by Jack Mayne
In dueling news releases this week, each side in the minimum wage and controlled working conditions initiative slated for the Nov. 5 ballot said the measure was either horrible or great for the workers and the citizens of SeaTac.
First, Puget Sound Sage, a local labor oriented “progressive policy think tank,” issued a release suggesting the measure would “boost economy and create jobs” that would result in an “annual $54 million income boost for the region.”
Wrong, says Common Sense SeaTac, the SeaTac business coalition fighting the proposed minimum wage initiative. The “labor-sponsored report … exposes the false arguments” of the backers.
“The Puget Sound Sage report released today (Sept. 25) finally acknowledges the truth of what we have been saying all along,” said Scott Ostrander, co-chair of Common Sense SeaTac. “The vast majority of workers who stand to benefit don’t live in the City of SeaTac” and won’t benefit from a voter approved initiative.”
The initiative has been labeled the “$15 an hour minimum wage” measure, but its detailed requirements go much farther, setting up a complex set of rules affecting airport employees and employees at large hotels and rental car companies, but exempting small businesses in the community.
The city would have to ensure companies that are affected are carrying the specifics of the measure, setting up inspectors and record facilities to accomplish its provisions. No one, it appears, has attempted to determine what the cost of the SeaTac city budget will be if the measure passes.
The proponent’s side
“The SeaTac living wage initiative is an important new front in the battle to offset increasing inequality, the Sage release quotes Dan Jacoby, economics professor at the University of Washington. “With virtually all our recent economic gains going to a small percentage of earners at the top distribution of income, we are past the point where we have to worry that this wage increase can damage our economy.”
“This initiative promises to propel wages, not only in SeaTac, but more broadly as well.”
Then, the Sage study says Proposition 1 “will have large and positive effects on household income in the region and direct benefits to the residents of SeaTac.”
Sage lists the “key findings” of its report:
- “Over 6,000 workers will receive an average wage increase of $3.97, or about a 36 percent boost.
- “Covered workers would see earnings rise from an average of $17,700 to $24,000 per year. Workers will spend their increased earnings at local businesses, restaurants and stores.
- “The paycheck boost along with worker spending will result in a total of $54 million in increased household throughout the region.
- “15-20 percent of this household income boost will be received by SeaTac residents, resulting in increased revenues for small businesses and the City.
- “Wage increases under Proposition 1 could be absorbed by marginal price increases between .5 percent and 1.5 percent for the customers of covered businesses.
- “The majority (68 percent) of revenues enjoyed by covered employers comes from visitors to the region, resulting in a net economic gain.”
In order to get the region’s economy “growing again … we must invest in the local job creators, the thousands of people who buy consumer goods, groceries, and gas in small cities like SeaTac,” said Nicole Keenan, a Puget Sound Sage policy analyst. “Our analysis of the SeaTac initiative shows how corporations that do well in SeaTac can do the right thing for their workers and make the local economy really take off.”
The opponent’s side
Common Sense SeaTac says that while “Sage still tries to assert – without a shred of hard evidence – that a few more workers might live in SeaTac, the two sides now fundamentally agree, the vast majority of workers who would benefit live outside of SeaTac.”
That means the benefits “any supposed economic benefit will be dispersed across a wide region, with little if any perceptible effect in SeaTac.”
If the proponent’s “are now correct that Proposition 1 creates $54 million in new payroll, then at least $49 million leaves the city.”
The Common Sense SeaTac group cites a recent Washington Research Council report that said the City of SeaTac has a “rather ‘porous’ economy, making it unlikely even the other $5 million would all be spent there.”
Common Sense SeaTac asks, “what are the costs to SeaTac?” Nothing in the legislation produces a stream of new revenue to pay the city’s cost of administering it.
It suggests the supporters “don’t want to discuss the burdens they would place” on city taxpayers, claiming the measure “takes city resources away from public safety, streets, and parks, to pay for overseeing, auditing, and enforcing what is essentially 6,000 private-sector worker union contract.”
Further, the backers of the initiative “also are unwilling to acknowledge what studies always show happens when wages are dramatically increased.
The opponents say the “magical world” of the Puget Sound Sage report increases labor costs by “as much as 63 percent doesn’t cost jobs, no local consumers pay higher prices, and the city magically can fulfill the dictates of the law at no cost.”
“In the real world, as the Washington Research Council report showed, Prop 1 will cause the loss of approximately 5 percent of entry-level jobs in the SeaTac businesses affected – at least 300 individuals, and further, employers will gradually replace an estimated 5 percent to 10 percent of their existing workers with more experienced and educated employees – another 300 to 600 individuals.
“Most of these job losses will be among teens and immigrants, those with the lowest skills and the greatest need to get on the first rung of the work ladder, will have it taken away by the higher skilled employees attracted to the higher wages.”
Finally, the business group says the “another revelation … perhaps not intended for wide public consumption, is the calculation that the average wage of the workers covered by the SeaTac initiative is NOT the state minimum wage of $9.19 per hour… rather, their current average wage is $11.03 per hour. This is not including tips earned by many of these workers.
Washington’s $9.19 per hour minimum wage was the nation’s highest until this week. Reuters reported that California Gov. Jerry Brown signed a law Wednesday (Sept. 25) that will raise the “minimum wage to $10 per hour, with the increase to take place gradually through the start of 2016.”