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
Darren: Thanks very much for your help. I will keep that in mind.
Teji:
You might not be aware but the spam filter nixes any comment that contains more than two hyperlinks. I brought back your comment but had to modify your first link to make the posting work. If you need more than two hyperlinks for your response, you can make another comment to keep the total less than 3
PDM: Thanks. We are all here to agree, disagree, learn, unlearn, relearn, interact.:-)
I have no idea why one of my main responses is:
Your comment is awaiting moderation.
@ PDM: Thanks. We are all here to agree, disagree, learn, unlearn, relearn, interact.:-)
davidm2575 writes:
[Here’s another article that says it is the franchisee who sets the wage:
“About 90 percent of McDonald’s 14,000 U.S. restaurants are operated by franchisees who set pay rates for their workers.”
Link to articles.chicagotribune.com/ for article ct-biz-0725-mcdonalds-thompson-20130725_1_minimum-wage-market-share-burger-giant
David: I have no idea what you read in the article or just loved the title. It seems for you and for some others, the ends justify the means no matter what so whatever your agenda may be should have a voice under any circumstances. Well, it does not work like that.
Let me quote from the same article:
“McDonald’s Chief Executive Don Thompson said Wednesday that he’s proud of the opportunities the burger giant creates for entry-level employees”.
How much does the entry job pay?
“The company also took heat this month for a financial planning website made available to its employees about five years ago. Critics have described the default budget settings, such as a $25,000 household income, as a sign that the company is out of touch.”
What do you think the above means?
[Here’s another one that says:
“McDonald’s Corp. and Burger King Worldwide Inc. say that they don’t make decisions about pay for the independent franchisees that operate the majority of their U.S. restaurants.”
http://hotair.com/archives/2013/08/29/workers-set-to-strike-fast-food-restaurants-for-higher-wages/%5D
From this hotair.com :
“For the restaurants it does own, McDonald’s said in a statement that pay starts at minimum wage but the range goes higher, depending on the employee’s position and experience level. It said that raising entry-level wages would mean higher overall costs, which could result in higher prices on menus.
“That would potentially have a negative impact on employment and business growth in our restaurants, as well as value for our customers,” the company said in a statement.”
What does the above mean to you?
You do not have the internal memos nor do you have the graphs showing expectations and how to reach them which include minimum wage.
David: Both articles prove what I am talking about. McDonalds expects some returns from us and tells us how to get them for them.
Following are interesting articles that happen to agree with my point of view.
http://www.dailyfinance.com/2013/09/18/mcdonalds-smart-reasons-pay-15-an-hour/
http://www.outsidethebeltway.com/cents-more-for-big-macs-could-mean-thousands-more-for-workers/
Bron writes:
[Teji Malik:
Good news, you should be able to raise your employee’s hourly rate without any trouble from corporate.]
Bron. I can not. BTW how is Bron’s Burgers doing?:-)
Teji Malik wrote: “I have no idea what you read in the article or just loved the title.”
The link was just my source. I wrote: “Here’s another article that says it is the franchisee who sets the wage: “About 90 percent of McDonald’s 14,000 U.S. restaurants are operated by franchisees who set pay rates for their workers.” ”
The point was that several reputable news sources claim that franchisees like you set the wage of its employees. You previously claimed that corporate sets the wage and that you are not allowed to pay your employees more. You own the franchise, right? Or does corporate own it?
Teji Malik wrote: “What does the above mean to you?”
It means that if you raise the wages that you pay your employees, that could have a negative impact on the growth of your business and upon the value that customers receive.
Teji Malik wrote: “Both articles prove what I am talking about. McDonalds expects some returns from us and tells us how to get them for them.”
Right. We agree about that. But the point was about whether you could pay more to your employees or not. I suspect that answer is that perhaps you cannot change how much you charge for a burger, which would pass the cost on to the customers. But Bron was asking if you could pay your employees more and just eat the profit that comes to you. Your answer was that corporate would not allow you to do that. You indicated that they mandated that you had to pay minimum wage. That’s not true, is it. The truth is that you are not willing to pay your employees more. You want corporate to make it where the customers pay more and your employees get paid more through that mechanism.
This is the problem that people like Bron has with socialist and liberal thinking. They always want someone else to pay. They never seem to consider how they can pay or sacrifice to achieve the social justice that they think needs to happen.
davidm2575 writes:
[I mentioned that I relied upon my wife’s income at the time. She is a CPA.]
David: You and I know that is not totally true. You did get money from your start up business in different forms as gas for the car, coffee etc. etc. and you also got refund from the IRS for your business deductions. If your spouse is helping you with her income, then your business model is not the right one.
Teji Malik wrote: “You and I know that is not totally true. You did get money from your start up business in different forms as gas for the car, coffee etc. etc. and you also got refund from the IRS for your business deductions. If your spouse is helping you with her income, then your business model is not the right one.”
No, what I said was true. My business is developing computer software, so more than twenty years ago, I had to invest time and money into creating a product before I could get paid. Without a product, nobody buys. While many businessmen put their money at risk, I had no money. I put at risk my time and labor by working without pay. Eventually I had to add some side jobs, like cleaning offices for a little money, doing computer repair, and selling computers. But once I had a solid software product to sell and I had some income from selling it, I stopped doing those other type of jobs. My wife eventually left the big accounting firm she worked for and started a private practice. As the family grew, she let clients go until her full time job has become our children and running the household.
I have never seen a tax refund from the IRS. I have had many discussions with my wife about how different business people I knew were claiming large deductions for all kinds of things. She would tell me that what they were doing was dishonest and illegal even though they had not been caught and probably never would be caught. She is very strict about what is allowed and what is not. She is my CPA for my business, so she is boss about those things. I don’t deduct for gas for the car, or coffee, or anything not related to my business. I try to tell her, “but I use my car to get me to the office.” Nope. Law is that such is not a business expense. If I have to travel out of town on business, yes, but not traveling to office from my home. She is super strict about separating business expenses from personal expenses. If I don’t give her a receipt that she can verify is a bona fide business expense, then she will not deduct it as a business expense. As a result, I pay thousands in taxes every month. When tax return time comes, I don’t get a refund.
davidm2575 writes:
[Teji Malik wrote: “East Germany was under the communist rule where as West Germany- now Germany- was and is a socialist country and like many other socialist countries in Europe, they are one happy lot.”
You may want to edit the Wikipedia entry if you think they have it wrong.
Wikipedia says:
“During this period, the NATO-aligned West Germany and the socialist East Germany were divided by the Inner German border.”
“The West German government was known to be much more decentralised than its state socialist East German counterpart, the former being a federal state and the latter a unitary one.”
http://en.wikipedia.org/wiki/West_Germany%5D
David: Was USSR a communist country or not along with all the Easter bloc countries which were in cahoots with the USSR?
I am from Europe. I know the difference between the communist country and the socialist one. I would not quote Wikipedia to prove my point.
Eastern Europe was all communist whereas Western Europe is social democracy where things like Health care, paid vacations longer than in the US and other socialist things are common and welcome.
The right wingers keep on breast beating to their fervent followers that we would become Europe if we keep on pumping money into the market. They advocate austerity.
Guess what? UK and many other counties failed when they tried the Conservative idea of austerity. When UK started printing Pounds and Germany Euros and pumped into the markets, the trend started reversing.
Teji Malik wrote: “Was USSR a communist country or not along with all the Easter bloc countries which were in cahoots with the USSR?”
I’m not saying you are wrong to call them communist, but the terms communist and socialist are not mutually exclusive. The party that ran East Germany was called the Socialist Unity Party of Germany. It was formed by the merger of the Social Democratic Party of Germany and the Communist Party of Germany.
I think that claiming the socialist label does not apply is inaccurate. I think the way modern socialists try to distance themselves from communism is disingenuous. The rhetoric of modern socialists is the same rhetoric that we heard from communists in the 50’s and 60’s. Many modern communists meet regularly with socialists. I was one invited to speak at a university by a communist. The venue was sponsored by a socialist group that this communist helped lead. Most members identified themselves as socialist rather than communist.
Teji Malik wrote: “I would not quote Wikipedia to prove my point.”
You misunderstood. I did not quote Wikipedia to prove my point. I suggested you edit the Wiki to correct it and make it better. Perhaps with your knowledge, you are able to make the Wiki entries more accurate.
Teji Malik wrote: “When UK started printing Pounds and Germany Euros and pumped into the markets, the trend started reversing.”
So you believe Credit and Borrowing money is the answer to creating a good economy. But do you believe that borrowing should be done in moderation? Do you believe in any caps on printing money?
Teji Malik:
Good news, you should be able to raise your employee’s hourly rate without any trouble from corporate.
DavidM:
I believe that, so if Teji is being told he cant pay more then he is not being told the truth.
PDM:
not if they are breaking the law, no, it would not be for me.
Franchises are a good way to get in business, fuk the bootstraps.
Bron, I suspect a franchise business is not for you. Bootstraps, Bron. Bootstraps.
pdm:
but that is what the franchise fees are for. As long as you pay those, corporate should not be setting wage rates for you. Especially if they have corporate stores near yours, personally that sounds illegal to me. Making a competitor charge the same wage rate or loose their business, WTF, that aint right. And doing so to maintain the corporate stores profitability, that is almost like bid rigging.
The more I think about it, the more I think Teji is mistaken.
Bron, when you own a franchise business, you agree to follow corporate regs. One thing to think about, corporate provides substanial marketing support. Don’t like it? Start Bron’s Hamburgers.
Teji,
It’s informative and a pleasure to read your comments. Thanks for hanging in there.
AP, thanks for the Amy Davidson. Interesting stuff and I agree about the oath issue. Hell, I’m annoyed by the Pledge of Allegiance. But I do think that Snowdon has over-reached by exposing the foreign policy. And I think the US would be silly to think they can “claw back” documents that are still out there. I’m not happy that they are held by Greenwald. I’m certainly not a hawk or a hardliner, but it’s easy to guess how I feel about stuff being held by the Chinese or the Russians.
Teji/DavidM:
How can BK corporate set wage limits? Isnt that restraint of trade? Arent there laws against that type of thing? If I ownded a BK franchise and coroporate told me I could only pay minimum wage, I would call the Justice Department. Fuk that, I’ll do what corporate tells me to do to a point.
If that is what BK corporate is doing they should be visited by the Feds. In my opinion that is criminal. No one should be able to tell a business owner what he can or cannot pay his employees. The business owner, based on market signals, should set wage rates.
Bron wrote: “The business owner, based on market signals, should set wage rates.”
That would make sense to me also. I found this article about a franchisee tampering with time sheets to lower pay. Notice what McDonald’s USA said about it:
McDonald’s USA denied the lawsuit’s allegations in an emailed statement.
“It is our company policy to comply with all laws, including local, state and federal employment laws,” the statement read. “This lawsuit involves allegations regarding the employment and payment practices of an independent McDonald’s franchisee. McDonald’s franchisees are independent business owners who set their own employment policies and are the sole employers of their crewmembers and restaurant managers.”
Here’s another article that says it is the franchisee who sets the wage:
“About 90 percent of McDonald’s 14,000 U.S. restaurants are operated by franchisees who set pay rates for their workers.”
http://articles.chicagotribune.com/2013-07-25/business/ct-biz-0725-mcdonalds-thompson-20130725_1_minimum-wage-market-share-burger-giant
Here’s another one that says:
“McDonald’s Corp. and Burger King Worldwide Inc. say that they don’t make decisions about pay for the independent franchisees that operate the majority of their U.S. restaurants.”
http://hotair.com/archives/2013/08/29/workers-set-to-strike-fast-food-restaurants-for-higher-wages/
DavidM:
Which is my contention, namely that the more free a countries economy, the more they adhere to a capitalist system, the better they do. If it wasnt for capitalism socialism could not exist. When almost pure socialism does exist you get East Berlin and Detroit.
Some mean-spirited comments up-thread, IMO.
http://meta.wikimedia.org/wiki/File:Howtonotbeadick.jpg
pdm:
You might find this interesting:
Amy Davidson of The New Yorker responds to the Fred Kaplan piece:
http://www.newyorker.com/online/blogs/closeread/2014/01/did-edward-snowden-break-his-oath.html?mobify=0
nick spinelli
When I was a juvenile probation officer I had 2 kids on my caseload from the same family. One was Anthony, the other Tony. That experience is helpful w/ the new Dave[welcome!] and David.
===========================
So why did you invite them over?