ANALYSIS: What you don’t know about SeaTac’s Proposition 1


by Jack Mayne

The least important thing you need to know about SeaTac’s Proposition 1 is the proposed minimum city wage.

The most important thing is a fact still unknown to the city administration, to the unions backing the measure and, especially, to the voters and taxpayers of SeaTac. That illusive fact is how much will it cost to administer and enforce the law that will turn City Hall into a de facto labor union headquarters. Whether voters in the city are pro-union or anti union, no one actually knows what Proposition 1 will cost taxpayers in dollars and cents.

Virtually every human being even only occasionally interested in the news has heard that the measure will make the relatively small city surrounding the big airport have a minimum wage of $15 an hour, a 63 percent increase over the state’s current minimum wage of $9.19 (slated to increase a few cents on Jan. 1). The SeaTac measure has been covered in media far away. Reuters international news service, the Christian Science Monitor, the new Aljazeera cable news channel, The Washington Post, KBOI television in Boise, the South Florida Times, many area and national television outlets and on-line, plus just about every sector of the food and travel business have done reports on the initiative.

In addition, Democrat party leaders, from the Seattle mayor to virtually every city, state and national Democratic official, have tripped over one another to endorse the measure in SeaTac and anywhere else it has popped up.

All of that and still SeaTac residents have no real idea what it will cost taxpayers – and to even the extent it could inhibit job growth in the city.

To those struggling to provide for themselves and their families, the increase sounds like a godsend.

To those who run businesses, big or small, the amount sounds like a potential death-knell or at least a forced minimization of their employee expenses.

Study, study, who’s got the study?
The matter has been studied by think tanks and organizations representing all sides.
Proponents’ major study was done by liberal think tank Puget Sound Sage which concluded “increased worker spending will multiply, resulting in an annual $54 million income boost for the region and more than 400 new local jobs. This increase in earnings and spending will mean more revenue for local governments to pay for improved infrastructure such as schools, parks and public safety.”

Along comes the conservative Washington Policy Center, which, surprise, concludes just about the exact opposite. Sure, there will be an increased income but “it is important to remember that a decision to increase the minimum wage is not cost-free; someone has to pay for it. Some workers may have more money to spend and inject into the economy, but that money would come immediately from employers, and ultimately from consumers, and even the workers themselves.

“So the $54 million the study says would be injected into the local economy is not free, it would be extracted from the 72 businesses the study says will be impacted. The end result would be an average cost increase of up to $722,500 per covered employer, per year.”

Lastly, the Freedom Foundation, a Washington state conservative think tank, said in a report released Thursday, Oct. 10, that the unions in the city “don’t live up to Proposition 1’s employment standards” and it asks, “why don’t they pay their own employees accordingly?”

The Freedom Foundation said its study “finds that the seven local labor unions which are the primary backers of Proposition 1 fail to provide many of their own employees with full-time, $15 an hour jobs, though they appear quite able to do so.”

It says 64 percent of union employed workers earn less than “the living wage for a single adult with two children” and 26 percent earn less than $15 an hour even though local unions “are generating record revenue.”

“The findings suggest that instead of helping workers on principle, unions are more interested in passing Proposition 1 to bolster their organizing efforts,” wrote the Foundation.

Costs for SeaTac taxpayers
Washington Policy Center noted the Puget Sound Sage study is silent on the cost to SeaTac ratepayers to monitor and ensure businesses are obeying the law.
One source suggests the cost to SeaTac’s taxpayers could be $750,000 to over $1 million a year.

Proponents make “no mention … of the cost to the City of SeaTac, which would be responsible for monitoring, investigating and enforcing the new law that would only benefit 15 percent to 20 percent of SeaTac residents. The costs associated with administering the new law would be born solely by the City of SeaTac, and these new duties would likely mean more expenses for the city, while just a fraction of the wage gain would be enjoyed by SeaTac residents.”

So, the money will either have to be raised by increasing taxes and fees, or it must be taken from the other parts of the city budget.

“So perhaps other surrounding local governments would enjoy increased revenue when their residents who work in SeaTac come home and spend their new wages, because only the businesses and government of SeaTac would be paying the tab.”

While the union-supported initiative would increase wages and require strict rules on who gets hired for transportation or restaurant jobs, the unions and smaller businesses are exempted from the proposed law.

“Crucially, the (Puget Sound Sage) study fails to even mention the fact that unionized businesses would be essentially exempt from Proposition 1’s labor mandates,” writes the Policy Center’s Erin Shannon. “The exemption could encourage non-union businesses to unionize for the sole purpose of taking advantage of the provision allowing union shops to pay less than $15 per hour and no mandated paid sick leave. So the reality could be much fewer than 6,300 workers earning the higher wages and other benefits when factoring in current unionized businesses that could pay less than the new law mandates and non-union employers that could opt to unionize to avoid paying the higher wage.”

The SeaTac Blog asked the proponent’s spokesperson, Heather Wiener of “Yes! For SeaTac”, to comment on the Policy Center statements. She initially agreed to do so, but did not.

The Policy Center suggests the Puget Sound’s study “dismisses any negative impacts a very high minimum wage may have on employers and workers, the fact is whenever government imposes a higher cost of staying in business, in this case through a proposed mandatory $15 per hour wage, employers are forced to raise prices or take other mitigating steps.

“It is not reasonable to believe 72 employers will absorb an increase in their cost of doing business of this magnitude.”

The Center’s comments suggest “mitigating steps include” laying off employees or reducing their hours, reducing employee benefits, giving smaller pay increases, cancelling expansion plans or relocating to adjoining cities such as Burien, Tukwila and Des Moines and even going out of business.


Comments

11 Responses to “ANALYSIS: What you don’t know about SeaTac’s Proposition 1”
  1. Vicki Lockwood says:

    This article should be required reading before anyone is allowed to vote on SeaTac’s Proposition !. In addition, the Progressive Liberal Fab 4 on the City Council should each be required to read this article out loud in front of the citizens of SeaTac. Thanks, Mr. Mayne, for such a thoughtful article.

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  2. Pam F. says:

    Mr. Mayne,

    Thank you for putting together this enlightening analysis.

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    • Ron Bensley, Jr. says:

      Pam F: Something all voters in the City of SeaTac should contemplate: why exactly is there a LOT of new construction of businesses in the City of Tukwila and the City of Renton, and none in the City of SeaTac?

      Anyone care to speculate why the boundaries of the mega-sized business park being developed on S. 180th Street end exactly at the border between Tukwila and SeaTac? Anyone here care to hazard a guess?

      Job creation requires a reasonably attractive business environment. Although the politics of Tukwila and Renton lean Democratic, voters in those cities nominate and elect a lot of what I’d call “lunch bucket Democrats” – who actually put a premium on JOB CREATION to put people to work.

      Local job creation doesn’t require elected officials to be dogmatic followers of the politics of the U.S. Chamber of Commerce or Association of Washington business, it just requires some rational common sense about how job creation occurs in the “real world”, not in some idealistic fantasy utopia.

      So in closing, once again I’ll ask: why exactly is a lot of business development and construction occurring in the City of Tukwila and City of Renton, but NOT in the City of SeaTac?

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  3. Doris Cassan says:

    Yes, Mr. Mayne, a a thoughtful article.

    Just a few thoughts – Actually a List of 10 why one should NO on Proposition 1

    1. It is discriminatory.

    2. It pits employers, employees and city against each other.

    3. It was written by a lawyer on behalf of outside interests, not for the citizens of SeaTac.

    4. It will benefit only a very few of SeaTac residences.

    5. It will require the City of SeaTac to administer the proposition; thereby causing SeaTac taxpayers to foot the bill.

    6. It is a very, very intrusive piece of legislation allowing a government body to be involved in the day to day operations of private enterprises.

    7. It mandates how a company can hire employees thereby eliminating opportunities for local young men and women entering the work force.

    8. It will give pause to other companies that might wish to locate in the city of SeaTac. If this type of intrusion happens to one industry, it could happen to another.

    9. It will give current employers no other choice than to look at methods of automation to operate their businesses or move to another city.

    10. It has enticed the pro proposition group to make up a bunch of untruths or half truths to promote it. And the promoters themselves do not abide by the same rules as it wishes to mandate to others.

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    • Ron Bensley, Jr. says:

      Doris: I strongly agree with you. Prop 1’s proponents delude themselves into thinking that no jobs will be cut, no businesses will relocate just outside the municipal boundaries of SeaTac, etc.

      Prop 1’s proponents need to get a life – I think too many of them believe in the Easter Bunny or the Great Pumpkin!

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  4. Interesting says:

    I find it interesting the unionized businesses are exempt. It makes it clear that this measure is solely to give the unions a competitive advantage.

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  5. Janice Taylor says:

    I am so disgusted that we citizens of Seatac are being made pawns in a game by unions and politicians. Why am I suddenly channeling a scene of the movie, “Blazing Saddles”? “Mongo only pawn in game of life.” Well, you Hedley Lamars in our game, do remember that Mongo and the good townsfolk of little Rock Ridge became a nightmare for your movie namesake. We Seatac townsfolk can do it, too.

    So the unions are exempting themselves from the minimum wage. What a bunch of hypocritical, deceitful scoundrels! Why would we think they have ANY noble motives? BECAUSE THEY DON’T! Like Hedley Lamar, they scheme and maneuver, rubbing their hands together at the thought of the money they’ll make. Like Gov. LePetomane, their pocketed govt officials are so captivated by self-importance, they fail to recognize how brazen and idiotic they appear.

    A big part of me feels we need a recall election for our council Gang of Four. (I do think they’ll try to find a way to reject even valid signatures, so beware.) Much easier would be to just tar and feather them. Or as our pioneer forebears realized, sometimes when your town is under siege by hostile forces, you just have to take up the shotguns and pitchforks and run them out.

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  6. Dorinda says:

    And don’t forget, this is NOT an initiative for the City. It is an initiative decided by the City, for the benefit of a few people who work for a selected few industries. Oh, and the Unions…

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  7. Ron Bensley, Jr. says:

    Although I and my wife Sandra Cook-Bensley just recently moved out of the City of SeaTac, Proposition 1 will cause a lot of headache, loss of jobs and loss of sales-tax revenue for residents who actually LIVE in SeaTac.

    Proposition 1 will NOT improve the standard of living of SeaTac citizens. Proposition 1 will reduce the number of jobs in the City. Proposition 1 will exacerbate the economic difficulties SeaTac faces relative to other areas of King County.

    In the State of Washington, our State Constitution does not grant authority to municipal governments to act as a de facto collective bargaining agent for private sector employees.

    Further, municipal governments are not granted authority under the State Constitution or by statute to enact or regulate employment standards for private-sector workers. The power to enact employment standards legislation is vested in the Washington State Legislature, not with the City either by Council action or by citizen referendum.

    Additionally, municipal governments are not authorized by statute to enforce employment standards. That authority is granted by statute to the Department of Labor and Industries, which is charged with “liberally construing” employment standards laws to protect Washington’s workers.

    Proposition 1 is patently unenforceable and possibly illegal on its face, because it circumvents the State Government’s pre-emption of employment standards legislation and enforcement. IF a voter-enacted change in employment standards were to be lawful, it would need to be via a STATEWIDE Initiative or Referendum measure, not a MUNICIPAL proposition.

    Proposition 1 is also defective in that the City would be mandated to enforce and regulate employment standards, again in violation of the State government’s vesting of such authority with the Department of Labor and Industries. Curiously, Proposition 1’s proponents were ignorant enough to not even provide a funding mechanism for the expenses which the City would incur were it legally obligated to enforce this bizarre law.

    For those of you who are actual voters in the City of SeaTac – do not be fooled by the smoke-and-mirrors misinformation by Proposition 1’s proponents. VOTE “NO” on this flawed, defective and unenforceable ballot measure.

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  8. Dorinda says:

    To all the politicians and outside interest groups that are trying to influence
    Seatac voters to foot the bill for a private union of 6000 at SeaTac taxpayer’s
    expense:

    Go pee in your own bathtub!

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