Seattle takes a minimum-wage leap

 
Seattle Mayor Ed Murray signs the city's minimum-wage increase on 3 June, 2014 Seattle Mayor Ed Murray followed through on a campaign promise to raise the city's minimum wage

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Seattle City Counciln has raised its minimum hourly wage to $15 (£9), setting the city on the path to providing workers within its jurisdiction with the highest such rate in the country.

The increase will roll out in increments, reaching the new level in 2017. Behind the local celebration of the new wage standard, however, a larger national debate continues over the economic rationale behind minimum-wage increases - particularly ones enacted on a municipal level, since prospects for a nationwide wage increase seem dim.

Last year, Seattle fast food workers walked out on their shifts and began a strike to protest against low wages, sparking a citywide movement to increase Seattle's lowest wage. The strike began at the same time as the Seattle mayoral race, eventually becoming a centrepiece in the city's elections - a voting platform that candidates, like the current mayor Ed Murray, could not ignore.

Start Quote

It will deepen the tendency towards labour market polarization”

End Quote Reihan Salam The National Review

In the neighbouring city of Seatac, voters in November approved a ballot measure raising its own minimum wage to $15. After he was elected into office the same month, Mr Murray stayed true to one of his principle campaign promises and successfully pushed for an increase.

As local politicians celebrated their legislative success, however, outside critics, like chairman and editor-in-chief of Forbes magazine Steve Forbes, have voiced their views on the increase, arguing that this policy shift represents a negative turn for the city.

Forbes argued that Seattle was "wounding itself" by raising the minimum wage. The increase, he writes, "will destroy jobs, especially for young people, and bankrupt numerous small businesses that operate on tight profit margins".

Despite these potential consequences, he concedes that Seattle's decision to raise the minimum wage reflects "the frustrations and anger that erupt when an economy is stagnant".

"Seattle will say goodbye to many of its low-skilled workers, most of whom serve the retail and leisure and hospitality sector," former chief economist of the Department of Labor Diana Furchtgott-Roth writes in the New York Times.

With the potential loss of low-skill jobs, others argue that the minimum wage increase could lead to a larger economic equality gap as unskilled workers in Seattle could face challenges in finding work.

Start Quote

More money in the pockets of low-wage workers means more sales”

End Quote Robert Reich The New York Times

"It will deepen the tendency towards labour market polarization as a non-trivial number of workers, starting with those who command a market wage of $9.32 or less, will find themselves locked out of formal employment," writes Reihan Salam for the National Review.

Aside from the growing online debate, some critics are taking their complaints to the courthouse. The Washington DC-based International Franchise Association plans to sue the city of Seattle as a result of the minimum wage hike. The association views that the increase is discriminatory because it requires smaller, franchise businesses to raise wages for their workers at the same rate as big businesses.

Supporters counter that the minimum wage increase will not hurt businesses, but rather attract workers to Seattle, thus fostering a stronger standard of living.

Former Clinton administration Secretary of Labour Robert Reich says that higher wages will bring more workers into the workforce, including some who wouldn't have been interested in the previously lower wages.

"That means they'll end up with workers who are highly reliable and likely to stay longer, resulting in real savings," he writes in the New York Times.

Additionally, Reich says, it's not just workers who will benefit from the increase in minimum wage:

More money in the pockets of low-wage workers means more sales, especially in the locales they live in - which in turn creates faster growth and more jobs. A major reason the current economic recovery is anaemic is that so many Americans lack the purchasing power to get the economy moving again.

Taking on trickle-down economists who champion economic policies supporting the rich rather than the poor, Seattle entrepreneur Nick Hanauer says that this increase will help further the already thriving economy of Seattle.

"A city in which restaurants pay workers enough so that they can afford to eat in restaurants, doesn't have fewer restaurants. It has more of them," he writes for the New York Times. "A $15-an-hour wage isn't a risky and untried policy in Seattle. It is the natural evolution of common-sense economic thinking."

As the debate comes to a head, perhaps only time will tell if the minimum-wage hike was a good decision for Seattle and potentially for other cities that are considering similar minimum wage increases.

As Quartz's Tim Fernholz points out, Seattle's minimum wage increase is not only unprecedented in the United States (outside of little Seatac), it would be the highest effective rate across the globe as well. Last month Swiss voters could have set the record with the equivalent of a $25 (£15) minimum wage, but they overwhelmingly rejected the measure.

It's impossible to fully predict the greater effects that the increase may have on the city and the globe.

That said, it's difficult to deny that Seattle will present a good opportunity as a petri dish for economists and politicians alike to gain a new understanding of the real-life effects of raising minimum wage.

(By Annie P Waldman)

 

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  • rate this
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    Comment number 21.

    Had the minimum wage kept the value it had in the late 1960s, it would be near $12 today; had it kept pace with worker's productivity, it would be $22. As Sen. Warren asked: "What happened to the other $14.75-- it certainly didn't go to the worker."

    Paying workers enough to live without government assistance, which subsidizes their employers, is less radical than the disparity we suffer today.

  • Comment number 20.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 19.

    All this user's posts have been removed.Why?

  • Comment number 18.

    All this user's posts have been removed.Why?

  • rate this
    +1

    Comment number 17.

    I agree that it is tough to try to live on minimun wage, but minimum wage was not established as a "living wage" but as a "fair wage" (re: FLSA 1938). I have to ask those who work for minimum wage to see if you sacrifice any luxuries such as cable TV, expensive cell phone plans, going to movies, dinner, etc. If you don't sacrifice, then you should learn to live within your means like I do.

  • rate this
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    Comment number 16.

    It is simply unreasonable, mean and ridiculous to imagine that a person can live in the USA on $8 an hour. It's not possible. I know, I've tried. No decent society wants burgers cheap at the cost of having a disaffected class of servants in grinding poverty. Hooray for Seattle.

  • rate this
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    Comment number 15.

    I definitely support a $10.10 minimum wage, but $15 might be too high and cause some of the issues that the opponents to minimum wage bring up. $15 is more than double the current $7.25.

    Fortunately, Seattle and Seatac have stepped up to be the grand experiment. We'll see if it improves or hurts their economy.

    In the mean time, the federal minimum wage should be raised from $7.25 to $10.10.

  • rate this
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    Comment number 14.

    This is after wife had diagnosis of cancer and then myself Graves Disease . So i have worked for almost 3 years without medical treatment. I can't afford to take time off just so i can make someone else richer and i get sicker now at 100 lbs and still can't go to the doctor . Healthcare is a FARCE

  • rate this
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    Comment number 13.

    Last year i made 12 K for the year and worked 3 days straight 3 times That"s 216 hrs in 9 days .This is too little of an amount to pay bills on and i fall further in debt every day . And that"s after filing bankruptcy and having the state of PA deny Unemployment with the employer before the hearing and the lawyer dropped me the day of the hearing . If you are poor, the rich/government will use you

  • rate this
    +1

    Comment number 12.

    Im an American,..but,

    Our idiot voters may be the dumbest in eons and eons

    Obama is smart, highly intelligent..

    But HATED by the Tea Partiers

    Whom are the minority yet hold extreme power

    THEY must be ..curtailed, isolated

    Preferrably somewhere on........ Bikini Attoll in the Pacific...to be..

    Treated Appropriately.....ewwww...roach controll

  • rate this
    +1

    Comment number 11.

    Together, these 3.3 million workers with wages at or below the federal minimum made up 4.3 percent of all hourly paid workers. The percentage of hourly paid workers earning the prevailing federal minimum wage or less declined from 4.7 percent in 2012 to 4.3 percent in 2013.

  • rate this
    -1

    Comment number 10.

    We now live in a country ran like Hitlers Germany or the USSR . We have catered to the rich long enough . The time for wage reform is at hand . All low income people need to ban together . A world walk off is needed to insure that people are treated all over the world with equality .

  • rate this
    +3

    Comment number 9.

    Expansion of 'right to work' legislation (24 states now) means the end of unions AND the minimum wage: http://en.wikipedia.org/wiki/Right-to-work_law & http://www.salon.com/2012/12/11/koch_brothers_tea_party_cash_drives_michigan_right_to_work_bill/

  • rate this
    +3

    Comment number 8.

    If all the working poor went on strike, how much would minimum wage go to if all the rich people had to 1)maintain and repair their mansions 2)make all their own personal errands 3)cook their own meals 4)substitute any physical labor task here. How much would they accept for these tasks??? Answer: more than $15/hr., that's for sure. As for Boehner, I apologize on behalf of all of OHIO.

  • rate this
    +2

    Comment number 7.

    People in this country are only motivated by their greed. Rich Americans get wealthy through exploitation of the poor (80%+of us). How you treat your countrymen is the least of their concerns. Careers as such do not matter -- only wealth extraction. Why do you think customer service disappeared in the 1970's? We are being farmed. The people of Seattle who set this in motion are REAL HEROES.

  • rate this
    0

    Comment number 6.

    I look forward to the nay sayers explaining why their doom and gloom predictions did not come true a year or so from now. No doubt Seattle will suddenly become "unique" in some way so they can proclaim that it's success is not replicable on the national stage.
    Congratulations Seattlers and best of luck to you for taking this brave step on behalf of the 99% for a change.

  • rate this
    -2

    Comment number 5.

    Boehner did vote for a minimum wage increase in 2006; Senate DOA: http://thehill.com/homenews/house/198856-boehner-id-rather-kill-myself-than-raise-the-minimum-wage
    ".. . Boehner backed a GOP measure that raised the minimum wage to $7.25 over three years, but it also included deep cuts to the estate tax that made the bill dead-on-arrival in the Senate." Worthless weasel.

  • rate this
    -2

    Comment number 4.

    When Steve Forbes (who may have inherited less than $1 billion), and the former Chief of Staff to the W. Bush Council of Economic Advisors, who has taken time out from promoting her book on how green jobs will destroy the economy to explain that raising the minimum wage will too, Ms. Furchtgott-Roth, speak out with one voice, I take pause... for a chuckle.

  • rate this
    0

    Comment number 3.

    Did not have to wait for Boehner, 2. is a redneck troll quick to redirect/misinform: http://www.bls.gov/opub/ted/2013/ted_20130325.htm Would be interesting if 2. even knew what a socialist was? Yes, with the GOP thwarted on illegal immigration (Mexican slave labor in California's agriculture segment dwindling), minimum wage is becoming an election issue!

  • rate this
    +1

    Comment number 2.

    Seattle, a far leftist city run by socialists. The minimum wage jobs are not intended to be careers. They are for entry level people out of school looking for a job, not a career. Minimum wage workers make up 1% of all US workers. This is nothing more than copying Obama's pledge to increase the minimum wage. It does absolutely nothing to improve the economy. Higher costs and a loss of jobs a comin

 

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