Sawant goes to City Hall to push $15 minimum wage

The incoming Socialist councilmember calls Ed Murray's four-year timeframe too slow and isn't so keen on small business exemptions.
Kshama Sawant and supporters at City Hall on Monday.

Kshama Sawant and supporters at City Hall on Monday. Photo: Bill Lucia

Offering few new details, incoming City Council member Kshama Sawant on Tuesday called for implementing a $15 per hour minimum wage in Seattle as soon as possible.

The newly elected Socialist's push for the wage increase has attracted national attention as cities around the country turn an eye toward income inequality. Mayor-elect Ed Murray has said that he favors raising the wage to $15 by the end of his four-year term.

“If by that he means that any legislation or any bill will be put in place at the end of four years from now,” Sawant said during a press conference at City Hall, “then I think that is too late.”

Sawant said, as she did throughout her campaign, that she would like to see the wage in place in 2014.

Murray is assembling a team to work on the city’s income inequality issues. He will announce the team members and his plans to address income inequality during a press conference on Thursday. Sawant said she would meet with the Mayor-elect later this week.

Washington’s minimum wage, at $9.19 per hour, is the highest mandated by any state, according to the U.S. Department of Labor. SeaTac narrowly passed a ballot measure in November that will up the minimum hourly wage in that city to $15 for some workers. Currently, San Francisco has the highest minimum wage for a city, $10.55 per hour; it is set to rise to $10.74 in January. The Washington D.C. City Council approved an $11.50 wage floor on Tuesday but it won't go into effect until 2016.

Among some of Seattle’s small business owners, rumblings about the wage increase are cause for concern.

“The 15 dollar piece is a big transition we’re talking about,” said Michael Wells, executive director of the Capitol Hill Chamber of Commerce. “If you do it overnight, you’re going to have a lot of freaked out small businesses.”

Wells used to own a Bailey/Coy Books in Capitol Hill and will serve on Murray’s income inequality team. While he supports discussing the wage increase, he said that policymakers should consider differences between business models and sizes. Among the possible factors: whether workers collect tips, the number of workers a business employs and the amount of revenue it earns.

“There’s a difference between Chipotle or Red Robin, and Rancho Bravo on Broadway,” Wells said, adding that it would’ve been tough for him to pay his bookstore employees $15 per hour. “I couldn’t pay people that kind of wage; it would have been terrifying.”

Sawant, pressed by reporters about the effect of a 63 percent wage increase on small businesses, said that paying employees isn't their biggest problem.

“We are living in the most regressive taxed state in the entire nation,” she said. “Small businesses are taxed far more than big business, small businesses also face skyrocketing costs of rent and the interest payments on their capital investments.”

“If we really want to protect small business jobs, it is not going to happen by not enacting 15 an hour,” she continued.

Asked if she would be open to some small businesses exemptions, Sawant said: “I can’t say at this point.”

Sawant said that she would release more specifics about her $15 minimum wage plans in early January. In the meantime, she said she is having discussions with labor groups, policy analysts, economists, community groups and workers.

“We are going to be releasing details very soon,” she added later. “It’s not something we want to come up with unilaterally.”

Sawant said that she and supporters of the $15 minimum wage will unveil a website in early January to act as a hub for supporters of the pay increase.

If upping the wage proves to be politically infeasible at City Hall, then Sawant said she would support turning it into a ballot initiative.


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Comments:

Posted Tue, Dec 17, 10:09 p.m. Inappropriate

If I'm a small business owner and I have to absorb a 63% increase in the cost of labor, my prices are going to increase 63%. It's that simple. To be a successful business owner one has to realize a profit after all the expenses have been paid. If that doesn't happen, no business and no jobs and no amount of red T-shirts will change the bottom line.

Djinn

Posted Wed, Dec 18, 4:06 a.m. Inappropriate

I have to question your business model. A 63% increase in labor translates to a 63% increase in product cost only if 100% of your business costs are labor. Suggest you set your emotions aside and redo your numbers.

Posted Wed, Dec 18, 7:03 a.m. Inappropriate

I have to agree with R that it'll be your LABOR costs going up 63% but, depending on what kind of business you own, labor is just one facet of your total expenses. A MAJOR facet, but still...

Rather than raise your prices accordingly to make up for the added expenses (which may result in lost customers and revenue), it may be more practical to reduce staff while exponentially increasing responsibilities among those who remain. It's not unreasonable to raise your expectations of employees who just received a 63% raise.

Posted Wed, Dec 18, 8:05 a.m. Inappropriate

Thanks for the responses from you and R, both of you make good points, but the proposed increase doesn't address the issues both of you raise. As you pointed out no business can absorb a 63% increase in cost whether it be labor or material without there being some major changes in the business plan.

If the proposed increase is to provide a living wage and it's implementation leads to a decrease in the work force, then only the brightest and best at this level receive the benefit of the increase. Remember this is the bottom of the economic ladder and the skill set for a lot of these folks is limited. Those with the worst skill set are the very ones who need the benefits of the proposed increase most, unfortunately these will be the first to be purged in the downsizing and cast adrift to fend for themselves.

Djinn

Posted Wed, Dec 18, 9:08 a.m. Inappropriate

Unfortunately, Djinn, that's the law of supply and demand (or "Economic Darwinism," if you prefer). As you point out, those with the least to offer employers are going to be left out more and more as the number of available jobs decreases. It's not good, but it IS reality.

There's absolutely nothing wrong with incorporating altruism in your business as long as it doesn't shut your business down, but responding to increased labor costs by simply raising prices generally leads to the loss of customers who find a better price elsewhere. That creates a double-whammy of increased expenses with diminishing revenues, which is not exactly a recipe for success.

Posted Wed, Dec 18, 8:40 a.m. Inappropriate

So now I see 3 possible side-effects of such a government-mandated wage hike:

1. The cost of living in Seattle rises (to reflect the cost of the wage hike being passed on to customers), thereby putting even greater economic pressures on low- to moderate-income households.

2. A number of small businesses close or move out of the city, thereby leaving our economy more in thrall to corporate chain stores (and making Seattle a little less quirky and less attractive to either residents or tourists).

3. More homeless on the streets, and more panhandlers (reflecting the folks who've been laid off as more skilled or experienced workers take their now-higher paying jobs). This could also result in more street crime.

If these are among the costs of 'economic justice,' is it really worth it?

Posted Wed, Dec 18, 9:14 a.m. Inappropriate

The only way to stand out from the milk toast Seattle City Council is to be so disruptive and outrageous that the media first provides the shock value then continues to talk about you -- and rather quickly you have established credibility -- giving the impression that you have a proven track record producing and passing legislation with community consensus even though, in reality, you are just the same as all the council members, but perhaps, a bigger bully.

Posted Wed, Dec 18, 12:47 p.m. Inappropriate

As a small business restaurant owner, I am feeling worried about how these proposed changes are going to affect the whole region. When it comes to laws and wages, once the flood gates are open, it's hard to close the doors. We are talking about unskilled labor getting $15 an hour. Question is, what happens to those medium skilled workers currently receiving around $15 an hour. I can see small businesses failing due to high labor costs as the need for a ALL AROUND hike in wages are needed to pay the medium skilled worker demands. What incentive is there for a medium skilled worker to keep working when he's getting paid the same as an unskilled laborer?

I can foresee this $15 minimum wage creating big price hikes, making it so that people won't eat at Seattle restaurants. Already coupled with high parking rates.

Another question is, is this really going to benefit Seattle workers? I can see people from other regional cities in South King, Eastside, Snohomish and Pierce counties flocking to the region for these unskilled jobs. This creates more competition as those with the least amount of skills fight for the limited within Seattle city limits high wage unskilled labor jobs.

I understand the need for gradual increases that affect the region as a whole, but a $15 wage from a $9.19 minimum wage, that's a bit much.

Posted Wed, Dec 18, 3:20 p.m. Inappropriate

GuiltyBystander, I agree totally with your response. What you described is what happened to the garment industry here in this country a couple of decades ago, and it wasn't the only industry to flee this country because of labor costs.

I'm betting that the there will be across the board hikes in the cost of goods and services that use minimum wage labor when this comes to pass.

Djinn

Posted Wed, Dec 18, 4:11 p.m. Inappropriate

As an owner of a service business, labor is by far the single largest expense I have. A 63% increase in labor cost will force me to raise prices because I can assure you I don't have a 63% profit margin. The problem with increasing the minimum wage so drastically just in Seattle is that businesses such as mine will be forced to compete with similar businesses just outside Seattle that are not subject to the higher wages.
We already pay wages higher than our industry average, as well as providing benefits. And our prices are slightly higher than most of our competitors. We manage because of our loyal client base that appreciates the quality we provide. Can I increase prices by 50% and still retain those clients? Probably not. We would likely close and look at opportunities outside of Seattle. That's not a threat, but simply the reality of competing in a dynamic market.
As someone who started out earning minimum wage myself, it's not meant to be a living wage to support a family on. It's a starting wage for those with limited skills and experience. If you're trying to create a comfortable life for a family in an entry level job, you might think about getting additional training and education so that you can move up to a better paying position.

crash63

Posted Wed, Dec 18, 8:31 p.m. Inappropriate

I was the E.D. of a business in this region for 7.5 years and established in year 2000, a minimum wage as being the same as what it would cost to rent a two bedroom apartment in the region: $15.51 per hour.
As a consequence, you may be surprised to hear that my overhead went down to 8% and my output increased by factors. Why? Because I was hiring the best people committed to the firm; staff investment in the firms programs continued to improve along with its balance sheet plus P&L.;
The question therefore: "is there a direct correlation between hourly rate and O/H as it affects NOI" is much more complex and necessarily disassociated from the initial hourly rate? Factors that fragment the association include a whole range of constraints and process flow options each have to examined carefully by any E.D anyway. In essence, don't be seduced by ultimate assumptions.

finetooth

Posted Thu, Dec 19, 5:29 a.m. Inappropriate

is this what is meant by the term "small ball"?.reflecting on the effects on the few, while ignoring the effects on the many..my point wash. dc has been burning out presses printing money to prop up the jobless recovery. truth be told,a few years ago, knew and talked about..the only way out from under mr. soetoro's economy is inflation..we know businesses are sitting on piles of cash they won't spend or loan..why should they?.the more they release the more the actual value drops..patty and the dems have been trying to find a trigger, sense unending assaults on banks and businesses will not blunt that fact..ms. sawant may have no d after her name, but the attention and the effect look very familiar..i'll play Cassandra this bullet once fired will as lead to a massive spike in wheel barrels sales, we'll need them sense the mint doesn't print 1000 dollar bills..pockets and back packs won't hold the cash it will take to by the burgers from the 15 dollar an hour clerk..they have just 2 years left to finish the job look for this to spread fast..patty, barry and the rest NEED inflation..the world already knows the damage those presses have done..

Posted Thu, Dec 19, 9:36 p.m. Inappropriate

Now comes the hard part. Sawant won by .5 percent. Not a mandate. So she needs to make the case, not assume she gets what she wants. And the funny thing about public service: it's not about her, it's about the people. She probably doesn't know yet that all the people who voted for her don't agree with her views. People vote for all kinds of reasons: they dislike the incumbent; they like the incumbent but think it's time for a change; they decided to vote for the woman in the race; they wanted a person of color; they took a protest vote, never thinking the challenger would win; and maybe some liked her platform, if they had any idea what it was. She is starting from scratch and she can't go it alone. She needs the city employees and her colleagues to want her to succeed, because it take 5 votes and that's if you can get your idea up for a vote. It's weird how that works. They'll want her to win if she wants them to win too.

GaelT

Posted Fri, Dec 20, 2:18 a.m. Inappropriate

Sawant's idea would have the most dramatic negative impact on exactly the people she claims to want to help. Not that she will care. Being a communist means never having to say you're sorry.

NotFan

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