“No matter how big my wallet gets, my head continues to only need one pillow to sleep on,” venture capitalist Nick Hanauer said during his remarks at an income inequality symposium held Thursday at Seattle University. An early investor in Amazon, Hanauer has co-founded, financed and managed over 30 companies, including an online ad company called aQuantive, which Microsoft purchased for $6.3 billion in 2007.
Hanauer is also in the in the pillow business. His portfolio includes the family-run Pacific Coast Feather Co, based in Seattle. By describing his bedding needs, the entrepreneur was trying to illustrate why he thinks raising the minimum wage makes sense. Referring to his own endeavors Hanauer said: “If no one could’ve afforded to buy what we made, then all of those businesses and all of those jobs would have evaporated.”
“An ordinary middle class consumer is far more of a job creator than a capitalist like me,” he added.
Mayor Ed Murray’s office helped organize the symposium, which also featured economists, policy experts, elected officials and low-wage workers. The event was held as the clock ticks toward the April 30 deadline for Murray’s Income Inequality Advisory Committee to come up with a plan for increasing the city’s minimum wage to $15. Professors from the University of Washington's Evans School of Public Affairs delivered a report to the committee earlier this month that said about 100,000 workers in Seattle make less than $15 per hour.
According to sources familiar with the discussions, committee members still face tough issues. They are trying to hash out whether and over what time period the pay floor increase should be phased in, if compensation like tips and bonuses should be counted toward hourly pay and if any businesses should be exempt from the higher minimum wage.
Some of these topics were on display Tuesday. Hanauer is on the committee. During his keynote address he voiced support for ramping the wage up to $15 over “several years” and said that any new wage policy should favor local businesses over national chains that are “economically extractive and culturally dilutive.” He also said he favored looking at “reasonable compensation pictures” that consider items like tips and commissions.
Among the other speakers were Michael Reich and Ken Jacobs, University of California Berkeley economists who have presented research to the mayor's committee. In past studies, Reich has compared neighboring areas with different minimum wages and the effects of a pay increase for workers at San Francisco International Airport. His work is commonly cited as evidence that bumping the pay floor does not kill jobs.
The economists said in their report to the Income Inequality Advisory Committee that studies have shown a 10 percent minimum wage increase results in restaurants spending about 1 to 2 percent more on operating costs and raising prices by about 0.7 percent.
Linda Di Lello Morton and Tamara Murphy, co-founders of Terra Plata, a Capitol Hill restaurant that specializes in local cuisine were in the audience — and they were skeptical of the numbers Reich and Jacobs referenced.
Depending on the time of year, they employee 35-50 employees. If the minimum wage increases to $15 per hour, they say, their labor costs would rise 30-40 percent. Murphy supports raising the minimum wage, but says it should factor in tips.
Servers at Terra Plata earn $9.32, the current minimum wage, plus tips. Murphy said that with tips wait staff tend to make about $30 per hour. Some servers, she said, make between $60,000 and $70,000 per year. If the minimum wage increases to $15 per hour, Murphy said they would hire 15 to 20 percent less staff, cut bussing shifts, and close during lunch hours.
Morton and Murphy also run the Elliott Bay Café. Eleven employees work there, most of them students. A $15 minimum wage, Murphy said, would force them to close it down.
“There’s only so much you can get for a cup of coffee and a cookie,” she said.
In their report, Reich and Jacobs cited three studies on minimum wage increases in San Francisco and Santa Fe that found “no statistically significant negative effects on employment or hours.”
“We hear those anecdotal stories,” Jacobs said during the symposium. “If you look at what’s actually happened, the anecdote doesn’t fit the data.”
Over 200 people turned out for the event. The day was jam-packed with panel discussions.
Jill Reese from the Alliance For a Just Society shared a study that pegged the "living wage" for a single person living in King County at $3,042 per month, or $17.55 per hour.
Evans School of Public Affairs professors Marieka Klawitter, Robert Plotnick and Mark Long discussed highlights from their report to the committee.
They found that three-quarters of Seattle businesses have fewer than 10 employees, but these establishments employ less than 12 percent of workers in the city. Only three percent of city workplaces, they said, have 30 percent or more of their full-time workers earning the state minimum wage of $9.32.
Martina Phelps, who makes $1,100 per month working at a McDonalds, was also on a panel. She is part of an effort to pressure the fast food company for higher wages. "We don't want Ferraris or mansions," she said. "We just want to be able to live."
Murray, in his remarks, continued to express his commitment to raising the minimum wage and reducing economic disparity.
“We have a responsibility to find a solution,” he said.
“For six decades we said the market would do it, it hasn’t done it,” the mayor added. “The answer then is government must step in and work with all of you as partners to change this curve of income inequality.”
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