State Watch

A $15 Minimum Wage

Washington unions are counting on it big time.

By 11.4.13

Wsiegmund (Creative Commons)
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A small suburban Washington city of 27,000 has recently taken center stage in the national debate over living wages. Voters in the City of SeaTac will soon decide on Proposition 1, a ballot initiative to establish perhaps the most draconian employment standards in the nation, complete with a $15 minimum wage requirement.

Labor leaders are thrilled, and it’s not hard to see why: Labor support of Prop 1 appears to be part of a growing trend to promote union organizing through local ballot initiatives.

Though small in terms of geography and population, the City of SeaTac is economically significant because it hosts Sea-Tac International Airport and surrounding travel and hospitality businesses.

Prop 1’s roots go back to 2005, when Alaska Airlines replaced unionized baggage handlers with non-union contractors. Six years later, Unite Here Local 8, the hospitality workers union, spent historic amounts of money to successfully finance three city council elections.

Local unions are now marching in lockstep behind Prop 1. So far, labor unions have provided 95 percent of the campaign resources supporting the initiative — over $1.2 million, according to the state Public Disclosure Commission. While the labor-backed campaign has decried the influence of “deep-pocketed greedy big corporations,” unions have outspent businesses 2-1, making Big Labor the biggest special interest in SeaTac. 

Prop 1 specifically targets the airport and related transportation and hospitality businesses. The $15 minimum wage requirement is 63 percent higher than Washington’s minimum wage of $9.19, already the highest among the states. 

In addition, Prop 1 mandates employers provide paid sick leave, makes it harder for businesses to hire part-time workers, prohibits tip-sharing among employees, and creates extensive new record-keeping requirements for businesses.

Even though Prop 1 allows anyone to bring suit against employers for violating the law, the city would bear the considerable cost of enforcing and monitoring day-to-day compliance. 

In public, the union-backed campaign argues Prop 1 will help low-income workers “make ends meet” by providing them with a “living wage.” Initiative supporters contend that increased wages will act as an economic stimulus for businesses, injecting $54 million into the local economy.

Such arguments parallel claims made by supporters of a higher federal minimum wage, and they are just as invalid.

The $54 million estimate assumes the measure will produce no negative consequences and is based on the premise that raised wages equal free money. Yet proponents fail to realize that higher wages must be taken from employers. Consequently, the estimate does not account for decreased employment, higher prices, reduced economic development, and other costs associated with Prop 1’s onerous regulations.

Local unions backing Prop 1 cannot even claim to support a “living wage” on principle.

A recent Freedom Foundation study examined payroll data self-reported by seven local unions to the Department of Labor last year. The study found that 26 percent of union employees earned less than a $15 an hour full-time wage (about $31,200 per year). Many were employed part-time.

If unions support $15 an hour full-time jobs on principle, why don’t they pay their own employees a “living wage”? After all, they spare no expense when trying to force businesses to do so. 

In a recent article about SeaTac, SEIU President Mary Kay Henry responded to these arguments using a time-tested method: ignore the real issues and blame the Koch brothers. 

Unions are arguably supporting Prop 1 because they view it as an organizing tool. 

Perhaps the most important provision in the initiative allows any or all of Prop 1’s regulations to be waived in a union contract. In other words, non-union businesses must comply with each and every provision, while unionized employers can attempt to negotiate less-onerous regulations or waive them entirely.

Consequently, should Prop 1 become law, non-union businesses trying to stay open will face significant incentives to unionize in order to stay competitive.

Similar provisions are increasingly common among local living wage laws. Unions backed and successfully passed a similar measure in Long Beach, California, last year. Measure Nrequired non-union hotels with more than 100 rooms to pay employees a $13 minimum wage and provide paid sick leave.

Shortly after Long Beach voters passed Measure N, two large Hyatt hotels went union. Smaller hotels took a different approach, cutting back to 99 rooms and laying-off staff. While remaining workers saw their wages rise, many had their hours reduced.

With union membership at historic lows, unions are seeking new strategies to stay relevant and organize new sectors. If Long Beach and SeaTac are any indication, local living wage laws appear to be another weapon in labor’s organizing arsenal.

Local communities are simply collateral damage.

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About the Author

 Maxford Nelsen is the labor policy analyst at the Freedom Foundation in Olympia, Washington.