Seattle: $15, for Real?

Advocates of a $15 minimum wage surrounded Seattle's city hall on April 23. The city has taken another step toward enacting the first $15 minimum wage in a big city in the U.S. Photo: Working Washington.

UPDATE, May 16: Seattle Mayor Ed Murray has submitted a proposal to the Seattle City Council to increase the minimum wage, but two unexpected elements of his proposal are problematic: a “training wage” and inadequate language for enforcing the new minimum.

It came as a shock to many that the mayor included a “training wage,” which his committee had not recommended and most of labor opposes.

It would allow an employer to seek approval from the state Department of Labor and Industries (L&I) to pay a wage lower than the city minimum, but higher than the state minimum, for the employment of “learners, of apprentices, and of messengers employed primarily in deliver of letters and messages,” as well as of “individuals whose earning capacity is impaired by age or physical or mental deficiency or injury.” The director of L&I would determine limits on time, number, proportion of the workforce, and length of time this training wage could be applied.

Also disturbing is weak enforcement and penalty language. Violation of notice and posting requirements could bring a fine of no more than $125 for a first offense or $250 for subsequent offenses. Impeding enforcement of the ordinance would carry a penalty of $1,000-$5,000. A worker who is paid less than the minimum could look forward to, at most, back pay with interest, and that only after what could be months of delay, and following a conference with the worker and employer to seek a remedy.

In addition, an employer could face fines. But a first violation would result in a warning; a second violation no more than $500 per employee or 10 percent of unpaid wages, whichever is greater; and subsequent violations no more than $500 per employee or 10 percent of unpaid wages, whichever is greater. The maximum penalty would be $20,000.

The mayor’s proposal is cosponsored by all city councilmembers other than socialist Kshama Sawant, and many say they want it adopted without amendment. The 15 Now Coalition, in the meantime, has started collecting signatures for the ballot initiative described below.

On a positive note, the mayor’s proposal makes some relevant findings of fact about the impact of a minimum wage increase. It notes that 34 percent of women, 40 percent of African Americans and Asian/Pacific Islanders, 50 percent of Latinos, and 70 percent of Native Americans in Seattle are low-wage workers; that 24 percent of Seattle residents earn no more than $15 an hour; and that 13.6 percent live below poverty level.

–Paul Bigman

Seattle has taken another step toward enacting the first $15 minimum wage in a big city in the U.S.

An appointed mayoral committee announced its recommendation May 1. Labor and progressive groups are celebrating the proposal as a victory but also pointing to its limitations: a long phase-in for all but the largest employers, and a separate tier in the interim for tipped workers and those with health care benefits.

The proposal, backed by the mayor, now heads to the city council for consideration. Most in Seattle expect the Council to approve the proposal, although some amendment is likely. Meanwhile, one of the two coalitions that has been organizing on the issue will keep pressure on the council by gathering signatures on an initiative to raise the minimum wage more quickly.

Councilmember Kshama Sawant, who won election last fall running as a socialist and who made $15 her central campaign plank, stressed that this is “not the end of the road. What came out of the committee is a reflection of the balance of forces. Our main focus should be to build a broader movement” for progressive change. She also emphasized the campaign’s potential to energize a national movement against economic inequality.

Phase-In Plan

Business representatives made up the majority of the committee. Labor had only four representatives, joined by some pro-labor political and community allies. Nonetheless, the compromise was endorsed by 21 of the 24 committee members. One business representative and Sawant voted no, and the Chamber of Commerce representative abstained.

The recommended plan would create four groups of employers, two large and two small, each on its own phase-in schedule. The last of these groups to arrive at a $15 minimum wage—small employers whose workers receive tips or health benefits—would get there in 2021. (See box for details.)

The four categories would converge by 2025, when all Seattle workers would be guaranteed a minimum of $18.13 per hour. From then on, the minimum would increase 2.4 percent per year.

Washington currently has the nation’s highest minimum wage, $9.32, indexed to increase at the rate of inflation each year. That was put in place in 1998 through a labor-initiated statewide referendum. As an indication of how far ahead of the rest of the state Seattle will be: with a 2.4 percent annual increase, the state minimum wage in 2025 would be $12.08.

Four Ways to $15

Under the committee’s recommendation, “large” employers, with more than 500 workers, would pay an $11 minimum wage starting January 2015. Those who don’t provide health benefits would reach $15 by January 2017; those who do would have a slightly longer phase-in, reaching $15 by January 2018.

A key element of the “large” definition is that franchised employers (for example, McDonald’s) would be defined as “large” if their national franchiser, not the local franchise-holder, had at least 500 employees. But it’s yet to be determined whether the standard means 500 employees or 500 full-time-equivalents. If it’s the latter, even some employers with more than a thousand part-time workers could wiggle out of being defined as “large.”

Smaller employers, with up to 500 employees, would also be in two categories: those that provide health care benefits or whose workers receive tips, and those that don’t.

That’s because, for these smaller employers, a new notion was invented: “guaranteed minimum compensation.” Tips and health benefits could be counted towards this total, which would start at $11 in 2015 and reach $15 in 2019. Non-benefited, non-tipped employees would get the whole amount in wages.

The minimum base wage, underneath any tips or benefits, would begin at $10 in 2015 and rise to $15 by January 2021. So during this interim period, the minimum money wage would actually be lower for those who receive health care or tips than for those who don’t.

Currently, Washington state has no separate minimum for tipped workers, as most states and the federal government do (federally, it’s $7.25 with no tips vs. $2.13 with tips).

All Seattle workers would be guaranteed a minimum of $18.13 per hour in 2025. From then on, increases would be 2.4 percent per year. Labor had proposed increases based on the rate of inflation, as in the state minimum. City attorneys indicated this was not legally possible for Seattle, resulting in the 2.4 percent figure, higher than recent inflation but lower than in some previous years.

Seattle’s annual rate of inflation for the past five years has averaged only 1.5 percent. If that continued, the 2.4 percent annual increases would be greater than the rate of inflation.

Mixed Reactions

The impetus for this struggle came from fast food workers, both locally and nationally, striking to demand a $15 wage. It was bolstered by the 2013 referendum establishing a $15 minimum wage for certain airport-related work in nearby SeaTac, and by Sawant’s run for city council.

Sawant said the “incredible pace of development since the late 2012 fast food walkouts” has meant that “big business and the political establishment were not able to speak out against $15.”

Outside the mayor’s business-majority committee, two different Seattle groups have been working on the issue. 15 Now, formed by and heavily influenced by Sawant’s group, Socialist Alternative, built neighborhood-based committees, with an emphasis on active mobilization: leafleting the public, holding rallies, and preparing for signature-gathering for a referendum. $15 for Seattle represented the views of several large unions, including the Service Employees (SEIU), Food and Commercial Workers (UFCW), and Seattle’s Martin Luther King Jr. County Labor Council, along with some of their allies. Their mobilizations were more limited, and focused more on influencing the city council rather than movement-building.

Few question that the committee’s proposal represents a huge step forward. But most in labor and the progressive movement are troubled by the proposal’s long phase-in to get to $15—and by the inclusion of health care and tips as part of “minimum compensation,” though that would be phased out eventually.

Hilary Stern, director of the worker center Casa Latina, which organizes day laborers, has been a strong supporter of 15 Now. She expressed “a little disappointment that we have to wait seven years for everyone to get to $15, and 11 years to have the same minimum wage for all.”

And Washington State Labor Council President Jeff Johnson notes that the inclusion of benefits and tips may have a negative impact on future legislation in Washington and in other states.

Initiative Will Go Forward

Dissatisfied with the committee’s recommendation, 15 Now plans to gather signatures for an initiative that would amend the city charter. It would require for-profit employers with more than 250 employees to pay $15 starting in 2015. Smaller businesses and all not-for-profits would have a three-year phase-in, reaching $15 (adjusted for inflation) by 2018. It also includes a provision that would allow unionized hotel workers to negotiate a lower minimum wage for employers with substantial health care plans. The specifics of that proposal were announced in mid-March, and approved at a conference of 300-350 activists, including many from across the country. The group will gather in June for a decision on whether to file the proposed charter amendment.

Many in labor were critical of the timing of that announcement. Johnson viewed 15 Now’s decisions on the phase-in period and on what the standards for different employers should be as “premature.” He believes that by defining “small” business as up to 250 employees—and by putting even huge nonprofits, such as hospital systems, on the slower track—15 Now’s announcement made it difficult for labor representatives on the mayor’s committee to hold to a lower number for what constitutes a “large” business.

Some activists in unions that represent not-for-profit workers, such as SEIU and the Office and Professional Employees (OPEIU), were particularly concerned about giving all not-for-profits, no matter their size, the longer phase-in time—something labor was able to remove from the mayoral committee’s recommendation.

On the other hand, 15 Now and its allies don’t like the delays for huge corporations in the mayoral committee’s plan. “There is no reason for McDonald’s and Starbucks to keep their workers in poverty one day longer,” Sawant said.

Speaking for many in and out of organized labor, Jess Spear, lead organizer for 15 Now, suggested that “labor really missed an opportunity to build a movement in the streets.” She said greater mobilization by unions might have won a stronger proposal.

15 Now will move forward with signature-gathering for its initiative, not only to build a progressive movement, but also to preserve options by pressuring the city council to improve the committee’s proposal and safeguarding against any backsliding under pressure from business. Already, at the first city council hearing following the mayor’s proposal, one councilmember raised the idea of a sub-minimum “training wage,” under which new employees could be paid less than minimum wage. Labor opposes this not only because of equity, but also because it’s an incentive to employers to “churn,” constantly hiring and firing workers to keep as many as possible at the lower rate.

While the mayor’s proposal is flawed and compromised, it would have been difficult to foresee this development even a couple of years ago. Clearly, a moderately liberal mayor and the entire city council came to support a $15 minimum wage because a tide of activism produced something approaching a consensus within the city: polls show 68 percent support among Seattle voters for a $15 minimum wage.

As Sawant notes, it became politically impossible for business and its politicians to outright oppose the increase. The question instead became how quickly we would reach the goal, and with what restrictions or exceptions. And it may be that the continued pressure from the 15 Now signature-gathering will result in at least some modest further gains through the council.

Inside-Outside Strategy

Dave Freiboth, head of the Labor Council and a member of the mayor’s committee, sees the proposal as a victory that has drawn on the strengths of both organized labor and the left.

He said the campaign was a rare instance of the labor council working closely with SEIU, which has done the fast food workers’ organizing, and UFCW—neither of which is affiliated with the council. He thinks working out that relationship may have slowed labor’s actions somewhat.

But he also credited 15 Now and Sawant for building pressure, without which the negotiators would not have made the progress they did. Casa Latina’s Stern too said the gains represent a vindication of an “inside-outside” strategy.

Johnson said labor’s efforts on this issue demonstrated “our commitment to the working class, to low-wage workers and attacking income inequality.” He hopes “unorganized workers will look at this and say, ‘We’ve got allies.’”

Paul Bigman is on the executive board of the Seattle-area Martin Luther King, Jr. County central labor council.

Correction: An earlier version of this article stated that 15 Now had begun gathering signatures for its initiative. It has not.

Comments

pbigman | 05/11/14

I'm not sure where brother Finamore sees an "enthusiastic endorsement" from me of the proposal for the Mayor's committee. Like Kshama Sawant, 15 Now's lead organizer Jess Spear and spokespeople for Socialist Alternative, I recognize the proposal as a significant victory for the progressive movement which has fought for a $15 minimum wage; and, also like those folks, I see the proposal as deeply flawed. But I'm a little puzzled by brother Finamore's comment, since nowhere in my article (or anywhere else) have I expressed any enthusiasm for the specifics of the proposal.

Carl Finamore | 05/10/14

I am disappointed in brother Bigman's enthusiastic endorsement of the Mayor's business-dominated committee proposal for a 11-year phased-in minimum wage proposal that includes numerous unjustified delays and exceptions which defeat the purpose of genuine reform. The article makes for a good debate in the pages of Labor Notes but standing alone without challenge, it gives an absolutely wrong impression. In fact, the Mayor's proposal must be strenuously opposed. It is designed to disarm and demobilize growing sentiment for the Fight for 15.