SeaTac’s minimum wage initiative has gotten a lot of media attention. We hope voters and regional policy leaders are paying attention, too, because SeaTac Prop 1 is full of remarkably bad ideas.
At a regional level, do we really want an economy where every city or town imposes a different set of wage and benefit requirements on its local businesses? What a strange and unworkable vision — rather like medieval fiefdoms — and we know how well that worked out.
Will raising the cost of entry-level jobs by roughly two-thirds lead to more such jobs, or fewer? Will employers forced to pay $15 for a job that used to cost $9 still be willing to give chances to people with no job experience?
Is it wise that unions stop negotiating with businesses and just impose their will through political power at the ballot box or in the council chambers? Will that increase jobs and investment?
For starters, let’s consider the experience of Washington state restaurants. Restaurants traditionally have been a prime learning ground for young people to get their first job experience. Yet since 1998 when Washington state changed its minimum wage law to what has become the highest in the nation, teen employment in our state’s restaurants has dropped from 25 percent of the workforce to 4 percent. Meanwhile, the average number of employees in our state’s restaurants has dropped from 17 to 14 during this period, while nationally the number has not decreased.
Is this, as a region, where we want to head? To get a closer look, consider the SeaTac initiative.
Proposition 1 would apply to about 6,300 employees at about 72 businesses, including airport concessionaires with as few as 10 employees, hotels and their restaurants, rental car agencies, parking lots, shuttle services and airline contractors such as ground crews.
This labor-backed initiative dictates a 63 percent increase in the minimum wage to $15 an hour and the wage would be tied to the consumer price index. It also mandates up to 6.5 days of paid leave a year, specifies who gets tips, imposes hiring rules and requires the city of SeaTac ensure business compliance and investigate complaints.
What’s worse, no small business in SeaTac will be exempt from the big spike in pay. They all compete in the same market for labor, so whether you’re a small hotel owner “exempt” from the law, an independent restaurant or just a small grocer, the wage difference will force you, too, to pay more, though without a captive market you won’t be able to raise your prices.
Not to worry, there will be fewer jobs, too. Recent studies estimate permanent job loss from Prop 1 to range from roughly 300 to 750 jobs, while at these higher wages, more experienced workers will eventually displace another 300 to 600 existing entry-level workers.
If that wasn’t enough, there are few economic benefits for SeaTac. With some 90 percent of those 6,300 employees living somewhere other than SeaTac, the paychecks will go elsewhere.
This will leave the City of SeaTac with a weakened economy, reduced business tax revenues, and higher overhead. In fact, a study by public finance consultants on the SeaTac initiative forecasts costs to the city of $2.5 to $3.4 million over the first five years. The study’s authors, who looked at all major West Coast local minimum wage laws said, “No other living wage ordinance is as complex as that proposed for SeaTac." Nor does any require require as much responsibility to be assumed by the municipality for overseeing its ordinance.
Finally, the SeaTac initiative is riddled with unfairness. Prop 1 grants unionized employees the right to agree to changes in the terms granted by the law but denies that right to non-union employees. It only bestows its large jumps in pay and benefits to workers at larger transportation and hospitality businesses while denying any changes to employees doing identical work at smaller businesses.
Clearly, SeaTac’s Prop 1 is terrible public policy. The greater question for the region is whether it wants to keep debating these same ideas city by city. Or fiefdom by fiefdom.