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.