Submitted by Darren Smith, Guest Blogger
The 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.
Organized 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
DavidM:
http://taxfoundation.org/blog/incomes-tend-rise-age
“One of the most overlooked explanations for the difference in income between taxpayers is the issue of life cycle. Our income tends to grow as we mature and gain work experience, reaching its peak as we near retirement. As this chart illustrates, the average income for taxpayers age 55 to 65 is nearly $82,000—well above the $57,606 average for all taxpayers. Even taxpayers over age 65 make more than the national average. As the Baby Boomer generation moves into its peak earnings years, there will be more high-income taxpayers than younger low-income ones, giving the appearance of rising inequality.”
Bron wrote: “Our income tends to grow as we mature and gain work experience, reaching its peak as we near retirement.”
Fascinating. And as a society, we have created this Social Security system that kind of coerces the mind to believe our work is done and it is time to cease work and retire. Notice the sharp drop for the 65 and over. I don’t think that is all natural.
Dave:
I think Otteray Scribe is speaking to DavidM. I second DavidM, I hope you continue to post. I also found your post interesting.
Well if making a valid argument that is not calling names, slandering etc is not acceptable commentary, then this is the last comment I shall make on this blog. I accept people’s argument and simply try to refute it based on what I believe is sound moral & economic theory. If my commentary somehow crossed this line, cite it. Otherwise, discussion without name calling or slander should be clearly warranted.
Dave wrote: “If my commentary somehow crossed this line, cite it. Otherwise, discussion without name calling or slander should be clearly warranted.”
Dave, I found your commentary insightful and beneficial. Please keep contributing.
David,
The notion that the civility rule is meant to prevent people being made uncomfortable is a mistake of interpretation. In the immortal words of Finley Peter Dunne’s fictional Mr. Dooley, I see the job of the commentators on this blog as to, “Comfort the afflicted, and afflict the comfortable.”
OS wrote: “The notion that the civility rule is meant to prevent people being made uncomfortable is a mistake of interpretation.”
I heartily agree. I think it is civil to make people uncomfortable through logic. I’m sure that I have made a lot of people here uncomfortable using logic. Making people uncomfortable through emotional castigations is another matter. It is trending toward incivility to make an entire class of people uncomfortable by denigrating their racial, religious, sexual, or political affiliations.
OS wrote: “In the immortal words of Finley Peter Dunne’s fictional Mr. Dooley, I see the job of the commentators on this blog as to, “Comfort the afflicted, and afflict the comfortable.” ”
Then depending upon how the commentators exercise that job description, they might be leading us toward another quote from Finley Peter Dunne:
“There are no friends at cards or world politics.”
I suspect some of us would like to be friends as we discuss varied opinions. Let’s see how we might accomplish that, shall we?
Tony, the “minimum wage” is a fallacious idea that people at the margin merit some wage dictated by busy bodies and bureaucrats. It does not increase employment period. It marginalized unskilled workers by pricing them out of the work force, who will now hire a person with no skills at that extreme wage. There should be 0 minimum wage period, this is not to say I believe on slave labour, I believe people at the margin need to acquire low laying marginal utility jobs that allow them to gain skills. Dictating the minimum wage will cause business’s to close, people to be laid off and prices to rise, these fallacious arguments to the contrary are just that. Price control hurts all of us, despite the do gooder intentions of people who wish to set arbitrary wages.
DavidM: We do not set the minimum wage at $100 per hour because the objective is NOT to make everybody happy, the objective is to eliminate wage exploitation. $100 an hour would make everybody happy, but nobody needs $100 an hour just to purchase survival goods (food, shelter, health care if it isn’t free, safety if it isn’t free).
Setting the minimum wage can increase employment by making employment a safe route to survival; when the minimum wage and the safety net are NOT routes to survival, you increase desperation and the ever-present “alternative” survival choice: Crime.
The point isn’t to make people happy, the point is to make work worth doing because it allows one to provide for a family. People don’t mind working eight and more hours a day, even at minimum wage, but few are so dumb that they will do that work when it doesn’t pay enough to buy food, shelter, clothing, keep their kids healthy, etc. Just like all of us, they aren’t going to lay down and die, if the only choice you give them is crime, then crime is what you will get.
This will prove all unskilled people right out of a job, especially at the margin. Not to mention raise prices dramatically across all of these industries. I mean, for goodness sake price control does NOT work!
Here are a few links as to why this is sheer stupidity.
http://www.forbes.com/sites/williamdunkelberg/2012/12/31/why-raising-the-minimum-wage-kills-jobs/
http://finance.yahoo.com/blogs/breakout/abolish-minimum-wage-says-peter-schiff-172858062.html
https://mises.org/daily/6097/
I could post a lot more articles, and I understand the author is just citing that this is happening and causing controversy, but I find it amusing everytime I see this nonsense happening in the world. It will have a direct negative correlation on prices and employment, this is a fact. To say otherwise is either purposefully ignoring the obvious cause and effect of wages/prices or is just utopian, either of which is worth a big yawn in my mind.
DavidM:
I would love to see that myself, take one state and do pure socialism and another state and do pure capitalism and see which one prospers.
Actually its been done, but not quite pure on either side, East and West Berlin. West Berling thrived and they had to build a wall in East Berlin to keep people there.
Since the principles are what matters, there is little doubt in my mind how things would go. There would be a mass exodus from the socialist state and a mass migration to the capitalist state after a period of time.
The only difference would be here, the socialist state couldnt put up a wall with guard towers, machine guns and mine fields to keep the slaves er citizens confined.
Bron, excellent point about East and West Berlin.
Tony C:
“As a point of morality, which does not enter into their economic analysis, we do not want businesses to exist if the only way they can earn a profit is to harm their workers, through near-starvation wages, abuse, discrimination or endangerment. In order to stop immoral behavior among actors that care only about money or themselves being punished, we must impose a dollar cost on such behavior, which in part we do with a minimum wage (and other laws regarding employment).”
As you said, only 15% of people would be bad actors, so wouldnt 85% of companies be run by good actors? Wouldnt those companies be run safely and pay well? So who would want to work for a company which paid them less than they could make somewhere else [unless they were learning something or liked the work for instance] or provided unsafe working conditions when they could go somewhere else?
The fix to all of what you are saying is a thriving economy so that workers can pick and choose where they want to work and for how much and under what conditions. Unfortunately the same sort of minds which think minimumn wage is pro-labor are also the ones ruin er running our economy.
A poor economy benefits bad actors and those who believe government is the savior of the people.
Tony C:
“And who cares about “distorting” the market? Should we prohibit a new pie shop from opening in our town because the existing pie shop owners believe the competition will distort the market? Should we have allowed slavery to continue on the grounds that freeing the slaves was going to severely distort the agricultural markets? There is nothing sacred about the market.”
What you are proposing would fit nicely with using government to prohibit a new pie shop from opening, setting minimum wage and prohibiting competition are market distortions. They are part and parcel of the same philosophy of economiics and government.
DavidM:
is that true? You cant have a person work for you for free even if he wants to?
What kind of sh*t is that? JC Penny started by working for free for someone, I worked for an architect for free in college to get experience, it was the best job because I learned a good deal and was able to apply some of my coursework knowledge to it. And after a month, they gave me $3.50/hour. I still remember those people and that job fondly. I earned much more than I was paid.
If government is preventing young people from working for free if they choose to do so, then we are not a free country. People promulgating that type of nonsense are tyrants.
DavidM:
“One thing government could do if it was really concerned for the poor is to make those start up experiments by the poor completely tax exempt. That would give the poor a competitive advantage over businesses who have to pay taxes on their employees. Such a scheme would be MUCH better for the poor and our overall economy than setting a minimum wage.”
That is a very good idea, no taxes of any kind. Give them a pass for 5-10 years on all taxes or until they start earning over $50k per year in 3 consecutive years.
Tony C:
Minimum wage jobs compete with welfare checks; at some level of wage rate people are not going to work and will take taxpayer funded handouts.
If you ended minimum wage requirements tomorrow, I doubt very seriously Burger King is going to be able to find someone to work as a fry cook or burger flipper for $5/hour when they can receive welfare or unemployment and other handouts to the tune of $20,000 plus per year.
So why do we even have a minimum wage? Where is the necessity? Especially in light of the social safety net we have in this country.
All a minimum wage does is prevent more young people from being hired, which pushes more people toward reliance on government. Which means more people voting for people who will increase spending on social welfare, which in turn leads to more power in the hands of government.
Seems to me government has reason(s) to jack up the minimum wage, shunt more people to welfare to keep them in perpetual government bondage. Spend and spend, elect and elect.
With that being said, you would have to crack down hard on illegal immigrants.
The system is messed up because market forces are distorted and no one person or group of people is smart enough to figure out all of the permutations that go into setting a minimum wage.
DavidM says: Reality dictates that I have to pay them what others in society are willing to pay for what they do.
And we can change that reality by instituting a minimum wage, that is the point.
DavidM says: but if I raise my prices too much, people stop buying for the simple reason that they cannot afford it.
But if, by government decree, everybody else’s expenses went up the same as yours, then people do not have a choice but to cover that expense, or choose to not buy from anybody. And that is the point also, we do not want people to engage in businesses that make a profit by exploiting people, and paying too little for them to ever get ahead is a form of exploitation.
DavidM says: Anybody who thinks they are not being paid enough could just work for themselves.
Not really, they can’t, in particular for minimum wage jobs. I was a dishwasher for a time in high school. Do you really think I could have struck out on my own and become a contract dishwasher for restaurants and bars and, for some inexplicable reason, they would have paid me MORE than the minimum wage?
I was trained to use the Hobart dishwasher I ran in literally five minutes. The instructions were also laminated and glued to the side of it, in case I forgot, on the chance I might be literate (actually not even true of the two over-40 dishwashers on the payroll with me). The idea that unskilled labor could make more money by starting their own business is just ludicrous, in fact the adults finished with school that are still in minimum wage jobs are usually there because they lack rational capacity and couldn’t operate a business or understand what they were doing. I know because I worked beside them for years, as a dishwasher, a janitor and unloading trucks. I love some of those guys, but they had the comprehension power of children. Literally, children. The typical child cannot run a business. Or know when he is being exploited for profit, or know that he should be insured or saving for a future he cannot even imagine.
Tony C wrote: “And we can change that reality by instituting a minimum wage, that is the point.”
And what about the rise in unemployment that such action causes? Do you really want young teenagers and unskilled young black teenagers unable to obtain employment? I would like to hear your comments about the analysis given previously by George Mason University Professor of Economics Walter Williams.
http://youtu.be/85OIBOSJTwg
Tony C wrote: “But if, by government decree, everybody else’s expenses went up the same as yours, then people do not have a choice but to cover that expense, or choose to not buy from anybody.”
Ultimately people just do without, so you basically just impoverish even more people who have less.
If your theory about minimum wage really worked the way you claimed, why not just set minimum wage at $100 an hour? Wouldn’t that make everyone happy? You can’t set it that high because you know deep down that the theory is flawed. You just want to push it a little bit so you can claim that you care about people earning a low wage.
Tony C wrote: “Not really, they can’t, in particular for minimum wage jobs. I was a dishwasher for a time in high school. Do you really think I could have struck out on my own and become a contract dishwasher for restaurants and bars and, for some inexplicable reason, they would have paid me MORE than the minimum wage?”
The implication in my point was that people don’t leave their jobs and work freelance because the market cannot support them, especially in the short term. If you truly BELIEVED that the business was taking advantage of you by choice, try to just do the same work without the employer. The rude awakening of reality is that wages are determined by the market more than by an employer. When the government involves itself, it disrupts the primary force preventing inflation by selfish business owners, which is competition.
I certainly agree with you that not everybody can run their own business, but they can farm out their services and find someone to pay them more *IF* the cause of unskilled workers having low wages was greedy businesses that refuse to pay more.
One thing government could do if it was really concerned for the poor is to make those start up experiments by the poor completely tax exempt. That would give the poor a competitive advantage over businesses who have to pay taxes on their employees. Such a scheme would be MUCH better for the poor and our overall economy than setting a minimum wage.
Thanks, bettykath.
Bron: Yes, I can marshal half a dozen economists for my view also.
Bron says: You set a minimum wage by government fiat without regard to market forces and you distort the market place. In regard to minimum wage, it keeps people out of the work force.
1) The minimum wage is not set “without regard to market forces.” In fact, the impetus to set the minimum wage is directly and entirely a result of market forces, in particular the market prices for food, shelter, health care and medicine, basic transportation and education.
2) The intent is to distort the market place, the market place is not some sacred untouchable religious relic. Everything distorts the market place, competitors distort the market place, greed distorts the market place, even altruism sometimes distorts the market place. This is a non-argument.
3) If setting a minimum wage keeps some people out of the market place, then we can have a strong safety net to catch them until they find real work. Because if their employers rely on making a profit by paying less than a living wage (which is a result of market forces as described in *(1)) then we do not sanction or condone such business; it borders on the use of slave labor, it is exploitive, and it is based on greed.
End of enumeration. The reason we have a minimum wage is because we have individuals in the country that will harm others for profit, even to the point of slavery, and without a minimum wage we know, from experience, that is precisely what happens. Which is why we instituted a minimum wage, and keep increasing it because market forces naturally inflate the price of survival goods, technology and science naturally increases the number and nature of survival goods, and thus the cost of basic survival increases over time.
The missing element of their arguments, which they conveniently and intentionally leave out, is the fundamentally exploitive nature of humankind, which has not changed since the days the Romans captured a Jewish slave force of 50,000 to build the Colosseum, and when the job was done, slaughtered them in it. It has not changed since slavery was legal in America.
There has always been, and will always be, a large and significant number of humans with no real sense of right and wrong, that rely only upon the law to determine their morality and what they are willing to do for profit. If slavery is legal, they will use it. If harming others is legal, they will use that. If coercion, blackmail, threats, physical violence, or lethal endangerment is legal, they will use that.
That is not a feature of every human, but it is a feature apparently born into about 15% of humans, and so extreme in about 2% of humans that we label it sociopathy or psychopathy.
There is some logical validity to those arguments, but they ignore the actual value of the minimum wage in order to attack it. The actual value of the minimum wage is to prohibit the enterprises that would exploit people and engage in effective slavery and coercion for profit.
Yes, we could have 100% employment if we enslaved everybody. But 100% employment is not a goal to be achieved at any cost.
Yes, imposing a minimum wage distorts the market. But not imposing a minimum wage will lead, as it did before minimum wages were imposed, to not being a “market” at all but a simple hold-up in which people are forced to work for starvation wages or to actually starve.
And who cares about “distorting” the market? Should we prohibit a new pie shop from opening in our town because the existing pie shop owners believe the competition will distort the market? Should we have allowed slavery to continue on the grounds that freeing the slaves was going to severely distort the agricultural markets? There is nothing sacred about the market.
As a point of morality, which does not enter into their economic analysis, we do not want businesses to exist if the only way they can earn a profit is to harm their workers, through near-starvation wages, abuse, discrimination or endangerment. In order to stop immoral behavior among actors that care only about money or themselves being punished, we must impose a dollar cost on such behavior, which in part we do with a minimum wage (and other laws regarding employment).
That is the value of the minimum wage. The intent is to distort the market by prohibiting exploitive businesses, if that increases unemployment so be it, we will increase taxes as needed, and take what those people need for subsistence anyway. The 15% that would willingly profit by forcing them to work in effective slavery must be prohibited from doing so, and we must be ever vigilant against them, because another thousand such people reach their 18th birthday every day in our country. That is the ugly fact and point your commentators studiously avoid; perhaps because they are ideological brethren themselves.
After reading all the comments, the one that gets the first place ribbon is Tony’s initial post.
If the minimum wage were a living wage the economy would improve because most of that money would be immediately recirculated within the same community. The minimum wage should also be raised “automatically” by being tied to the cost of living like social security and Congressional pay.
bettykath wrote: “If the minimum wage were a living wage the economy would improve because most of that money would be immediately recirculated within the same community. The minimum wage should also be raised “automatically” by being tied to the cost of living like social security and Congressional pay.”
Your assumption here is that business owners have this bucket of endless free money sitting around that they don’t want to part with, so government must step in to make them pay their employees more. In reality, the situation is more like the government coming to you and making it a law that you have to pay more for every one of your household expenses. Imagine the law mandating that you have to pay twice as much for food, electricity, water, sewer, gas, cars… everything. The government might claim that it is good for the economy to have more money being spent by everybody you are paying, but your objection might be that you just don’t have it.
I sincerely wish I could pay all my employees twice or even three times what I currently pay them. I wish I could make them all millionaires. Reality dictates that I have to pay them what others in society are willing to pay for what they do. I can keep raising my prices to try to achieve that goal, but if I raise my prices too much, people stop buying for the simple reason that they cannot afford it.
Anybody who thinks they are not being paid enough could just work for themselves. They don’t have to find a company to hire them. Many don’t do that because they don’t want to do what every start up business owner without investors has to do. Work for no pay or even less pay until they become established.
In regards to social security and Congressional pay, the fact that Congressmen are paid too much and social security has been financially failing for the last three years, these examples demonstrate a reason not to do the same with minimum wage. Our entire country would follow the path of Detroit.
David, “I still support a pardon for Snowden after reading the article.”
I appreciate the opportunity to agree with you.
David, “I am perceiving that stereotyping is a big part of the problem. When I think about racism, for example, it is not really racism that is wrong. What I mean is, it is not recognizing differences between the races that is wrong. What is immoral about what we call racism is first creating a stereotype of people, then denigrating the stereotype, which finally leads to denigrating particular individuals who fall into that stereotype. Perhaps it would be better if we did not create the stereotypes in the first place, or if we did, at least let’s not denigrate an entire class of people based upon it.”
A good start but isn’t just the negative stereotyping that is racism. It’s the stereotyping by those with the power to control the group of people within the stereotype, e.g. red lining the ability to borrow money or to borrow money at the same rates of those not within the stereotype, jerry-mandering voting districts to minimize their representation in legislative bodies, shortchanging their schools, not hiring them for jobs for which they are well-qualified except for their being of the stereotyped set, disrespecting their cultural heritage, etc.