Courts, Politics, Society

City of SeaTac Minimum Wage Increased to $15.00. Consequences Could Be Beneficial And Detrimental.

Submitted by Darren Smith, Guest Blogger

City of SeaTac LogoThe City of SeaTac Washington enacted a proposition narrowly approved by voters (77 vote margin among approximately 6,000 total votes) that would, among other issues, raise the minimum wage of hospitality and transportation workers to $15.00 per hour; one of the highest in the United States. The minimum wage for Washington State is $9.32 and the highest among all fifty states. Supporters of the proposition argued the cost of living for those workers is forcing them to live in substandard lifestyles given their working environment and lack of benefits provided in these industries. Opponents argue the law would put an unnecessary burden upon business and force cuts in employees and a disincentive to operate within the city. Much controversy has been generated on all sides.

There are and estimated 1,600 transportation and hospitality workers employed in SeaTac and 4,700 within the Port of Seattle; mainly serving the airport. The ordinance has sparked much controversy on both labor and business interests and could have an affect on other cities throughout the state. A recent superior court decision also has invalidated a significant number of employees working in SeaTac.

The ordinance is SeaTac Municipal Code Chapter 7.45.

SeaTac is located in the vicinity of Seattle-Tacoma International Airport (SEA) south of Seattle. Adjacent to the airport, on International Boulevard, are a large number of hotels, motels, car rental agencies, and long term parking businesses that support travelers. The businesses subject to the ordinance generally are represented in the North American Industry Classification Codes (NAICS) as follows with some exemptions for small motels:

  • 485999 All Other Transit and Ground Passenger Transportation
  • 488119 Other Airport Operations
  • 488190 Other Support Activities for Air Transportation
  • 488510 Freight Transportation Arrangement
  • 532111 Passenger Car Rental
  • 561720 Janitorial Services
  • 721110 Hotels and Motels
  • 722310 Food Service Contractors
  • 722410 Drinking Places
  • 722514 Cafeterias, Grill Buffets, and Buffets
  • 722515 Snack and Nonalcoholic Beverage Bars

In addition to the wage minimum, adjusted annually for inflation, the ordinance provides a one hour sick and safe leave benefit per forty hours of work with a cash value to be paid at year end. Also there is a provision the employers must offer extra hours to part-time employees before a full time position is created. There are also provisions for employer/employee oversight related to labor relations.

The crux of the proposition was to provide this wage and benefit program both to employees outside the airport and those within the airport. However, recently the Superior Court of Washington for King County struck down the ordinance in part. In BF Foods, LLC, Filo Foods, LLC, et al., v. City of SeaTac, et al., (13-2-25352-6 KNT) Judge Andrea Darvas ruled the ordinance violated Revised Code of Washington 14.08.330 which declared the Port of Seattle which Seattle-Tacoma International is located and a state chartered municipality, had exclusive jurisdiction and the ordinance applying to this area was void declaring: “The Washington State Legislature has clearly and unequivocally stated its intent that municipalities other than the Port of Seattle may not exercise any jurisdiction or control over SeaTac Airport operations, or the laws and rules governing those operations.” Judge Darvas further decreed certain portions of the ordinance relating to employees suffering adverse actions for union activity or retaliation and such was pre-empted by federal labor law and void. Most of the remaining parts were upheld. Supporters of the ordinance promised a direct appeal to the state supreme court.

A few airports have labor rules similar to that of SeaTac. San Jose Airport workers are guaranteed health insurance and a $13.82 hourly wage. Los Angeles International workers receive $10.91 and health benefits.

Seattle-Tacoma InternationalOrganized opponents to the SeaTac ordinance were mostly from businesses. Plaintiffs in the lawsuit included Alaska Airlines which has its main hub at Seattle Tacoma International. In 2005 Alaska Airlines terminated 500 unionized ramp workers and re-hired some as lower wage, non-union workers. Recently, Alaska Airlines spokesman Paul McElroy stated: “Alaska Airlines believes in fair pay and benefits for all workers, and we respect every worker and the job they do…This lawsuit isn’t about $15 an hour. It’s about an initiative that violates state and federal law.”

Local businesses have spoken out as well. Han Kim, who manages Hotel Concepts which manages eleven hotels in Washington stated he and his business associates decided to shelve plans to construct a new hotel on land they own in SeaTac. They currently have three in SeaTac. Kim stated “Uncertainty is bad for business, and right now we’re right in that area so we’re just putting everything on hold” The American Car Rental Association estimated five percent of workers’ jobs would be cut along with another five to ten percent who will be replaced by more experienced workers. A manager with Dollar Rental Cars spoke of outsourcing some functions along with cutting staff.

Ramifications and benefits are certain to be brought by this ordinance, some short term and others into the future. A higher standard of living is a simple but important issue to those workers having more of a livable wage and provided benefits for their families. And most would agree with that. But what could be some of the long term issues that might affect those workers, their employees and the community?

Essentially an island of wage disparity has been created in the King County which SeaTac is located. Workers outside the city limits performing the same tasks as covered workers inside are paid sixty percent lower if paid at minimum wage. Moreover, almost an archipelago of islands are within the city itself. Those in other service industries and manufacturing who can work just as hard as transportation and hospitality workers are not given the same wages and benefits in the same city. Workers in the hotel industry who work at smaller locations are exempt from this benefit. Would this be considered equitable? Is it fair for some semi-skilled or low skilled jobs to be paid differently based upon lobbying efforts by some groups and where workers might or might not have union representation?

Businesses in SeaTac are at comparative disadvantage to those a few miles away. With the possibility of sixty percent higher labor costs in industries that are labor intensive and have low margins some SeaTac businesses could be priced out of business. Consumers are also likely to bear the burden of this as costs are transferred to the customer. If businesses depart or do not locate in the city SeaTac can face decreases in taxation. There is also a regulatory cost that can be had if a patchwork of cities enacts differing labor laws and this can negatively affect businesses that have to account for many locations rather than simply relying on state law.

It has been argued that with increasing wages comes increasing quality of services, workers with more earning power buy more goods and services which increases revenue to businesses, government, and other workers.

There are, however, other analogues in Washington where wages differ officially based upon location. One example is Prevailing Wage as defined in Chapter 39.12 RCW and Chapter 296-127 WAC. Essentially certain occupations hired for public works and contractors bidding for projects of the State of Washington must provide minimum wage and benefit levels for workers. Each county has a prevailing wage rate that is assigned for that region, there are underlying rates for trade levels such as journeymen or apprentice for numerous trades and in fact some are even more granular as in the case of commercial divers who receive hourly premiums based upon depth of each dive. See Washington Department of Labor and Industries prevailing wage calculator for details.

It is clear this is new territory in Washington State and other cities might follow suit. But it also represents some challenges that might require time to address.

What do you think?

Sources

Reuters
Fox News
City of SeaTac Municipal Code 7.45
Superior Court of Washington [13-2-25352-6 KNT]
Revised Code of Washington
Washington Administrative Code

178 thoughts on “City of SeaTac Minimum Wage Increased to $15.00. Consequences Could Be Beneficial And Detrimental.”

  1. Bron,

    How many folks live in ND and how many have moved there before the commencement of the related tar sands oil economy…. But for lack of workers, do you really think they’d pay much beyond min wage?

  4. In North Dakota Subway is paying $15/hour and entry level positions at Wal Mart are paying $17/hour.

    The best way for people to be paid better is for the economy to do better. The policies of this and other administrations are anti-growth and geared toward putting business and government in bed together which isnt crony capitalism but fascism or socialism.

    As DavidM points out above, the politicians didnt have the stones to raise minimum wages across the board but only in the captive consumer market of travelers. So this is more of a bone to the unions rather than any sort of rational economic policy. Most traveling is done by business, typically larger corporations who will be able to absorb the extra cost.

    My prediction is that some local businesses are going to go under or shut their doors, fewer workers will be hired and tax revenues will drop a few percentage points.

    Unfortunately business is not about providing jobs but about providing a product or service to the consumer at the best quality and lowest price possible while still making a profit. If Wal Mart raised their prices to pay their workers $15/hour, it would hurt the people who shop there. People who are not rich and probably not making $15/hour themselves.

    The only right way to pay a worker more is to grow the economy so labor can sell itslef to the highest bidder. It is working in ND, it will work in the economy as a whole.

    Playing at central planning will not cause prosperity, it never has and it never will.

  5. Elaine, that’s a great article. I had not recognized the importance and impact of moving the meat processing plants to rural locations.

    Thanks for posting.

  6. If I go into a restaurant with my half blind human Pal, in the city of SeaTac, will the waiter get $15.00 an hour? This should figure into my calculation for a tip. At some point I might decide to tip the management owner.

  7. I agree with the notion of separating a sea port and an air port from any jurisdiction of a city adjacent to or containing same. A port of call is a horse of a different stripe. There, the boys and girls should be subject to local law on payment for hourly wage, even if the job does not take an hour. There should not be a ceiling on pay per view or pay per job, but a minimum. Hand job not excluded.

  8. I say HOORAY for the 50s and 60s!!! We had a growing middle class then, mobility then, wages growing then and UNIONS then.

    Boooooo Boeing! It is disgusting the way corporations are holding taxpayers hostage by threatening jobs unless cities, states, and union workers pay them billions in tax rebates, loss of pensions, decreased wages.

    Just disgusting that our citizens and particularly members of the TeaParty and “independent” libertarians buy that crock.

    1. pdm wrote: “Just disgusting that our citizens and particularly members of the TeaParty and “independent” libertarians buy that crock.”

      Can you tone it down a bit?

      Some members here are Tea Party members, and some are independents and libertarians. Comments like this one are flaming and contrary to to the new civility policy of the blog. Let’s try to make this a place where everybody feels comfortable sharing their views.

  9. Having said all that, this experiment is a positive one and could become a springboard for the betterment of many poor communities.

  10. davidm2575: “Low wage jobs have always been entry level jobs, temporary jobs, or unskilled jobs with high turnover. I worked many minimum wage jobs as a youth, in college, and even after college graduation However, I NEVER expected to stay in those jobs”.

    It is true that in the past, mainly the fast food companies hired youth which was a springboard for the kids to move forward. This is not the case now. Most of the workers are older with families who can not afford to live on the minimum wage and have to rely on the government which we as taxpayers with health insurance end up paying via food stamps and by other means when they are sick.I know some kids who used to work for Walmart collecting carts from the parking lots and were promised promotions. They never got it and eventually left. Many families with kids can not afford to do that.

    “Who would think that way”?

    Families with kids who can not survive with this meager money. In fact we are subsidising the big corporations while they are making billions in profit.

    “Minimum wage jobs are not careers and I don’t think any person with sense looks at them that way”.

    Sadly they are for them who can not find any other job. I know some college graduates who are working for minimum wage.

    “Those who want to support a family must move up into management or into an actual skilled career. It only takes a few months for a fast food worker at McDonald’s or Burger King to move up into management and above minimum wage positions.”

    Wrong. I own both franchises and there is no way to do that. I have been suggesting to the both corporations for quite sometime where they can share in paying higher wages with us and we would only have to increase the price of a burger by.07 cents which would not hurt anyone. They have refused to do so. I hope they change their minds as they are making billions through the fees, commissions from the vendors etc. etc.

    “I think the same opportunity exists at Walmart. I tend to look upon anybody who talks about minimum wage jobs as a career meant to support a family as being a little dim upstairs.”

    No it does not. That is the reason Walmart is spending millions in “false” advertising giving the image of ladder climbing.

    1. Teji wrote: “I know some college graduates who are working for minimum wage.”

      I worked several minimum wage jobs after I graduated from college. It’s that unusual. I never expected to make that my career. I’ve known several homeless people with college degrees. I’ve met two homeless people who had Ph.D.’s.

      How many people working for minimum wage in your the McDonald’s and Burger King franchises that you own are expecting to stay at minimum wage as a career choice? What percentage? In my community here, most of these workers are young people, mostly in high school. I have several children in high school, and these are the kind of jobs they get.

      The last time I helped a homeless guy get a job at Burger King, he was made a shift manager and earning above minimum wage in less than 3 months. Within six months, he was able to afford his own apartment and marry his girl friend and have children. Are you saying that this is not possible in the franchises that you own?

  11. Great topic Darren. It is amazing that a city had to experiment with a living wage requirement. OS is correct that many retail workers used to have a living wage until the Wal-Mart’s of the world decided the family needed more billions. Elaine’s link to an insightful Salon article describes what has happened to the middle class and why. I can sum it up in one word. Greed.

  12. I read an interesting article a few days ago. Here is an excerpt from and a link to it:

    The “middle class” myth: Here’s why wages are really so low today
    Want to understand the failures of the “free market” and the key to getting a decent wage? Here’s the real story
    Edward McClelland
    12/30/13
    http://www.salon.com/2013/12/30/the_middle_class_myth_heres_why_wages_are_really_so_low_today/

    Excerpt:
    Let me tell you the story of an “unskilled” worker in America who lived better than most of today’s college graduates. In the winter of 1965, Rob Stanley graduated from Chicago Vocational High School, on the city’s Far South Side. Pay rent, his father told him, or get out of the house. So Stanley walked over to Interlake Steel, where he was immediately hired to shovel taconite into the blast furnace on the midnight shift. It was the crummiest job in the mill, mindless grunt work, but it paid $2.32 an hour — enough for an apartment and a car. That was enough for Stanley, whose main ambition was playing football with the local sandlot all-stars, the Bonivirs.

    Stanley’s wages would be the equivalent of $17.17 today — more than the “Fight For 15” movement is demanding for fast-food workers. Stanley’s job was more difficult, more dangerous and more unpleasant than working the fryer at KFC (the blast furnace could heat up to 2,000 degrees). According to the laws of the free market, though, none of that is supposed to matter. All that is supposed to matter is how many people are capable of doing your job. And anyone with two arms could shovel taconite. It required even less skill than preparing dozens of finger lickin’ good menu items, or keeping straight the orders of 10 customers waiting at the counter. Shovelers didn’t need to speak English. In the early days of the steel industry, the job was often assigned to immigrants off the boat from Poland or Bohemia.

    “You’d just sort of go on automatic pilot, shoveling ore balls all night,” is how Stanley remembers the work.

    Stanley’s ore-shoveling gig was also considered an entry-level position. After a year in Vietnam, he came home to Chicago and enrolled in a pipefitters’ apprenticeship program at Wisconsin Steel.

    So why did Rob Stanley, an unskilled high school graduate, live so much better than someone with similar qualifications could even dream of today? Because the workers at Interlake Steel were represented by the United Steelworkers of America, who demanded a decent salary for all jobs. The workers at KFC are represented by nobody but themselves, so they have to accept a wage a few cents above what Congress has decided is criminal.

    The argument given against paying a living wage in fast-food restaurants is that workers are paid according to their skills, and if the teenager cleaning the grease trap wants more money, he should get an education. Like most conservative arguments, it makes sense logically, but has little connection to economic reality. Workers are not simply paid according to their skills, they’re paid according to what they can negotiate with their employers. And in an era when only 6 percent of private-sector workers belong to a union, and when going on strike is almost certain to result in losing your job, low-skill workers have no negotiating power whatsoever.

    Granted, Interlake Steel produced a much more useful, much more profitable product than KFC. Steel built the Brooklyn Bridge, the U.S. Navy and the Saturn rocket program. KFC spares people the hassle of frying chicken at home. So let’s look at how wages have declined from middle-class to minimum-wage in a single industry: meat processing.

    Slaughterhouses insist they hire immigrants because the work is so unpleasant Americans won’t do it. They hired European immigrants when Upton Sinclair wrote “The Jungle,” and they hire Latin American immigrants today. But it’s a canard that Americans won’t slaughter pigs, sheep and cows. How do we know this? Because immigration to the United States was more or less banned from 1925 to 1965, and millions of pigs, sheep and cows were slaughtered during those years. But they were slaughtered by American-born workers, earning middle-class wages. Mother Jones magazine explains what changed:

    “[S]tarting in the early 1960s, a company called Iowa Beef Packers (IBP) began to revolutionize the industry, opening plants in rural areas far from union strongholds, recruiting immigrant workers from Mexico, introducing a new division of labor that eliminated the need for skilled butchers, and ruthlessly battling unions. By the late 1970s, meatpacking companies that wanted to compete with IBP had to adopt its business methods — or go out of business. Wages in the meatpacking industry soon fell by as much as 50 percent.”

    In Nick Reding’s book “Methland,” he interviews Roland Jarvis, who earned $18 an hour throwing hocks at Iowa Ham…until 1992, when the slaughterhouse was bought out by a company that broke the union, cut wages to $6.20 an hour, and eliminated all benefits. Jarvis began taking meth so he could work extra shifts, then dealing the drug to make up for his lost income.

    Would Americans kill pigs for $18 an hour? Hell, yes, they would. There would be a line from Sioux City to Dubuque for those jobs. But Big Meat’s defeat of Big Labor means it can now negotiate the lowest possible wages with the most desperate workers: usually Mexican immigrants who are willing to endure dangerous conditions for what would be considered a huge pile of money in their home country. Slaughterhouses hire immigrants not because they’re the only workers willing to kill and cut apart pigs, but because they’re the only workers willing to kill and cut apart pigs for low wages, in unsafe conditions.

    In Rob Stanley’s native South Side, there is more than one monument to the violence that resulted when the right of industry to bargain without the interference of labor unions was backed up by government force. In 1894, President Cleveland sent 2,500 troops to break a strike at the Pullman Palace Car Factory. On Memorial Day, 1937, Chicago police killed 10 striking workers outside the Republic Steel plant. The names of those dead are cast on a brass plaque bolted to a flagpole outside a defunct steelworkers’ hall. They were as polyglot as a platoon in a World War II movie: Anderson, Causey, Francisco, Popovich, Handley, Jones, Reed, Tagliori, Tisdale, Rothmund.

    I first saw those sites on a labor history tour led by “Oil Can Eddie” Sadlowski, a retired labor leader who lost a race for the presidency of the USW in 1977. Sadlowski was teaching a group of ironworkers’ apprentices about their blue-collar heritage, and invited me to ride along on the bus. Oil Can Eddie had spent his life agitating for a labor movement that transcended class boundaries. He wanted laborers to think of themselves as poets, and poets to think of themselves as laborers.

    “How many Mozarts are working in steel mills?” he once asked an interviewer.

    1. Elaine M posted an article saying: “The argument given against paying a living wage in fast-food restaurants is that workers are paid according to their skills, and if the teenager cleaning the grease trap wants more money, he should get an education. Like most conservative arguments, it makes sense logically, but has little connection to economic reality.”

      This is NOT the conservative argument. It is not even close to the conservative mindset of how to set a wage. Pay according to their skills? No, it is pay according to what the market will pay for them to do the job.

      The conservative argument is that if businesses cannot afford to pay more, they should not be forced to pay more because it will put them out of business. This is what happened to many businesses in Detroit. Unions demanded more pay, more benefits, higher pensions. The pressure was so great and government so coercive that the businesses were compelled to promise pensions that they could never deliver. They knew it was just delaying the inevitable failure of the business, but they had no choice. They did it and made plans to move away, leaving the city and unions to deal with the mess that they created.

      I think today that most conservatives like me think that education is way overrated. It use to not be this way, but today it is. Mostly women now go for higher education. Most millionaires today drop out of college in order to make it big. I continued formal education for 9 years, and my income cannot touch my cousin’s income who dropped out of college and became a multimillionaire. I spent a decade improving my mind while he spent a decade building a business. It is possible for education to waste a lot of time for many who are ready to forge a career path. Not everybody is ready to start a career, but a significant number are. Facebook and other high tech companies have a policy of trying to find college students who will drop out of college and make a career with them. They believe that many young minds are wasted pursuing education. They want to get them hired while in their prime when they can perform better.

      Look, the dynamics for what a business pays someone is not much different from the dynamics involved when someone knocks on your door and asks you to let them cut your lawn, or take down a tree for you, or pressure clean for you, or do some house cleaning. They give you a price for them to do it, and if you can afford it, you will probably say okay. On the other hand, if their price is more than you can afford to pay, you tell them no. It is no different for businesses. If the work being done brings in enough money so that the business can afford to pay it, then fine, but if not, they will only pay what they can afford to pay or they choose not to employ at all. For the most part, there is no evil motivation of trying to take advantage of someone. I wish I could just pay all my employees millions of dollars a year. That would be great, but reality dictates that I can only pay them what other people are willing to pay for the services that they perform.

      As for the shoveling job you mention, the employees today are not of the same caliber as those back then. Most reliable people today will not take a job like that. I know similar jobs here in Florida. The homeless call it mucking. They go into the holds of ships to do this. It is a dirty, stinking job that nobody wants to do. Even many homeless guys in the day labor line will not do it. So what happens is that the people who do these jobs are totally unreliable. Many of them are drifters and drug addicts. The employer has to deal with tremendous turnover, and that costs a lot of money. Because there is the turnover, they have to deal with day labor companies, which make some money off connecting the guy willing to do the job with the business that needs the work done. While this creates some jobs for the people working for the Temp agency, the guy doing the real dirty work makes less money. It is a sad state of affairs, but this is what drives the hiring wage down. The article you post is way too simplistic on these issues. It is basically just a propaganda piece to promote liberal ideology.

  13. Davd sez: “Low wage jobs have always been entry level jobs, temporary jobs, or unskilled jobs with high turnover.”

    ***************************

    That should read “…have always supposed to have been entry level jobs with high turnover.”

    The reality is that all too many employers have discovered that in the recession created by the banking industry, ALEC, predatory lenders, and outright criminality in the financial sector, there is a high unemployment rate. That translates to people who are literally desperate for jobs and will take anything. One of my family members got a degree in medical office management and has applied for more than a hundred jobs over the span of a year. Every hospital and doctor’s office within a two hour drive. Guess what. Even the jobs where it says “no experience required” have at least a dozen applicants for every job, and when it comes to hiring a new college grad or somebody with a few years experience, the job goes to the one with experience.

    Formerly, before Walmart and other big box stores, there were decent jobs in the retail sector. Now, employers deliberately cut hours so there are far more employees than needed for full time jobs. Many retail stores have their employees come in from five to twenty hours a week–on minimum wage. When the employee tips past the twenty hour mark, they find their hours being cut.

    Another thing I have observed, when an employee complains the schedule is so erratic they cannot attend college classes, or even plan for days off, they are either let go or hours cut even more.

    These policies come at a cost. Employee loyalty is a dim distant memory.

  14. A large negative to minimum wage laws is the resulting unemployment of youth. How many business will hire an inexperienced 16 year old at $15/hour? Look at youth unemployment in cities, it is obscenely high. I also agree that $10 or even $15 per hour for an adult supporting a family is obscene. How about this, rather than minimum wage laws how about some enticement of annual increases in pay. You would need some protection so that workers don’t get fired after 3 years or some such number but leaving our youth unemployed is not a viable solution, it is a recipe for revolution.

    1. Paul wrote: “How many business will hire an inexperienced 16 year old at $15/hour? Look at youth unemployment in cities, it is obscenely high. I also agree that $10 or even $15 per hour for an adult supporting a family is obscene.”

      Low wage jobs have always been entry level jobs, temporary jobs, or unskilled jobs with high turnover. I worked many minimum wage jobs as a youth, in college, and even after college graduation. However, I NEVER expected to stay in those jobs. Who would think that way? Minimum wage jobs are not careers and I don’t think any person with sense looks at them that way. Those who want to support a family must move up into management or into an actual skilled career. It only takes a few months for a fast food worker at McDonald’s or Burger King to move up into management and above minimum wage positions. I think the same opportunity exists at Walmart. I tend to look upon anybody who talks about minimum wage jobs as a career meant to support a family as being a little dim upstairs.

  15. Interesting Darren… I will want to see how it works…. The judge is correct in that federal laws apply…. However… In many aspects they share with locals enforcement of other laws…. So this could be a basis for challenge…. It’s my understanding that when mandatory mins are applied…. There’s a minimal impact on business….. They just don’t want to pay for the services these folks perform just to get tips….. What’s the difference if you have 10 people working when you have to pay them sufferance pay…. But when they have to dig in the till to pay an almost living wage… They won’t be so ready to over staff normally tipped workers….

  16. If the Fed. quit printing 80 billion dollars a month maybe the dollar would have more buying power?

  17. There are often unintended consequences to all actions like this. A long term effect could very well be less flights coming in and out of the airport. These higher paid workers getting laid off, and the entire metro area of Seattle paying higher fares for flights.

    Boeing in Seattle is currently going through union negotiations regarding where they will build their new aircraft. There is a gap between the young and old union employees. The young see that there must be more of a cooperation[as did Ford employees]. The older union members are still stuck in the 50’s/60’s mentality as are their leaders. Hopefully the younger members win, or we may end up having to bail out another major company ala GM and Chrysler. Remember, Ford didn’t need our taxpayer money. For all us Darwinians, we know it’s, “Adapt or perish.”

  18. This is the way minimum wage experiments ought to be done: by the city, not the federal government. It is interesting that they only apply the law to Hospitality and Transportation. I guess they figure the visitors to the city will get hit with the higher cost of paying for it. This experiment might actually work in this situation, but I would be skeptical that it could be applied successfully to all businesses.

  19. Analyzing this entails some push and pull on the dynamics of civic maturity and immaturity.

    Everything on the playground need not be based on struggle and fighting in a mature community.

  20. I think it is an experiment worth conducting. For every negative, there is an offsetting positive. Yes, it is more expensive for businesses, and reduces profits for businesses, but the workers being paid more will spend more. People earning $15 an hour (about $30K per year) typically spend all their pay, primarily within their community. That is not true of people (like most business owners) earning four or five times that, they don’t live paycheck to paycheck, so they don’t spend as much in their communities. So I think the local economy will have more money flowing.

    The main impact will be on businesses, which will have higher costs. Businesses that are barely viable to start with may indeed fold, but I think that is a price worth paying; a business that can only make a profit by exploiting workers is not a business we should sanction.

    I think the truth is that if (under the new regime) there is any profit to be made by providing a product or service, somebody will find that opportunity attractive and step into the role of providing it.

    I think the truth is that some things have to be done, and nobody is going to go out of business and abandon their profits and property because they are too mad about the cost of janitorial services or shelf stocking increasing 60%.

    So I think the minimum wage is indeed a cram-down for business owners, and represents an end to their game of exploiting workers to make a profit and forces them to take less profit, or find new and better ways to provide profitable services. Those are good things.

    They can try to raise prices, but their customers will have the final say on whether that will work, presuming the customers aren’t captives. After all, presumably any well-run business has already set their price as high as the market will bear; so increasing the price should reduce sales so much it produces less overall profit — Their customers have never cared what the expenses of the business were, they shop on the final price and perceived value, nothing else.

    In the case where customers are captive, they may pay higher rates for a time because they have no choice, but it creates a competitive opportunity, other competitors willing to operate a little closer to the bone could offer the product or service for a lesser price. And if that isn’t true, then the customers have no choice, and the cost of the higher minimum wage is passed on to customers that have no choice but to pay for it. Which is okay too.

    The bottom line, to me, is that a higher minimum wage should theoretically reduce profits, but won’t eliminate them, and should theoretically improve the economy by improving the flow of money and consumption of those earning it. It should theoretically reduce the gaps in pay between employees and each level of management, all the way to the owner; in other words it should better distribute the wealth created by the commercial enterprise to which they are contributing.

    That is a cram-down on owners that (I think) are taking an unfair share of profits just because they can. But I have no problem with that; selfish behavior is typically only curtailed by coercion.

    All that said, there are too many variables to be certain of the outcome, but I think it is a worthy experiment.

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