SeaTac Approves a $15 Minimum Wage: Is Seattle Next?

The subject of the minimum wage has been much in the news of late. Fast-food workers have been organizing demonstrations to demand a $15 minimum wage in order to be able to support themselves. Walmart has been under pressure for some time because of its low wage policies. President Obama asked earlier this year for a rise in the national minimum wage from the current $7.25 to $9, and has recently been talking about a goal of $10.

Obama has also been talking seriously about the threat income inequality poses for our nation. It has become quite clear over recent decades that the inevitable evolution of an unconstrained free-market economy will lead to ever-growing income inequality as more earnings accrue to the owners of capital and less to laborers. This divergence has led to stagnant or falling real wages for most workers in the nation.

The one possible solution that involves little political upheaval and directly addresses the issue at hand is to raise the floor on wages to counter the decline that is occurring. Much has been claimed about what effects might follow from a significant increase. Clearly, some people would lose their jobs, but, just as certainly, other jobs would be created by the increased spending that would take place. Economists are coming around to the view that such increases in the minimum wage are likely to have a small effect on the total number of jobs.

Politically, some would view this as a redistribution of income from the wealthy to the poor and oppose it for that reason. It is probably more accurate to view such a move as a redistribution of profit between various industries. Some would see costs go up and profits decrease, but others would benefit from the increased demand created by the higher wages.

An increase in the minimum wage might have a greater effect on income inequality than most suspect. Employees tend to view their compensation with respect to the premium they are paid over the minimum wage. If fast-food workers were to attain a $15 wage, do you think the auto companies could pay starting auto workers $14 an hour? Raising the minimum would likely send ripples well up into the higher wage brackets.

A large boost in the minimum wage is an experiment waiting to happen. And now it looks like someone has taken that first step.

Steve Coll has an interesting note in The New Yorker where he discusses the approval of a $15 minimum wage for some workers in the city of SeaTac. If that name sounds familiar it is because that town is where the Seattle-Tacoma airport resides.

"Sea-Tac, the airport serving the Seattle-Tacoma area, lies within SeaTac, a city flecked by poverty. Its population of twenty-seven thousand includes Latino, Somali, and South Asian immigrants. Earlier this year, residents, aided by outside labor organizers, put forward a ballot initiative, Proposition 1, to raise the local minimum wage for some airport and hotel workers, including baggage handlers. The reformers did not aim incrementally: they proposed fifteen dollars an hour, which would be the highest minimum wage in the country, by almost fifty per cent."

Needless to say, this bold move aroused considerable local activity.

"Business groups and labor activists spent almost two million dollars on television ads, mailings, and door knocking—about three hundred dollars per eventual voter."

The election was held on November 5 and the proposition passed by 77 votes out of a total of about 6,000. Coll suggests that a recount might possibly overturn the results. However, an editorial from the Seattle Times dated December, 8, 2013 contains this comment:

"BACKERS of a $15 minimum wage who are celebrating victory in SeaTac now aim to seize the day in Seattle. They do have the political momentum. What they don’t have is a sense of responsibility or of any information on the actual effects of the law they favor."

There is no mention of a recount threat, but there is the comment about the possibility Seattle voters might be interested in a similar move.

"The Seattle City Council has approved $100,000 for a study of the issue. The study should find real information on jobs gained and lost, consumer spending and business investment in SeaTac before it reaches a conclusion. Let’s find out what happens in that small city before making a decision for a population 23 times larger."

SeaTac is an ideal place to begin a minimum-wage movement. Because it contains the regional airport it captures a number of employers with very deep pockets, including major airlines and hotel chains. These businesses would have a difficult time saying that they cannot afford to pay more to a hand full of baggage handlers or maids. However, it is faulty as an economic demonstration project. The proposition approved does not include all workers. It would take a place that is big and diverse such as Seattle to perform the appropriate experiment.

The idea of a significant rise in the minimum wage is not politically impossible. As Coll points out:

"Twenty-one states and more than a hundred counties and cities have enacted laws that set minimums above the federal one. Before SeaTac’s vote, an Indian reservation in California had the highest local minimum in the country, of ten dollars and sixty cents. San Francisco’s is just a nickel less. But political support for higher wages extends well beyond Left Coast enclaves. According to a Gallup poll taken earlier this year, a majority of Republicans favor a minimum wage of nine dollars. That reflects a truth beyond ideology: life on fifteen thousand a year is barely plausible anymore, even in the low-cost rural areas of the Deep South and the Midwest."

All great movements start with a single step. Stay tuned!