‘SeaTac is proving trickle-down economics wrong’

People rally in support of a $15 minimum wage at Seattle Central Community College in Seattle, Washington March 15, 2014.
People rally in support of a $15 minimum wage at Seattle Central Community College in Seattle, Washington March 15, 2014.  Jason Redmond/Reuters

‘SeaTac is proving trickle-down economics wrong’

09/08/14 11:18 AM
The community of SeaTac, Washington, home to the Seattle-Tacoma International Airport, this year became the first in the nation to approve a $15 minimum wage law.
It’s been more than eight months since the policy took effect, and Dana Milbank highlighted the results over the weekend.
As fast-food workers demonstrate nationwide for a $15 hourly wage, and congressional Republicans fight off a $10 federal minimum, little SeaTac has something to offer the debate. Its neighbor, Seattle, was the first big city to approve a $15 wage, this spring, but that doesn’t start phasing in until next year. SeaTac did it all at once. And, though there’s nothing definitive, this much is clear: The sky did not fall.
“SeaTac is proving trickle-down economics wrong,” says David Rolf, the Service Employees International Union official who helped lead the $15 effort in SeaTac and Seattle, “because when workers prosper, so do communities and businesses.”
In fairness, SeaTac is a small community and the number of affected workers is quite modest, making this a difficult test case. Still, as Milbank’s piece noted, the owner of a SeaTac hotel, who had strongly opposed the minimum-wage increase during the 2013 debate, said the hike would invariably lead to local layoffs and eliminated jobs.
That was last year. This year, with the $15 minimum wage in effect, the hotel is moving forward with a multi-million dollar expansion anyway.
And what of Seattle, which will soon have easily the highest minimum wage of any major U.S. city?
Milbank’s column added these valuable insights.
In Seattle last week, I stopped in at the jammed Palace Kitchen, flagship of Seattle restaurateur Tom Douglas, who runs upward of 15 establishments. He warned in April that the $15 wage could “be the most serious threat to our ability to compete,” and he predicted that “we would lose maybe a quarter of the restaurants in town.” Yet Douglas has opened, or announced, five new restaurants this year.
Likewise, the International Franchise Association has sued to block implementation of the law, arguing that nobody “in their right mind” would become a franchisee in Seattle. Yet Togo’s sandwiches, a franchise chain, is expanding into Seattle, saying the $15 wage isn’t a deterrent.
And a spokesman for Weyerhaeuser, the venerable wood and paper company, says the $15 wage didn’t factor into its decision, announced last month, to move its headquarters and 800 employees to Seattle from outside Tacoma.
It’s against this backdrop that the political debate continues to unfold. The White House made a minimum-wage increase the subject of its official weekly address over the weekend, and just last week, two Republican opponents of a wage hike – Senate Minority Leader Mitch McConnell and Senate hopeful Rep. Tom Cotton – both started hedging on whether an increase is a good idea.

Local Minimum Wage Laws – A Summary

shortlink here:  http://wp.me/p2w2NH-yI

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Report prepared for the Seattle Income Inequality Advisory Committee

http://seattletimes.wpengine.netdna-cdn.com/opinionnw/files/2014/04/Berkeley-minimum-wage-study.pdf

March 2014

Michael Reich

UC Berkeley Professor of Economics and Director, Institute for Research on Labor and Employment, UC Berkeley

Ken Jacobs

UC Berkeley, Chair, Center for Labor Research and Education, Institute for Research on Labor and Employment

Annette Bernhardt

UC Berkeley Visiting Professor of Sociology and Visiting Researcher, Institute for Research on Labor and Employment

Acknowledgments: We thank Miranda Dietz and Jenifer MacGillvary for their contributions to the research and writing of this report.

 

Contents

Executive Summary ……………………………………………………………………………………………………………………. 1

1. Introduction …………………………………………………………………………………………………………………………. 4

2. Profile of existing local minimum wage laws ………………………………………………………………………………. 4

3. How San Francisco enforces its minimum wage law ……………………………………………………………………. 7

4. The research literature on minimum wage effects …………………………………………………………………….. 10

5. The effects of minimum wage laws on workers and families ………………………………………………………. 10

6. The effects of minimum wage laws on businesses …………………………………………………………………….. 17

7. Conclusion ………………………………………………………………………………………………………………………….. 26

References ……………………………………………………………………………………………………………………………… 28

Figures

Tables 1

Executive Summary

As cities and counties across the country increasingly debate whether to establish their own minimum wage laws, policymakers are understandably asking a host of questions. How are existing laws designed? What do we know about the impacts of local wage mandates on workers and their families? What does research tell us about the effect of local wage mandates on employment, and, in particular, do businesses move outside city or county borders in response? In this report, we address these and related questions.

Existing local minimum wage laws

Nine localities in the United States currently have enacted minimum wage laws: Albuquerque, NM; Bernalillo County, NM; Montgomery County, MD; Prince George’s County, MD; San Francisco, CA; San Jose, CA; Santa Fe, NM; Santa Fe County, NM; and Washington DC. (Richmond, CA, just voted to raise its minimum wage to $12.30 an hour by 2017, and a final vote is pending to pass the law.)

Current mandated wage levels range from $8.50 in Bernalillo County to $10.74 an hour in San Francisco. (New wage mandates in Washington DC and Santa Fe, Montgomery, and Prince George’s Counties go into effect later this year.)

On average, the existing local minimum wage laws have mandated total wage increases of 41.4 percent, many of them in multiple steps and the majority indexed to inflation thereafter. Localities with larger increases have been more likely to implement them in several steps. Across the localities, the average per-step minimum wage increase is 16.7 percent.

The nine laws are similar in covering the large majority of work that is performed within the boundaries of their cities or counties. San Francisco delayed coverage of nonprofits and small businesses (less than 10 employees) for one year. Santa Fe initially exempted small businesses but later amended its law to cover all establishments.

Two of the nine laws (San Francisco and San Jose) follow their state’s law in treating tipped workers the same as non-tipped workers, maintaining a uniform minimum wage for both groups. The other seven laws follow their states’ laws in maintaining a lower minimum wage for tipped workers (even as some increased the base wage for tipped workers). Several of the laws make similar provisions for commissioned workers.

How San Francisco enforces its minimum wage law

San Francisco uses a variety of high-impact enforcement and education strategies to ensure that the city’s minimum wage law has its intended effect.

2

From the beginning of 2004 to mid-2012, San Francisco’s enforcement agency processed 616 worker complaints related to the minimum wage and recovered $5.8 million in back wages on behalf of 3,004 workers. These are higher benchmarks than typically achieved by state and federal enforcement agencies.

San Francisco’s Office of Labor Standards Enforcement assigns 7.5 compliance officers to minimum wage enforcement on behalf of approximately 611,000 people employed in the city. These officers share responsibility for enforcement of the city’s paid sick leave law as well.

Approximately $979,000 supports the 7.5 positions devoted to minimum wage enforcement. In addition, $462,125 is contracted to community organizations that provide education, outreach, and case referrals, largely focused on minimum wage violations.

Effects of minimum wage laws on workers and families

Researchers consistently find that minimum wage laws raise pay for workers at the bottom rungs of the labor market. These increases include both directly affected workers (those earning between the old and the new minimum wage) as well as those indirectly affected (those earning above, but near, the new minimum wage).

Raising the minimum wage also pushes up the wage floor relative to the median wage, thereby reducing pay inequality.

Researchers consistently find that the affected workers are largely adults and disproportionately women and people of color.

New research on the effect of minimum wage increases documents important reductions in family poverty rates and enrollments in public assistance programs, such as food stamps.

Researchers have not estimated the amount of economic stimulus actually created by the new spending power of low-wage workers after minimum wage increases. We do know that low-wage workers and their families are likely to spend a significant portion of those increased earnings.

Effects of minimum wage laws on businesses

Economists have increasingly recognized that raising the minimum wage does not automatically mean that employment will fall. Increased labor costs can be absorbed through a variety of other channels, including savings from reduced worker turnover and improved efficiency, higher prices, and lower profits. Modern economics therefore regards the employment effect of a minimum wage increase as a question that is not decided by theory, but by empirical testing. 3

• Labor economists continue to debate the actual impacts of the minimum wage on employment and hours. We discuss in our assessment the most rigorous studies and offer a non-technical explanation of the nature of the disagreements in the research literature.

• To date, three rigorous studies have examined the employment impacts of San Francisco’s and Santa Fe’s local minimum wage laws. Each finds no statistically significant negative effects on employment or hours (including in low-wage industries such as restaurants).

• A larger body of economic research investigates the effects of state and federal minimum wage increases. These studies compare employment trends for states or counties that have different minimum wages. The best studies make comparisons to nearby states or counties to control for regional economic trends. These studies also find no statistically significant negative effects on employment or hours at an aggregate level or for low-wage industries such as restaurants and retail stores, or for specific groups of workers such as teens. These studies also do not find substitution effects (such as shifts in hiring away from black and Latino teens).

• Studies of the impact of minimum wage increases on restaurants’ operating costs find that an increase of 10 percent in the minimum wage increases operating costs by about 1 to 2 percent.

• Researchers find small one-time price increases in the restaurant industry (of about 0.7 percent following a 10 percent minimum wage increase), but not in other industries.

• Researchers find that increases in the minimum wage reduce employee turnover, translating into a reduction in direct costs (recruitment, selection, and training of new workers) and a reduction in indirect costs (lost sales, lower quality service, and lost productivity as the new workers learn on the job). Some studies have also identified additional benefits of higher wages, including improved morale, improved work performance, and reductions in absenteeism.

• Researchers have not found evidence that employers absorbed minimum wage increases by reducing health benefits or pensions.

In summary, our assessment of the research evidence indicates that minimum wage mandates raise the incomes of low-wage workers and their families, and that the costs to businesses are absorbed largely by reduced turnover costs and by small price increases among restaurants. That said, it is important to emphasize that existing research is necessarily limited to the range of minimum wage increases that have been implemented to date. While these studies are suggestive, they cannot tell us what is likely to happen when minimum wages are increased significantly beyond current local, state, or general.

 

The full report: http://seattletimes.wpengine.netdna-cdn.com/opinionnw/files/2014/04/Berkeley-minimum-wage-study.pdf

 

 

 

Fast Food Workers Strike in National Action for Economic Justice – Aug. 29, 2013

shortlink here:  http://wp.me/p2w2NH-oo

New York City, via gothamist.com http://gothamist.com/2013/08/29/fast_food_workers_walk_out_to_fight.php 🙂

“Fast food workers are walking out on their jobs today to once again protest low wages, demand the right to unionize and fight for better working conditions. The strikes are occurring in 50 cities including New York City, where there are multiple walk-outs plus a rally planned.

The first walkout was at the McDonald’s at 341 Fifth Avenue in Manhattan. City Council Speaker and mayoral hopeful Christine Quinn was there, as was City Council Member and Public Advocate hopeful Letitia James. James invoked Martin Luther King Jr., quoting the civil rights leader, “It is a crime for people to live in this rich nation and receive starvation wages.””

Chicago Tribune:

http://www.chicagotribune.com/news/sns-rt-us-usa-restaurants-strike-20130828,0,3586222.story

“NEW YORK (Reuters) – Fast-food workers staged strikes at McDonald’s and Burger Kings and demonstrated at other stores in sixty U.S. cities on Thursday in their latest action in a nearly year-long campaign to raise wages in the service sector.

The strikes spread quickly across the country and have shut down restaurants in New York, Chicago, Detroit, Milwaukee, St. Louis, Raleigh and Seattle, according to organizers.”

LA Times:   http://www.latimes.com/local/lanow/la-me-ln-fast-food-protests-hit-los-angeles-thursday-20130829,0,7294893.story

Huffington Post:  http://www.huffingtonpost.com/2013/08/29/fast-food-protest-chicago_n_3837419.html

the Guardian UK: http://www.theguardian.com/world/2013/aug/29/fast-food-workers-low-pay-nationwide-walkout

KTVU San Francisco: http://www.ktvu.com/news/news/local/fast-food-strike/nZf4X/

NBC 5 Dallas- Fort Worth, Texas:  http://www.nbcdfw.com/news/local/Dallas-Fast-Food-Workers-Join-Nationwide-Strike-221626461.html

Flint, Michigan:  http://www.mlive.com/news/flint/index.ssf/2013/08/minimum_wage_protesters_in_fli.html

SeaTac’s $15 an Hour Wage Initiative Achieves Sig Threshold Quickly

shortlink here:  http://wp.me/p2w2NH-n3 mnemonic here:  http://urlet.com/sincere.brainier

“Less than two weeks after filing a City of SeaTac initiative that would assure better wages and working conditions for thousands of low-wage SeaTac Airport workers, backers have announced that they have already surpassed the signature threshold.”

The initiative if passed will raise the minimum wage for these 5,000 workers to $15 an hour along with other reforms.

http://slog.thestranger.com/slog/archives/2013/05/21/backers-pass-signature-threshold-on-seatac-measure-to-require-living-wages-for-airport-workers

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https://www.facebook.com/itsourairport

About

There are thousands of poverty-wage workers at our airport. Let’s make every airport job a good job.
Mission

Let’s make every job at Sea-Tac a good job.

Description
These baggage handlers, fuelers, passenger service workers, ground transportation workers, taxicab drivers, and cargo workers do work critical to the successful operations of Alaska and other airlines at our airport. However, they do not actually work for these large corporations.
Instead their jobs are contracted out to the lowest bidder. Most of these airline contractors pay poverty wages.
Workers across the airport report that benefits, if offered at all, are usually unaffordable for workers bringing home at or near the minimum wage for the long and onerous hours worked. And most of these workers are immigrants that have come from Africa, Asia, and Latin America to pursue a better life in Seattle. Their work is vital to keeping Sea-Tac running and providing good service for the more than 32 million passengers that pass through our airport. They work hard – sometimes holding down two or three jobs.
They deserve to be treated with respect, dignity and to a make a living wage.
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SeaTac Committee seeks higher minimum wage, employment standards

“For the past several days, a proposal by an outside group to raise some minimum salaries almost $6 an hour above the state minimum and impose mandatory paid sick leave for transportation and hospitality workers in have caused some concerns in the city.

“The proposed ordinance would raise minimum wages from the state’s current $9.19 per hour to $15 an hour for all workers defined to be in the hospitality and transportation businesses inside SeaTac.”

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PDF of the Initiative:

http://www.ci.seatac.wa.us/Modules/ShowDocument.aspx?documentid=7321

Walmart’s Dickensian Internal Pay Policy Revealed – Poverty is Policy

via Huffington Post:

“The company website declares that “a job at Walmart opens the door to a better life” and “the chance to grow and build a career.” But interviews with 31 hourly workers and one former store manager reveal lives beset by paychecks too small to handle the bills, difficult to manage part-time schedules with hours subject to constant change, and little reason to hope for career advancement. Citing fear of losing their jobs, most spoke on the condition of anonymity.

The testimonials of these workers are confirmed by Walmart’s official compensation policy, an internal company document obtained by The Huffington Post, titled the “Field Non-Exempt Associate Pay Plan Fiscal Year 2013.” The plan details a rigid pay structure for hourly employees that makes it difficult for most to rise much beyond poverty-level wages.

Low-level workers typically start near minimum wage, and have the potential to earn raises of 20 to 40 cents an hour through incremental promotions. Flawless performance merits a 60 cent raise per year under the policy, regardless of how much time an employee has worked for the company.   As a result, a “solid performer” who starts at Walmart as a cart pusher making $8 an hour and receives one promotion, about the average rate, can expect to make $10.60 after working at the company for 6 years.

The Walmart pay plan is organized around seven levels of job difficulty for hourly workers, called Position Pay Grades (PPGs), ranging from cart-pushers (Level 1) and cashiers (Level 3), to cake decorators (Level 4) and customer service managers (Level 6). Each subsequent pay grade offers 20 to 40 cents more than the previous level, according to the document. This means that the base rate of pay for a top hourly position at Walmart, like a check-out supervisor, is $1.70 more than that of the lowest paying job.”

pdf of walmarts pay policy http://big.assets.huffingtonpost.com/Walmart_0.pdf

complete article at:

http://www.huffingtonpost.com/2012/11/16/walmarts-internal-compensation-plan_n_2145086.html

Hundreds of Walmart Workers Walk Out – Federal Way, Washington Nov. 15, 2012 VIDEO

update fri 11/16 Wal-Mart filed an unfair labor practice charge against the United Food and Commercial Workers International Union, or UFCW, asking the National Labor Relations Board to halt what the retailer says are unlawful attempts to disrupt its business.

http://www.reuters.com/article/2012/11/16/us-walmart-union-idUSBRE8AF1DB20121116

update worker actions spread to Texas http://www.thenation.com/blog/171299/walmart-strike-takes-texas-organizers-promise-massive-black-friday-protest#

businessweek http://www.businessweek.com/articles/2012-11-16/wal-mart-workers-black-friday-strike

via KOMONEWS.com

http://www.komonews.com/news/local/Walmart-workers-threaten-to-strike-on-Black-Friday-179589451.html?tab=video&c=y

FEDERAL WAY, Wash. — Hundreds of Walmart workers walked off the job on Thursday, and the employees are now threatening to strike on one of the biggest shopping days of the year.

Walmart workers are not unionized, but growing unrest over what they call low wages, shortened hours and few benefits has some of the employees threatening to strike.

VIDEO:

http://www.komonews.com/news/local/Walmart-workers-threaten-to-strike-on-Black-Friday-179589451.html?tab=video&c=y

More Photos http://www.federalwaymirror.com/news/179590821.html

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