Why a $15 minimum wage will make Seattle stronger

Guest Opinion: Why our views of economics - and community - are broken and how to fix them.
Seattle entrepreneur and venture capitalist Nick Hanauer.

Seattle entrepreneur and venture capitalist Nick Hanauer. Photo: Nick-Hanauer.com

A Martin Luther King Day crowd supports justice and a higher minimum wage.

A Martin Luther King Day crowd supports justice and a higher minimum wage. Rick Barry/Flickr

Editor's Note: Nick Hanauer gave the following speech at Mayor Ed Murray's Income Inequality Symposium at Seattle University on March 27th, 2014. It is reprinted here in full.

Societies and their economies are shaped by the explanations we accept about how the world works. Let me give you a simple example: If you explain the solar system by putting Earth at the center of it, you will send a rocket in one direction to get to Mars. If you believe that the sun is the center of the solar system, you would send that rocket in a totally different direction.

People are of course entitled to their opinions. But only one of those explanations is going to actually get you from Earth to Mars. The other explanation leads to disaster.

Navigating an economy isn’t that much different. If we explain it the right way, we get where we want to go. If we explain it the wrong way, we end up adrift.

Today, our entire economy has been structured by a couple of incredibly simple, compelling and mistaken explanations. You may be familiar with them.

First, if taxes on the so-called rich “Job Creators” go up, employment will go down, and the economy will collapse.

And, its evil twin: If wages for workers go up, employment will go down, and the economy will collapse.

These paired ideas are really best understood as explanations for how the economy works. And at the root of these explanations is the assertion that the source of growth and general prosperity in capitalist economies are rich people and the profits of businesses. That the higher they go, the better off all of us will be.

These ideas define our economy. They were advanced by the right, but broadly accepted by the left. They are, in short, the anchor concepts of trickle-down economics.

But these explanations are totally wrong. As wrong as believing that the Earth is the center of the solar system. And the reason our economy is struggling — the reason the middle class is shrinking — is because we have accepted these explanations and allowed them to direct our politics and economic policy.

My goal this morning is to show you why these explanations are wrong, and to advance a different and better explanation which shows why increasing the minimum wage isn’t bad for the economy.

In fact, it’s good for the economy and for business.

If the trickle-down economics explanation for how to create jobs were true, then our economy would be in very, very, good shape. But here is where we actually are: Since 1980, the share of income for the richest Americans has more than tripled — from about 8 percent to 24 percent in 2007 — while their effective tax rates have declined by close to 50 percent.

If it was true that lower tax rates and more wealth for the wealthy would lead to more job creation, then today we would be drowning in jobs. And yet unemployment and under-employment are at record highs.

Corporate profits have gone from 8 to 12.6 percent of GDP since 1980. That’s almost an extra trillion dollars. If it were true that corporate profits led to hiring, then today shouldn’t we have 50 percent more jobs?

Since 1980, CEO pay has gone up 700 percent; median income only 5.7 percent. If the rich getting richer benefitted everyone, what happened to the middle class?

One of the central claims of trickle-down advocates is, “Yes, inequality is getting worse, but think of the growth!” So, growth in the USA, with its leading amounts of inequality must be much, much higher, right?

Not so much.

In fact, growth in the USA is comparable to Socialist hell-holes like Canada, New Zealand and Australia, Germany and Scandinavia.

But crucially, these comparative growth numbers hide something far more important: The relative advancement of the lived experience of the typical family.


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Comments:

Posted Fri, Mar 28, 5:51 a.m. Inappropriate

Hey Nick, since you were a big proponent of the State Income Tax (On the Wealthy), can we assume that you have been writing a check to the State for what you felt should have been taxed and what you are being taxed? You know, actually leading by example without being compelled to do so by law?

Feel free to establish as many buisnesses as you like and pay $15.00 an hour.

Cameron

Posted Fri, Mar 28, 7:30 a.m. Inappropriate

Though Mr. Hanauer is very wealthy, he is woefully ignorant of how the economy works. If he thinks that productivity has improved due to more efficient workers, he has apparently missed the whole technological innovation and automation thing. As an example our port used to employ hundreds of longshoremen. But after successive strikes and demands for higher pay the shipping industry moved to containerized cargo and automation. The port is much more productive today, but only employs a fraction of the number of longshoremen. Granted those employees are well compensated, but most of their former co-workers lost their jobs. As labor costs increase either through market forces or legislation, people will be replaced by automation. How much does a counter person at a fast food restaurant need to be paid before they're replaced by a touch screen ordering system?
Mr. Hanauer also seems to be woefully unaware of what's happened in our global economy. Why are low paying service jobs the fastest growing part of our economy? Because these jobs are not easily outsourced. But as previously mentioned, they're not immune to being replaced by automation.
A $15 minimum wage will benefit a very few people while at the same time creating a lot more unemployed people. And the cost for the higher minimum wage will not be borne by the 1%, it will be borne by the great mass of the rest of us who will have to pay more for that pillow, that cup of coffee, the dinner out, etc.
If we're serious about strengthening the middle class we need to focus on creating workers who can thrive in this global economy. We need highly skilled, educated and flexible employees who can command a higher wage. We need comprehensive tax reform that will close the loopholes that allow a company like Boeing to avoid paying any income tax at all. We need to eliminate the loopholes that allow the super rich to pay a tax rate lower than the middle class. We need to invest that money in improving access to quality education and technical training. And create a strong social safety net.
Raising the minimum wage will not change the dynamics of our global economy. The days of high paying low skill labor jobs is past, and it's not coming back.
The most important factor in determining someone's prospect of success in the job market is getting their first job and starting the climb up the ladder. Unfortunately a $15 minimum wage will put that first rung on the ladder out of reach for many of our most vulnerable citizens. Seattle already ranks dead last in the percentage of teens with a job. A $15 minimum wage will only make that worse. I'm continually shocked at the number of people I meet in their 20's who have never had a full time job.
Income inequality is a problem in our society, but the simplistic assumption that a $15 minimum wage will solve that problem is absurdly naïve. The problem is much more complex, and requires a much more comprehensive approach. The $15 Now campaign looks a lot like the progressive version of the type of overly simplistic Tea Party slogans. We can do better.

ep

Posted Fri, Mar 28, 8:02 a.m. Inappropriate

This is funny because Nick Hanauer made his billions by inheriting his family's business, Pacific Coast Feather, that made its millions by paying low wages. Maybe he's feeling guilty about that now but would it be better if Pacific Coast Feather started paying all it's employees $15 an hour? Look at their reviews from their North Caroline plant:

“Extremely unprofessional, no management structure, no training program for new and/or current employees, grossly low pay”

Within Management (Former Employee)
Henderson, NC

Doctor heal thyself.

Simon

Posted Fri, Mar 28, 8:07 a.m. Inappropriate

More reviews of Nick Hanauer's family business, Pacific Coast Feather:

"I've seen posts that say it's great to work for them based on benefits and perks (esp for families), but I'm not sure where their base is coming from. They barely pay enough to survive at entry level, nor did they offer a chance for an increase in pay in 2 years because of a "raise freeze". Said freeze was continued even though the CEO claimed the company had rebounded near their highest revenue ever. They cut back on medical benefits so that they are now almost rediculous. Sure they offer 401k and whatnot, but what corporations don't? They don't offer any perks like bus passes or, well, anything. They offer 0 weeks vacation for your first year of employment (though, they are willing to let you work overtime to make up for a few days off), and then it's industry standard 2 weeks (1 week in some departments).”

“So really, I'm just a little confused when they say it's a great place to work. Compared to my history, the benefits and perks are now well below most companies and the pay isn't enough for a family without another income."

“No growth opportunities, terrible location, poor pay”

“no real opportunity for growth as an employee. most staff do what they always have done with little mobility upward, sideward…”

“It is very un-organzied. you never know if you will have a job tomorrow...There is a large turn over in management and production employees. There isn't any retirement.”

Simon

Posted Fri, Mar 28, 8:27 a.m. Inappropriate

Job opening at Nick Hanauer’s Pacific Coast Feather:

Product Development Assistant - Hourly
1 Pacific Coast Feather Salary
$8-$9/hr

Simon

Posted Fri, Mar 28, 9 a.m. Inappropriate

Philosophically, I am fully in support of increasing the disposable income of the middle and lower classes because those are the true job creators, not the upper class. Mr. Hanauer's arguments are spot on in the importance of keeping wealth from being locked away by a tiny percentage of the population. Tax policy should favor investment in jobs and factories.

But from a purely pragmatic perspective the people who are fighting the hardest for minumum wage should think long and hard about whether or not their work can be performed by a machine. Sometimes the only reason that low-skill labor has a job is because they are cheaper than a mechanical system.

There is still a ton of manufacturing going on in the US, but increasingly it is being performed by machines and robots rather than people. Labor priced itself out of competition in the textile industry and in manufacturing. Now labor wants to price itself out of the market in the service industry.

The people who have jobs will be making $15 an hour, but there will be fewer jobs available because machinery will become less expensive than human labor.

talisker

Posted Fri, Mar 28, 9:08 a.m. Inappropriate

"Labor priced itself out of competition in the textile industry and in manufacturing. Now labor wants to price itself out of the market in the service industry."

Which probably explains why Nick Hanauer's Pacific Coast Feather pays only $8 an hour for a Product Development Assistant at one of his plants. Even the CEO of this company Hanauer owns and controls, disagrees with him:

“If someone were to force me to move the base wage in our manufacturing organizations to $15 an hour, we will be out of business in six months. Period,” said Joe Crawford, CEO of Seattle-based Pacific Coast Feather.

The company pays an average of about $11 an hour, not including benefits, at its pillow-making plants in North Carolina, Illinois, Iowa and California, Crawford said."

Simon

Posted Fri, Mar 28, 9:21 a.m. Inappropriate

Hanauer's main theme is to increase the wage percentile of the middle class, yet increasing the minimum wage addresses mostly the bottom tiers. I agree with him that trickle-down doesn't work, but that's about it.

The real problem is that there are fewer unskilled jobs positions today compared to 30 or 40 years ago. As pointed out in other posts, automation has made some jobs "redundant". Also outsourcing wasn't practical 40 years ago. Whether we want to admit it or not, we are in a much more global economy than that period and the effect is we can hire people - either directly or indirectly by buying their goods - from places with very low wages. We now have to compete with that.

Simply raising the minimum wage doesn't compete with outsourcing. It's a bigger problem to deal with. For example, for those people who are motivated, our society can help by providing more education and keeping us the innovators of the world.

As for the minimum wage, I do believe in providing a safety net of sorts for those people stuck in unskilled labor. I don't know if $15 is the right level for Seattle, but not providing enough support puts us closer to a third world situation.

pragmatic

Posted Fri, Mar 28, 9:26 a.m. Inappropriate

Interesting how people like Nick Hanauer who clamor for "income equality" aren't themselves volunteering to give up their own income exceeding $31.2K per year to be redistributed among those of us who don't make $15 an hour. Guess it's easier for them to open their mouths than their checkbooks. "Do as I say" and all that.

Until the wealthy decide to just give us their excess money outright, we should just stick with the time-honored method of closing the income gap: Earn more money by working harder and smarter or finding a better job. Not all of us can inherit pillow factories or marry Microsoft execs.

See you at the Rainier Club, Nick.

Posted Fri, Mar 28, 9:37 a.m. Inappropriate

Raising the minimum wage traditionally has been a way to maintain some sense of equity in our society. However, the increase must be in line with economic reality. President Obama is proposing an increase to a $10.10 hourly minimum wage nationally. Our state's minimum wage already is the highest in the country. There is a tipping point where an increase will cost entry-level and low-skill jobs and, in some instances, cause a small business to close.

AFL-CIO founder Samuel Gompers: "The worst crime against a working man is the business that can't make a profit."

My father once worked for a daily wage of $1.84 as an unskilled sawmill
worker in pre-union days. Thanks to unionization, and establishment of a decent minimum wage, our family made it through the Depression.
But some of the local calls for an immediate increase to $15 per hour
are being made without regard for economic reality. They often reflect personal posturing by political and other people who like the feeling of self-righteousness it gives them. Realism, please, lest the poor and striving lose jobs and be victimized by the posturing.

Posted Fri, Mar 28, 10:09 a.m. Inappropriate

So, if you think $10.10 for a national minimum wage is appropriate (and you never said whether you do or don't), then given relative cost of livings, what do you think is appropriate for Seattle?

pragmatic

Posted Fri, Mar 28, 10:23 a.m. Inappropriate

I do not know whether $10.10 is the right minimum wage nationally. It might be low is some places, high in others. I'd want to see a state-by-state, industry-by-industry, metro area-by metro area analysis.

The $15 wage being proposed locally has some vocal supporters but so-called advisory groups seem to be coloring their conclusions with going-in biases. We need the kind of thorough, professional, objective analysis suggested. My own gut instinct: Such an analysis might support a minimum-wage increase but not likely so large and abrupt as one to $15. No more posturing. Reliable information please.

Posted Fri, Mar 28, 10:43 a.m. Inappropriate

I agree Ted. I was on the last panel of the day in yesterday's symposium, sitting next to Saru Jayaraman of ROC United. She made a comment about places with the highest minimum wage for restaurant workers having the highest revenues for restaurants, drawing the conclusion that it means that high wages are good for restaurant business. I'm not an economist, but I am a business owner, and I know the difference between gross revenue and profit. I would assume that revenues are highest where wages are the highest since the restaurants need to raise prices to cover the higher labor cost. The question is do they remain profitable?
The other thing Ms. Jayaraman said was that she knows her model of paying restaurant workers a living wage, and not accepting tips works because she owns a restaurant in NY. Well, last night I decided to look it up. The interesting thing is that her restaurant COLORS, after years of struggling, apparently closed to the public late last year. So even with her PR machine she can't make her model work, it's unlikely that most other restaurants could either.
It's pretty obvious that the debate going on in City Hall is extremely one sided. I've invited councilmembers to come visit our business and talk to the employees themselves. To date, no one has taken me up on that offer. The $15 Now campaign is a gross over simplification of a complex change in the global economy. Outsourcing and automation are and will continue to eliminate low skill jobs. A more honest debate and comprehensive approach to deal with this problem is needed.

ep

Posted Fri, Mar 28, 10:34 p.m. Inappropriate

"A more honest debate and comprehensive approach to deal with this problem is needed."

For dealing with all our problems.

louploup

Posted Fri, Mar 28, 12:25 p.m. Inappropriate

Why are panelists such as Michael Reich and Ken Jacobs to be considered biased? Simply because their findings go against your "gut instinct"?

ep: "A $15 minimum wage will benefit a very few people while at the same time creating a lot more unemployed people."
So we've heard. Evidence presented by a couple U Dub profs on the panel indicates the "very few" you're talking about amount to some 100,000 in the Seattle area. Where's the evidence for big effects on unemployment? Do actual studies, such as those cited in the panel discussion, mean nothing to you?

Why do you seem to care so little about the people selling you that pillow, that coffee, that "dinner out?" Do you expect just about everyone to effectively transition into the "highly skilled, educated, and flexible" sector you champion? Conceptually, you say, service jobs ought to be considered "first rung" positions--the transitory, larvae stage workers go through by way of development into fully-fledged high-flying economic butterflies. What makes you so certain of welcoming vacancies on the upper tiers of your financial ladder? How many coders do you expect society to need?

Haven't heard anyone claiming the minimum wage initiative alone is a silver bullet, sufficient to slay all economic dragons. Who would you be calling "naive?"

Grumpy

Posted Fri, Mar 28, 7:46 p.m. Inappropriate

I care about the little people. So much so in fact I am employer to over 70 of them in Seattle. Please educate me on how increasing my cost 67% wont translate to me( the business owner)laying off people as I promise you I will. How much different do you view the Tenant who just got a notice that his rent is going up by 67% and is forced to move or get a 2nd job ect. Why is that you fall "hook,line & sinker" to the notion that lower skilled workers wont be replaced by out of city workers that are earning $13 in Renton but now $15 in Seattle. The $15 dollar wage becomes even less attainable if you are unemployed. Seattle is already expensive place to live in. Do you think by business owners then raising costs to offset increase in labor prices Seattle's cost will be more affordable or less. And what of those people who are on fixed income social security, Food stamps who have a fixed wage(nothing to do with $15) but helplessly they purchasing power drops.

Posted Fri, Mar 28, 12:31 p.m. Inappropriate

I believe that the $15/hr groupies will attain it's stated goal of raising the minimum wage, but it won't help those who need it the most, those folks who lack skills and education. These will be the first casualties. Instead of helping them up the economic ladder, it'll kick them off it. A large part of the blame for this can be placed on our educational system. It hasn't changed fast enough to keep up with the times and seems to lack the brains to recognize it. Unless changes happens quickly to the system, the entrenched bureaucracy will continue to produce students who would fit nicely in as production workers in a pillow factory at $9/hr.

Djinn

Posted Fri, Mar 28, 2:09 p.m. Inappropriate

Mr. Hanauer is very good at propping up and knocking down straw men. Perhaps one of his many businesses is manufacturing scarecrows. But here's an interesting fact that he didn't mention: Today, the US has the greatest income disparity since the 1930s. And what was going on in the 1930s? A market bubble burst, dropping the value of the stock market precipitously due to investments driven by dept. A big-government Republican gets replaced by a bigger-government Democrat who introduces and abandons new economic and business policies too quickly to keep track of - and in the arrogance of his economic ignorance, refuses to see that his incessant fiddling is one of the major roadblocks to a recovery. Barack Obama looks in a mirror and sees Franklin Roosevelt, and it's not a flattering reflection.


I say let Mr. Hanauer conduct his experiment. Raise the minimum wage in Seattle to $15/hr. And along with that, of course, raise all the wages between the current minimum wage and the new one. Let's see what happens. It will be instructive, and may reveal that some of Mr. Hanauer's Gaia-Economy "facts" are merely New Deal wishful thinking.

dbreneman

Posted Fri, Mar 28, 6:22 p.m. Inappropriate

Gee, if I had Mr. Hanauer's wealth, it would be a lot easier to support a policy that could result in higher consumer costs just like he does! But as my perch on the economic ladder is far below his, and as I already have a hard time affording to live in Seattle on my modest income, I'm scared to death of what an immediate hike of the the local minimum wage might do to the cost of living here. If Hanauer and his allies really want to help low- and middle-income people like they say they do, couldn't they come up with some policies that won't hurt us at the same time?

Posted Sat, Mar 29, 2:07 a.m. Inappropriate

Wow! A collection of mostly mean-spirited, personal attacks on Hanauer for even suggesting that a higher minimum wage might be good for our economy. Yet, not one of these irate trolls adds anything but their own opinion to the discussion. How about looking at the evidence? Studies of actual economic data have shown over and over again that raising the minimum wage does not reduce employement. Some sources for this statement:
http://newscenter.berkeley.edu/2010/12/01/minimumwagejobs/
http://thehill.com/blogs/congress-blog/economy-a-budget/236981-economic-research-supports-raising-the-minimum-wage
http://www.cepr.net/documents/publications/min-wage-2013-02.pdf
These studies go back to President Truman's measure to raise the minimum wage by 80% which was greeted with the same hysteria that is seen here -- yet a few months after the measure was implemented, even the Wall Street Journal was compelled by the obvious factual evidence to agree it had not reduced jobs.
So opponents of raising the minimum wage attack Hanauer personally, but not one of them can point to a study of actual economic data to support their position. They can only spout what Stephen Colbert so aptly labeled "truthiness" - stuff that they sounds good to them, regardless of facts.
A few of these commenters claim that they employ low wage people and would need to go out of business or fire the low wage people if the minimum wage were increased. No doubt they'd be uncomfortable, but are they saying any increase in prices would put them out of business? Many of them have dealt for example with huge spikes in energy or raw materials costs without going out of business. Higher costs make it harder to make a profit, but that's only one side of the question. Higher wages paid into our local community will increase spending by a strong multiple (compared for example, to a spike in oil prices which sucks money out of our economy and sends it to OPEC or the oil companies). So we can expect economic demand to go up even as businesses face a challenge of higher costs. So yes, a higher minimum wage would require businesses to get more efficient and even raise prices in some cases, but no, from all the objective evidence I've seen, it won't cause an overall loss of jobs or a decline of business activity.
There are other theoretical sides to this argument; any brief opinion piece like Hanauer's or brief comment like this obviously can't address the whole complex subject. But the trollish comments attacking Hanauer don't further the discussion. Unfortunately, this sort of ranting has become more the rule on Crosscut recently, and it's a pity because comments in this venue used to be quite a bit more thoughtful and interesting.

Ken Shear

Posted Sat, Mar 29, 9:55 a.m. Inappropriate

Not mean spirited. Mostly pointing out the hypocrisy of the silver spooned billionaire that currently now pays less then $10 per hour @ his business.

And as for those articles. We are pointing out here that costs will go up on that measurement of labor by 67%. That will have an impact on prices. Not "could" or might or for some employers of minimum wage. Raise by 27% like sf did over 3 years is different then what is being proposed here. Sf seems very affordable doesn't it btw I! A lot of poor minorities live in that city right?

Btw don't you think business owners would already raise prices if they could. But I imagine that you think we will be collectively motivated to increase prices once labor costs go up . The ironic aspect is this is Seattle only. Not Renton,kent, Bellevue Everett ect. Consumers can go elsewhere and shop on amazon and this will play out particular in manufacturing jobs that sell nationwide or globally. These business employ seattlelites often $13-17 per hour but would have to raise all of those folks hourly based on the new floor of $15. So costs go up but no local boon of new money goes to them as they sell all over. Guarantee you they lose their competitive advantage and will be the first wave of biz to move.

Posted Sat, Mar 29, 3:23 p.m. Inappropriate

"mostly mean-spirited, personal attacks on Hanauer"

It's not mean spirited to point out his hypocrisy at paying workers at his company's factories less than $10 an hour.

Simon

Posted Sat, Mar 29, 3:25 p.m. Inappropriate

"A few of these commenters claim that they employ low wage people and would need to go out of business or fire the low wage people if the minimum wage were increased."

Well let's quote the CEO of Nick Hanauer's Pacific Coast Feather why don't we:

“If someone were to force me to move the base wage in our manufacturing organizations to $15 an hour, we will be out of business in six months. Period,” said Joe Crawford, CEO of Seattle-based Pacific Coast Feather.

The company pays an average of about $11 an hour, not including benefits, at its pillow-making plants in North Carolina, Illinois, Iowa and California, Crawford said."

Simon

Posted Sun, Mar 30, 7:25 a.m. Inappropriate

I see your point, but it's hard to make that comparison. Likely, $11/hr + benefits on average for those locations is as good or better than $15 in Seattle. It's certainly better than the national minimum wage.

pragmatic

Posted Sun, Mar 30, 7:50 p.m. Inappropriate

...and it's a pity because comments in this venue used to be quite a bit more thoughtful and interesting.

What you mean to say is that you took comfort from the fact that most posters in the old days agreed with you. That was then, this is now. Get used to it.

This is a forum to express opinions, yours and mine are equally valid. There is no requirement for agreement or concensus. It's a rough and tumble place, just like the world outside your door. So you're free to ignore or belittle to your hearts content, but your sense of righteousness doesn't get you a free pass from the same treatment in return.

Djinn

Posted Tue, Apr 1, 9:39 a.m. Inappropriate

Nothing mean spirited in the comment section. Simply points of view that add to the discussion.

What I can't figure out is why the illogic of such a dramatic rise in the minimum wage is not understood by everyone.

Simply put - the employers who pay $15 per hour will suddenly have job applicants from surrounding areas to Seattle applying for the jobs. The Seattle employers will suddenly have higher skilled people, who may very well be able to do the jobs so much better that the Seattle employer can lay off 1 or 2 existing people for every better skilled new person hired.

So then Seattle sends its' great unskilled workers out of Seattle to find a job.

No matter how you look at it, raising the minimum wage by more than 60% is a nightmare and will disrupt and harm many lives.

Posted Sat, Mar 29, 5:29 a.m. Inappropriate

"So yes, a higher minimum wage would require businesses to get more efficient and even raise prices in some cases, but no, from all the objective evidence I've seen, it won't cause an overall loss of jobs or a decline of business activity."

http://blogs.seattletimes.com/opinionnw/2013/12/06/minimum-wage-seattle/

Well here is some objective evidence from the State Treasurer and his days as a UW Economics professor. It's only an estimated 10% job loss and I am certain those getting the new higher minimum wage will be happy to learn that they now qualify to pay higher taxes in support of the newly unemployed. Enjoy Ken, just because Hannnauer is rich and wrong on many topics doesn't mean he is immune from critical review of his proposals like the income tax and minimum wage increase.

Cameron

Posted Sat, Mar 29, 2:24 p.m. Inappropriate

Cameron, I went to your link actually hoping to find some evidence supporting your side of this issue, because I find it very disheartening to see the Crosscut blogs so totally taken over with rants full of truthiness. But the citation is to an opinion piece about a survey, not a study. The survey indicated that some jobs had been lost because employers were not willing to pay a minimum wage. It said nothing whatsoever about whether any jobs were created by the increased local economic activity due to more spending by workers receiving more pay. That's the issue, as all the studies I cited recognize -- and they all find that more jobs are created by increased spending than are lost by employers shedding jobs they won't pay minimum wage for. Would you consider it bad, for example, if raising the minimum wage caused both loss of a $10 per hour job and creation of a new $15 per hour jobs?

You of course are entitled to your opinion, which apparently is not based upon any study but a survey about one side of the issue. I have nothing against you disagreeing with Hannauer and attacking his opinions. I do have an issue with using ad hominem attacks instead of evidence to support one's opinions. I think it lowers he quality of the debate and there's so much of it in Crosscut comments these days that it's swamped what used to be a lively discussion with mean spirited rantings.

Ken Shear

Posted Sat, Mar 29, 3:56 p.m. Inappropriate

I would love to see a study that examined what would happen when a City increases it's minimum wage 60% above that of surrounding communities. Unfortunately such study doesn't exist, so we're left looking at ones that examine the effects of a city or state with a minimum wage 10 or 20% higher than surrounding areas. Though instructive, they by no means give you a clear picture of what will happen if Seattle by itself implements a $15 minimum wage for everyone without any exceptions for tips, or other benefits an employee may receive.
I can easily imagine fierce competition for low skill jobs in Seattle, and increased spending outside of the City where things will be cheaper. But again, no one has presented any studies focused on what the positive or negative effects may be on the specific minimum wage proposal being considered here in Seattle.

ep

Posted Sat, Mar 29, 5:09 p.m. Inappropriate

Ken you can choose to believe whatever you want. I will stick with the Washington State Treasurer's opinon. But he was just an Economics Professor from UW...what does he know.

Cameron

Posted Sat, Mar 29, 5:13 p.m. Inappropriate

From the McIntire article.

"The study’s aim was to judge the effect of a 1968 state ballot measure that increased Washington’s minimum wage in two steps to $4.25 ($7.59 in today’s money) by January 1990. The effective minimum in Washington for most workers had been the federal minimum of $3.35.

This was a 27 percent increase over two years, which was fairly big, but less than half the 63 percent increase between the 2013 state minimum of $9.19 and the 2014 SeaTac minimum of $15.

In its study, McIntire’s team surveyed more than 1,000 employers and interviewed more than 500 affected employees. It also looked at state Employment Security data.

More than 100,000 employees got wage increases in 1989 and 1990 because of the rise in Washington’s legal minimum. Over two years, employers reported laying off 11,700 workers “as a result of the minimum wage increases.” Employees reported about the same number.

In other words, for every 10 workers who got a raise under the law, one worker somewhere was laid off. The most-affected employers were restaurants and bars (the law also eliminated the tip credit), particularly in the lower-wage parts of the state."

Cameron

Posted Sat, Mar 29, 11:19 p.m. Inappropriate

The problem with this survey is, it's one sided. The survey doesn't cover the important question, how many jobs were created because of increased spending locally by the 100,000 low wage workers whose pay was increased?

So again, if raising the minimum wage caused one employer to eliminate a $10 job and another employer to create a $15 job, are we worse off or better off? It's the key question, because all of the studies that have addressed effect of minimum wage increase on job creation overall that I can find say, no job loss and most of them say employment net increase. That is, the number of new jobs under the higher minimum wage turns out to be higher than the number of jobs lost.

BTW, I too believe the survey - yep, probably some jobs were lost because of the minimum wage increase; I just wish the survey had gone a bit further and tried to determine how many new jobs were created. But it didn't, so it just can't tell us net benefit or loss of the minimum wage increase.

Ken Shear

Posted Tue, Apr 1, 9:44 a.m. Inappropriate

The $15 minimum wage people would certainly increase their spending. But not in Seattle. These people would come in from Shoreline, Edmonds, Bothell, Renton, Arlington, Auburn, Pacific etc to gain a 60+% raise in pay, and then spend their extra paycheck in the out-of-Seattle towns where they live.

The former Seattle minimum wagers would either be unemployed, or be forced to look outside of Seattle to find a different job that pays the same as their former Seattle job.

Why can't you see this logic?

Posted Tue, Apr 1, 12:32 p.m. Inappropriate

Exactly. Why hire a high school dropout from Seattle @$15/hr when I can get a college grad from Shoreline now?

Simon

Posted Sun, Mar 30, 8:53 a.m. Inappropriate

"So again, if raising the minimum wage caused one employer to eliminate a $10 job and another employer to create a $15 job, are we worse off or better off?"

I guess that depends on your viewpoint. Are you the luckiy one in ten that is at the margins of society and gets laid off?

As to the inability of the study cited to support your position, sometimes facts are hard to accept. But it should give you great comfort to know that the State Treasurer who helped author the study, according to you, presented a bias, one sided position and now holds sway over the State Treasury.

Cameron

Posted Sun, Mar 30, 10:16 a.m. Inappropriate

Okay, so if I understand your posting, assuming that raising the minimum wage caused loss of a $10 job and creation of a $15 job both, you still think it would be bad because you feel sorry for the person who'd lose the $10 job. I think, since they're both minimum wage jobs, it's pretty likely that the person who lost their job would have a good shot at getting one of the new jobs. Or are you assuming that for every $10 per hour job we lose, we'd be creating a $50 per hour job? I don't think that's what the studies I'm citing actually show. I think a fair reading of these studies shows increased economic activity creates greater demand for labor.

Plus, I think there's a pretty big benefit from the large numbers of employees who would receive higher wages.

One other question, as you indicate that your concern is about workers in low paying jobs, not about companies that benefit from paying employees very low wages. Do you support other measures to protect low wage employees against being terminated, or is it just raising the minimum wage that bothers you? For example, are you in favor of a law requiring employers to allow sick leave? This of course has a huge impact on employees who are living paycheck to paycheck (that is, most $10 an hour employees).

Finally, about the survey - from your response I think we're talking past each other. Please re-read my post. I tried to say, I believe the survey you mention -- but it's not a study. I am saying the survey doesn't give us enough information to make a sensible decision. That's quite different than accusing someone of bias. It would pretty obviously take more resources and time to study the job-creation side of the question. For whatever reason, the study didn't go that far. BTW, as a point of clarification, you're not citing the McIntire study directly, you're citing a Bruce Ramsey blog post uses the study to support Mr. Ramsey's beliefs. I have the same problem with Ramsey's column as with your comments -- it is only looking at one side of the question. My understanding is, Ramsey's much more conservative on this kind of issue than McIntire. If McIntire agreed with what you're saying, I'd be very surprised, actually.

Ken Shear

Posted Tue, Apr 1, 9:46 a.m. Inappropriate

I'd like to hear why that commenter thinks one employer would CREATE a $15 per hour job if minimum wages were increased to $15 per hour, instead of creating that same job today but paying much less per hour?

What is the incentive to the employer??

Posted Sun, Mar 30, 10:51 a.m. Inappropriate

Everything gained by the 9 who earn the $15 an hour minimum will be consumed in taxes and support for the 10% additional unemployed and their families.

If you have issue with what Treasurer McIntire believes, you should definiately ask him a the next you run across him. I will take him at his printed word. Maybe you could publish his study at Booktrope?

Cameron

Posted Sun, Mar 30, 11:02 a.m. Inappropriate

If the $15 minimum wage is implemented, too many small businesses and fragile non-profits will close.

Call it survival of the fittest if you will, but we will be living in a corporate owned plastic world with no personality.

Posted Tue, Apr 1, 6:33 p.m. Inappropriate

Why would any entrepreneur start a company in Seattle if the min. wage goes to $15? He or she would not. This could be the best thing for the Bellevue economy since Microsoft.

taupe

Posted Tue, Apr 1, 7:28 p.m. Inappropriate

I worked at Pacific Coast Feather Company for over 3 years. I worked in a role that was lets say administrative and required a 4 COLLEGE degree. The pay was barely above the proposed minimum wage increase he is supporting. I find it funny that Mr. Hanauer wants to give someone flipping burgers a 200% raise increase. Yet his CEO instituted a wage freeze and laid off over 1/3 of his workforce from the Seattle corporate office over the past 2 years. This was after it was reported that the company had its highest profits in three years at last years corporate meeting which his brother Adrian attended. You might want to look in your own backyard before you start touting the benefits of raising the minimum wage sir quite honestly you come off as a moron. It seems that you don't have a clue whats happening to the company that built your family fortune. Or it could be that you just don't care or this is a jump point into some kind of political career. Pacific Coast Feather is KNOWN for underpaying its employee's just look at glass door. The people who worked and are currently working there didn't and don't deserve it.

Posted Mon, May 26, 8:28 a.m. Inappropriate

How do you think skilled laborers feel about unskilled workers making the same wage as them? They never asked us that. It's almost an insult to those who have education/experience in their fields. That's my only gripe. I believe it should be tiered for non-skilled labor at $12.50 and education/skilled labor at $15.00. In my opinion, it is only fair. Equal opportunity and economic justice I am for, but if done smartly. My field is at a psych hospital, with the most violent and severe and persistent mentally ill in the state. People that should be never on the streets. This job requires minimum a BA. We should be compensated accordingly for education and experience, but make $15 an hour and under. This is, however, not a reality in today's world sadly. Yes, it is selfish.

Rebecca

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