One US town's battle over the minimum wage

SeaTac in Washington state could become the first US city to introduce a "living wage", as Samira Hussain reports

SeaTac, Washington, is an unremarkable town that's become remarkable.

Made up of fast-food restaurants and hotels that cater to the town's eponymous airport, it's mostly a stopover for people in transit, a throughway on the 25-minute drive to Seattle.

But even those passing through cannot miss the alternating blue and green signs that now dot almost every lawn, billboard, and shop window of this suburb.

The signs urge residents to vote yes - or vote no - for Proposition 1, a measure that, if passed, would raise the minimum wage here to $15 (£9.40) an hour.

That would mark a 63% increase over the current minimum wage of $9.19 (£5.76) in Washington state, already the highest state minimum wage in the nation, and would be double the federal minimum wage of $7.25 (£4.54).

Map

Saba Belachew, an immigrant from Ethiopia, says she is desperately in need of a raise. She works two jobs at the airport and still cannot make ends meet.

That's why she has added a third job to the mix - canvassing the apartment complexes here in the shadows of signs advertising car rental companies such as Thrifty and Hertz, the companies where many of these residents work.

"Some doors I'll knock like three times per day - am, pm, and in the midday," she says as she clutches a handful of fliers in the car park.

On this grey day, 24 hours before the town's voters must submit their ballots, she is mostly unsuccessful - but still hopes that the measure will pass.

"Finally, when you find somebody when the answer is yes it makes my day," she says.

Saba Belachew Saba Belachew currently works three jobs to try to make ends meet
The working poor

Supporters of Proposition 1 say $15 an hour is a "living wage". Detractors say that it would see businesses close and lay off some of the 6,300 workers who would be impacted by the raise.

SeaTac covers just 10 sq miles (26 sq km) and has a population of just 30,000, with only 12,000 registered voters.

But what everyone agrees on is that tiny SeaTac has suddenly become a battleground for one of the biggest issues confronting the US economy - income inequality, or the widening gap between the rich and poor, which has risen to its highest level since 1917.

"Coming out of the recession, we've seen job growth come out of the low-wage service sector," says Prof Ken Jacobs, head of the University of California-Berkeley Labor Center.

chart

That's exacerbated income inequality, he explains, because "minimum wages have been stagnant and their real value has been declining for some time".

Start Quote

Robert Plotnick

People aren't going to stop flying out of SeaTac because it costs a little more to buy a hamburger or a beer”

End Quote Prof Robert Plotnick University of Washington

So as those at the top earn even more, those at the bottom are earning even less.

A full-time worker on the federal minimum wage in 2013 earns $14,500 a year.

If that worker were supporting a family with two children, that wage would put the family significantly below the poverty limit of $23,550 a year.

Some 10.5 million Americans fit this definition of the working poor.

President Barack Obama has called this "wrong".

In his State of the Union address in January, he proposed raising the federal minimum wage to $9 an hour.

"Let's declare that in the wealthiest nation on Earth, no-one who works full-time should have to live in poverty," he said.

'A bellwether fight'

Global minimum wage

Australia currently has the highest minimum wage in the world, at AUS$16.37 (US$15.52) an hour. France and the UK are also close to the top, at $12.73 and $10.08 respectively.

According to the Organisation for Economic Co-operation and Development (OECD), as of 2012, there were 11 countries that had a minimum wage above the $9 an hour being proposed by President Obama.

The other countries are Canada, New Zealand, Belgium, the Netherlands, Ireland, Austria, Japan, and Luxembourg.

But there are several countries that do not set minimum wages - including places often seen as friendly to labour, for example Sweden and Denmark.

And in places such as China, minimum wages tend to be set at the regional level and at a monthly rate, making comparisons difficult. The highest monthly minimum wage in China is in Shenzhen, where workers earn $262.34 a month.

The lowest minimum wage in the world is Mexico, at $0.55 an hour.

However, President Obama has been taken up with other matters, so for now it has fallen to surprising SeaTac to vote on what Prof Jacobs has called "a bellwether fight" for low-wage work in the US.

Prof Robert Plotnick, of the University of Washington, says the decision to force a vote in SeaTac is a good strategy for campaigners, who first began work on their living wage initiative last spring by spurring 24-hour walkouts by low-wage workers in cities such as New York and Seattle.

The airport "insulates workers from some of the possible negative impacts of a higher wage", he says.

"People aren't going to stop flying out of SeaTac because it costs a little more to buy a hamburger or a beer."

A crippling cost

But business owners in the airport say there might not be any place for flyers to actually buy that burger if Proposition 1 were to pass.

"To go from $9.19 an hour to $15 overnight would kill us - it would literally force us to shut our doors," says Brett Habenicht, who co-owns a Quiznos sandwich franchise located in Terminal B.

Brett Habenicht, Quiznos Brett Habenicht says if Proposition 1 were to pass, he would have to shut up shop

Mr Habenicht says that while he "100% agrees" people should earn a living wage, he doesn't think that Proposition 1 is the right approach.

"We don't expect anyone at $9.19 an hour making sandwiches to spend 20 years working for us," he says.

But while that might not be the expectation, it is becoming the reality.

"People who should be coming into the quick service industry as their first job are staying in the industry for a lot longer," says Anthony Anton, head of the Washington Restaurant Association, which opposes Proposition 1.

He says teenagers used to make up 30% of restaurant workers in the state; now, they make up just 5%.

Mahananda Ghimirey and family Mahananda Ghimirey says he struggles to pay the rent and support his family

And increasingly those remaining have families to support, like Mahananda Ghimirey, a refugee from Bhutan who lives with his wife, six-month-old son, brother, sister, mother and father in a tiny apartment.

A chef at one of SeaTac's restaurants, he puts the matter very simply.

"It is very hard to work 40 hours a week and... the money is not enough to pay the rent," he says.

More on This Story

US Economy

More Business stories

RSS

BBC Business Live

  1.  
    PUBLIC SECTOR FINANCES Via Email

    Economist Howard Archer says it is still possible higher rate taxpayers will have an positive impact on borrowing when they self-assess for the 20103/14 tax year in January. But at this rate it "looks inevitable... that extra fiscal tightening will be needed in the new parliament." Capital Economics meanwhile, suggests borrowing would have to be 37% lower over the next six months for the Chancellor to meet his £95.5bn target for the year. That seems... unlikely.

     
  2.  
    Via Twitter Kamal Ahmed BBC Business editor

    tweets: "Breaking: Kantar retail figures - Tesco sales down 3.6% year on year, Sainsbury's down 3.1%". We'll bring you the full numbers in a moment. But clearly not good news for Tesco ahead of its half year results on Thursday.

     
  3.  
    PUBLIC SECTOR FINANCES Via Twitter

    BBC Newsnight's economics editor Duncan Weldon tweets: "Unless the exchequer gets a huge self assessment bumper in January it looks like borrowing will be up this financial year on last."

     
  4.  
    PUBLIC SECTOR FINANCES 10:12: Via Email

    IHS Global Insight economist Howard Archer has a different take on the borrowing figures. He says: "The government's current fiscal problems largely reflect the fact that much weaker-than-expected earnings growth has limited income tax receipts, along with a large number of people now being in low-paid jobs or self-employed."

     
  5.  
    PUBLIC SECTOR FINANCES 10:00: Via Email

    Here's the line from the Treasury. It says: "We have seen stronger growth in receipts this month [that's true enough; income tax rose £200m, or 2.2%, to £10.7bn] but as today's figures show, the impact of the great recession is still being felt in our economy and the public finances. At the same time, we have to recognise that the UK is not immune to the problems being experienced in Europe and other parts of the world economy."

     
  6.  
    09:48: PUBLIC SECTOR FINANCES
    Public borrowing graph

    In the month of September itself government borrowing stood at £11.8bn. That's an increase of £1.6bn compared with the same month a year ago. We await the usual email from the Treasury telling us that income tax will be back-loaded into the year. But the Chancellor at this point looks increasingly likely to miss his £95.5bn borrowing target (as the chart above shows) for the financial year. Don't forget on Monday the FT reported that Treasury Secretary Danny Alexander told his colleagues in the Cabinet there was no money for any tax giveaways in this year's Budget and the Office for Budget Responsibility last week warning about income tax receipts.

     
  7.  
    09:33: PUBLIC SECTOR FINANCES

    Public sector net borrowing excluding public sector banks from April to September 2014 was £58bn, an increase of £5.4bn compared with the same period a year earlier, official figures show.

     
  8.  
    09:23: ASOS SHARES
    ASOS share price graph

    ....have leapt this morning after the publication of its annual results. The online retailer, which had warned on its profits on three occasions this year and suffered from a fire in one of its warehouses over the summer is up 17% to 2,275p.

     
  9.  
    09:14: TESCO PROFITS

    ...are not published until Thursday, so don't worry - you're not in a time warp. But the drip feed of information may have started already. HSBC analysts David McCarthy has put out a note today in which he says the supermarket behemoth will need to invest £3bn in its customer offer to achieve a turnaround. But he says most of that could be self-funded. Mr McCarthy adds: "Tesco has been going wrong for six years or more and it could take as long to put things right as it took to go wrong".

     
  10.  
    08:58: EUROSTAR GROWTH
    the new eurostar e320 train

    Eurostar has reported a 3% growth in passengers to 2.7 million for the three months to 30 September compared with a year earlier as well as 2% growth in revenue to £211m. Just last week the government announced its intention to sell its 40% stake in the firm it jointly owns with the French. Under the plan the government hopes to raise about £20bn from corporate and financial asset sales by 2020. Eurostar celebrates its 20th birthday on November 14th. It will unveil its new fleet (see above) to mark the occasion.

     
  11.  
    08:46: MARKET UPDATE

    Markets are down again today. The FTSE 100 in London fell 0.35%, the Dax in Frankfurt declined 0.31% and the French CAC dropped 0.11%.

    • ARM Holdings led the gainers up 2.5%
    • Reckitt Benckiser led the losers down 2.4%
    • Whitbread fell 2.2%
     
  12.  
    08:36: BAE BUYER

    BAE Systems continues its movement into cyber security, stumping up £144m for Perimeter Internetworking Corp, which trades as SilverSky, a cloud security firm. The purchase will add to earnings in three years, says the firm

     
  13.  
    08:24: TOTAL SHARES

    Shares in French oil firm Total are understandably lower this morning following the death overnight of the company's widely respected chief executive Christophe de Margerie in a plane crash in Moscow. Total has opened down nearly 3% to €42.94.

     
  14.  
    08:12: WHITBREAD
    General view of cup from a Costa Coffee shop,

    Revenue for the owner of Costa Coffee and Premier Inn was up 13% to £1.29bn for the six months ended 28 August. Whitbread chief executive Andy Harrison said: "The trading momentum of our strong first half performance has continued into the first few weeks of the second half and positions Whitbread well to deliver full year results in line with expectations."

     
  15.  
    08:00: GKN RESULTS

    GKN, which makes parts of planes and cars, said sales fell of the third quarter - that's July to September - but profit rose. A stronger pound than last year caused much of the lost revenue. For the rest of the year, the motor and aerospace market will grow, while agriculture "looks set to continue its recent decline," it says.

     
  16.  
    07:50: ARM CHIPS BBC Radio 4

    Simon Segars the boss of chipmaker ARM is on the Today programme. He says lots of companies license his firm's tech so he's not worried about competition from the likes of Intel, which is now targeting ARM's market. "Competition is a good thing," he says. He adds: "History has shown the technology solution that we produce is the one that goes into most devices. Virtually every smartphone in the world uses an ARM processor". So, safe to say he's not worried in the slightest then.

     
  17.  
    07:35: ASOS PROFITS DOWN
    ASOS webpage screengrab

    Online retailer ASOS has reported as 14% slump in profits to £46.9m. Last year ASOS reported profits of £54.7m. There are no surprises here, though. The firm has previously warned "disruption" from investment in warehousing and the launch of its new business in China would hurt profits and that remains the case. Boss Nick Robertson says the firm is "in a period of major investment that comes at a short term cost, but the medium-term benefits will be significant."

     
  18.  
    07:20: ARM CHIPS
    chip

    ARM, which could well make the chips in your mobile phone, says it made $320m (£195.5m) of sales in the third quarter, up 12% compared with last year. It will probably sell $350m in the final three months of the year, it said.

     
  19.  
    07:10: RECKITT RESULTS
    Reckitt Benckiser products

    Reckitt Benckiser says it now expects full year revenue growth at the lower end of its total revenue growth target of 4-5%. The firm "delivered a robust performance in tougher markets in the third quarter" it said.

     
  20.  
    07:00: CHINA GROWTH BBC Radio 4

    China's economy grew by 7.3% in the three months to September, compared with expectations of 7.2%. But it's still the lowest growth in six years. The BBC's Chief Business Correspondent Linda Yueh tells the Today programme Chinese monetary policymakers want to slow the Chinese economic growth gradually and allow the rest of the world to get used to it. China is becoming a "middle income economy" she says and will revert to a normal path for a developed economy over time of around 3% to 4%.

     
  21.  
    Via Twitter Linda Yueh Chief business correspondent

    tweets: My interview with CEO of Oscar de la Renta fashion house, Alex Bolen, from Talking Business

     
  22.  
    06:41: ENGINEERING SKILLS Radio 5 live

    We don't have enough engineers in the UK or scientists for that matter argues Ann Watson of Semta, an engineering skills charity, on 5 live. She says: "We need a million scientists, engineers and technicians by 2020, We are starting to see a shortage in education; people training those recruits." The perception of engineering as a "dirty, oily industry" doesn't help, she says.

     
  23.  
    06:30: STOCK MARKET Radio 5 live

    Jane Foley, senior currency strategist at Rabobank is on 5 live talking about the falling stock market. "If we see stocks fall more we may see companies bargain hunting," she says. So more firms may start purchasing each other.

     
  24.  
    06:21: HEATHROW TRAVEL Radio 5 live
    heathrow

    Travel writer Simon Calder is on 5 live talking about the weather. He says he sees about 50 weather-related cancellations at Heathrow, so perhaps about 5% of flights so far. Flights to Frankfurt look hard to come by, he says.

     
  25.  
    06:12: FLIGHTS CANCELLED

    Heathrow airport has said this morning that around 10% of flights will be cancelled today as the remnants of Hurricane Gonzalo hit the UK. Flights with the 20 biggest carriers would be affected, it says. British Airways has already cancelled some ahead of the expected severe weather. The remains of the hurricane are predicted to bring heavy rain and gusts of up to 75mph in some areas, causing disruption to rush-hour travel. If you're travelling today it's worth checking before you arrive at the airport.

     
  26.  
    06:02: TOTAL CEO DEATH Radio 5 live

    Christophe de Margerie, the chief executive of French oil company Total, has died in an air crash in Moscow. Sarah Rainsford, the BBC's correspondent in Moscow says poor weather with low visibility is a possible cause of the crash. His plane crashed when it collided with a snow-clearing machine killing him and three crew, she tells 5 live.

     
  27.  
    06:01: Howard Mustoe Business reporter

    Good morning! Get in touch via email bizlivepage@bbc.co.uk or on twitter @BBCBusiness.

     
  28.  
    06:00: Matthew West Business reporter

    Morning folks, we have the latest public borrowing figures out at 9:30 today. But before that we have full year results from online retailer ASOS, and interim figures from Whitbread, plus the weather is promising to play havoc with the transport network today with 10% of flights out of Heathrow already cancelled this morning. We'll bring you everything as it happens.

     

Features

From BBC Capital

Programmes

  • Smart glassesClick Watch

    Smart spectacles go into battle – the prototypes looking to take on Google Glass

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.