ANALYSIS: Could the City of SeaTac become a labor union?

by Jack Mayne

While a minimum wage of $15 has caught wide media and public notice, the real devil is in the details and sub-paragraphs of the proposed ordinance that City of SeaTac voters will decide on Nov. 5. Those details and sub-paragraphs would, in effect, require the city government to act very much like the administrators of a private labor union.

No one on the SeaTac city staff or among the measure’s supporters has apparently made any attempt to figure out how much administering this proposed city ordinance would cost taxpayers. If the ordinance were approved, the costs to administer it would have to come from current city operations, and staff would have to be hired or reassigned to ensure that private companies abide by the new law.

Moreover, the proposed ordinance, backed by the Service Employees International Union, has been criticized for covering only some workers –that has generated support and criticism from a variety of sources.

Unions and their members, along with private social agencies and individual low and minimum wage earners, strongly support the passage of the ordinance. Some city residents, many immigrants from east Africa and other workers in the airport area said they just could not support their families on the current $9.19 minimum wage without two or three jobs.

On the other hand, business operators in SeaTac strongly oppose the proposal and will apparently provide financial support to promote its defeat.

Mayor Tony Anderson goes out of his way at every public opportunity to say “the city did not initiate this ordinance.” He notes that at the July 9 council meeting “the city decided not to take action on this ordinance but, rather, to move it forward for consideration of the SeaTac voters on the November general election ballot.”

There has been some speculation that the proposal was a payoff for the $100,000-plus that union organizations poured into the 2011 city election. That resulted in the election of members Mia Gregerson, Dave Bush, Barry Ladenburg and Terry Anderson. All but Anderson, who has been on the Council since the city’s inception, were given around $30,000 each to run their campaigns. Some observers say that amounts to more than has been spent in all campaigns since SeaTac became a city in 1990.

The $15 wage rate
The 3,359-word long proposed ordinance specifies that “covered workers” means “any individual who is either a hospitality worker or a transportation worker.” Employees of the Port of Seattle are exempt from the ordinance.

The proposed minimum pay of $15 has grabbed the media locally and around the nation. Interestingly, the City Council of Washington, D.C., recently passed a minimum wage of $12.50 but its future is in doubt because it would affect mostly employees of Wal-Mart. That company is threatening to leave the city if the measure is enforced.

Covered workers would also get “paid leave for sick and safe time out of the employer’s general assets.”

Nicole Keenan, analyst with Puget Sound Sage, a nonprofit policy organization, says she estimates the initiative would cover 6,100 workers, “the majority of which work for large, multinational businesses.” Keenan said the average worker will get $533 more each a month and would put an additional $39 million a year “into the pockets of SeaTac workers.”

City would administer it
The city would have to do many things if the ordinance passes, and nothing in the proposal suggests any additional revenue.

“The city shall adopt auditing procedures sufficient to monitor and ensure compliance by hospitality employers and transportation employers with the requirements” of the law, the proposal states. It also specifies that the city attorney “is hereby authorized to investigate and, if it deems appropriate, initiate legal or other action to remedy any violation of this chapter; however, the city attorney is not obligated to expend any funds or resources in the pursuit of such a remedy.”

So, if the city attorney is not obligated to spend money, how can City Attorney Mary Mirante Bartolo watch for “potential violations and to monitor compliance” of the ordinance? Obviously, to do the job required will mean spending city money.

City Manager Todd Cutts would have his job, too. Employers “shall retain records documenting hours worked, paid sick and safe time taken by covered workers, and wages and benefits provided to each such employee, for a period of two years, and shall allow the city manager or designee access to such records, with appropriate notice and at a mutually agreeable time, to investigate potential violations and to monitor compliance with the requirements” of the ordinance.

All for free?
“Like that wouldn’t cost anything? Really?” said SeaTac resident Vicky Lockwood at a recent Town Hall meeting. “Would the city have a law on the books and not enforce it?

“City government must be honest with SeaTac voters and tell us what this law is really about. I ask you, city staff … how much will this cost? Why do you refuse to tell voters what they are really voting on? Responsible voting adults know there is no such thing as a free lunch. Whatever it costs will be mean less services and more taxes for SeaTac citizens and businesses.

“The truth is the law will hurt businesses and residences alike. Businesses will have to pay more for the people they employ, then they will have to raise their prices. Citizens will pay more for services, which, by the way will include citizens who don’t get $15 an hour. There will be less jobs so taxpayers will have to pay higher taxes to assist the new unemployed. Seems pretty simple to me.”

Roger McCracken of Master Park told the SeaTac Council on July 23 he wanted to focus not on the ill-effects to his own business but on something that is “a deep, dark secret.”

“What is it going to do to the costs of this city to enforce these new responsibilities? Common sense tells us we cannot take on new responsibilities and not have to reduce some other city services. The city would have to process complex information, and records would have to be kept for the estimated 6,100 people under the proposed law’s provisions.”

Doris Cassan, president of Dollar Rent A Car SeaTac, said employees of SeaTac businesses that would be affected by the ordinance “do not live in SeaTac,” and that city taxpayers “will pay for administering this ordinance without benefits.”

“Should not city staff be focused on creating an environment whereby businesses, employers and employees can prosper and expand,” Cassan asked.

Object to $15
Scott Ostrander, general manager of Cedarbrook Lodge in SeaTac, has formed a new group to fight this “special favors” initiative, noting that the imposition of special wages and benefits for a small segment of private employees would “hurt people and the city as a whole.”

“A proposal that imposes a 63 percent increase in wages above and beyond the state minimum wage, the highest in the nation, has a lot of unintended consequences,” Ostrander said.

Caroline Curtis, director of operations for BMI Hospitality Management, which owns and operates the Holiday Inn Express, the Fairfield Inn, and Hampton Inn, said her businesses employ “over 120 people here in SeaTac.”

“If the minimum wage is increased in SeaTac 63 percent over the state minimum wage, we will be forced to cut staffing and services to our guests,” Curtis said. The company would also have to raise its rates to guests.

Such rate increases and service cuts will mean business lost to hotels in Seattle and Tacoma.

“When this happens, SeaTac will lose more revenue even as they spend more money administering the law, auditing the compliance and responding to complaints,” Curtis said. “The city will be forced to cut services and/or increase taxes to cover the additional cost of administering the law.”

Frank Welton, general manager of the Doubletree Hotel and the Hilton Airport hotel, said he didn’t know “how to fathom a 63 percent increase in some wages. I have never heard of anything like that. I think it is horrible for the initiators of this initiative to pretend that they know how it will affect the businesses in this community. Do they know how difficult it is to stay competitive and to make it work? They put this on the voter’s shoulders – that is not where this belongs. That’s not fair to the voters.”

“This belongs with team members sitting down and negotiating and talking over things that they need, not just wages – all the things they need. We have a collective bargaining agreement. We work with our team; we work with the unions. We make it work. It is not just about the wages. This is simply a bad idea,” Welton said.

Frank Finneran, manager of the Holiday Inn, says the ownership family is planning to build three more hotels in SeaTac and that Cedarbrook’s Ostrander also plans an expansion.

“If this initiative passes, those developments and expansions will not happen,” Finneran said. “This initiative stands squarely in opposition to the economic development goals of the city of SeaTac. There is no way we can let this happen.”

Leanne Segovia, owner of Filo Foods and BF Foods, two Sea-Tac Airport concessionaires, wondered if citizens “realize the cost to regulate all the things listed in this ordinance? Who will pay for this? Will taxes go up? Do the citizens of SeaTac understand this? So, why do we even have this ordinance? I, as a small business, may have to close my doors or cut jobs. This is not what I want to do.”

Michael J. West, a retired business owner, told the City Council that the initiative is “a job killer.”

“Local entry level employees, our kids, will have to go elsewhere for work because any employer forced to pay a minimum of $15 wages is going to hire the most experienced, well educated, most fluent worker they can – not the typical entry level worker. This ordinance hurts the people it purports to help.”

He noted that the “very real” added expenses to administer work rules and the potential of less income because of less employment could mean increased taxes to maintain service levels.

Max Nelson, labor policy analyst at the Freedom Foundation in Olympia, said that last fall voters in Long Beach, Calif., approved a measure requiring hotels with more than 100 rooms to pay employees a $13 minimum wage.

“In response, hotels reduced the number of available rooms and laid off staff. At one large hotel, rooms were reduced from 174 to 99 and 75 employees lost their jobs.”

Favor the $15 wage
Howard Greenwich, research and policy director for Puget Sound SAGE — Seattle Alliance for Good Jobs and Housing for Everyone — responds:

“We have looked closely at the so-called good jobs initiative and how it will affect SeaTac. Living wage policies, similar to that proposed by the so-called Good Jobs Initiative, have been successfully adopted at several airports on the West Coast. Overall, the evidence from these places show that the standards create a win, win, win for workers, businesses and their communities.”

He said the Los Angeles Airport hotels were “doing better” since the high pay law was adopted, with occupancy rates up as well as revenues per room.


3 Responses to “ANALYSIS: Could the City of SeaTac become a labor union?”
  1. Ron Bensley, Jr. says:

    Very good analysis. This initiative, if voted into law, is likely to create huge legal defense bills for the City of SeaTac.

    This initiative interferes with the jurisdiction of the Washington State Department of Labor & Industries and the U.S. Department of Labor regarding the regulation of employment standards in the private sector.

    This initiative would interfere with employment standards legislation as enacted by the Washington State Legislature and the United States Congress.

    This initiative is blatantly discriminatory, as it seeks to have City Government provide preferential treatment to employees in some private-sector occupations, but not to all persons employed within the City of SeaTac.

    This measure may also violate the National Labor Relations Act, the Taft-Hartley Act and similar Federal legislation by interjecting a municipal government into private-sector employer-employee relations.

  2. Pam F. says:

    FYI on the Minimum Employment Standard initiative:

    A caveat to the above program: Barry Ladenburg did contact me to say that he had NOT helped refine the initiative wording.

    Also, a must listen:
    Thank you Mr. Habernicht for speaking up.