Economic growth will increase minimum wages | Don Brunell

The central element of Proposition 1 is a $15 per hour minimum wage for workers at SeaTac Airport and area hotels, restaurants and car rental agencies. But, it also includes a complex web of employee work rules enforced by the City of SeaTac.

 

The SeaTac minimum wage initiative is in limbo.

The central element of Proposition 1 is a $15 per hour minimum wage for workers at SeaTac Airport and area hotels, restaurants and car rental agencies. But, it also includes a complex web of employee work rules enforced by the City of SeaTac.

On Aug. 26, a King County Superior Court judge ruled that Prop 1 did not have enough signatures to qualify for the November ballot. Proponents have gathered additional signatures and appealed the judge’s ruling.

Regardless of what happens in SeaTac, the issue of a higher minimum wage will come before voters. The Service Employees International Union (SEIU) is organizing protests by fast food workers and others here and across the nation, demanding a $15 hourly minimum wage.

Because of that, it’s important to understand the consequences — intended and unintended — of such measures.

Although Washington has the highest minimum wage in the nation — $9.19 per hour indexed to inflation — supporters say it’s not enough. In addition to a $15 hourly wage, Prop 1 specifies worker retention procedures and details the conditions under which employees can take sick leave. Opponents say it’s tantamount to a union contract enforced by the city.

Ironically, the initiative can be waived in union contracts, even if the union jobs pay less than $15 per hour. This would have had the effect of pressuring employers to agree to union contracts to avoid its provisions — although supporters aren’t publicizing that point.

Another problem with Prop 1 is that 90 percent of the workers it benefits live outside the City of SeaTac, yet city taxpayers are on the hook for enforcement costs. In addition, Proposition 1 is unfair. It would establish a two-tier wage structure in which some employees earn 63 percent more than others doing the same work.

Of course, we would all like people to have better jobs and more money, but this isn’t the way to do it.

Historically, minimum wage jobs have been the first rung on the ladder for millions of young people entering the job market — a place to learn work skills and gain experience. Minimum wage jobs were never intended to be a career, but rather the beginning of a career path.

For example, Scott Ostrander started as a bellman, carrying guests’ luggage for $2.13 per hour and tips. Today, he’s general manager of the Cedarbrook Lodge, one of the hotels targeted by the initiative.

Washington is already a high-cost state for employers, with the nation’s highest workers’ comp benefits and fifth-highest unemployment insurance benefits. When you add to those costs, something has to give. In this case, it’s jobs.

A study by the Washington Research Council (WRC) estimates that increasing the minimum wage to $15 per hour will eliminate 5 to 10 percent of those jobs. In the end, you might have higher paying jobs, but fewer of them.  Is that what we want?

In addition, WRC says the initiative would push out many current workers as more qualified applicants, attracted by the higher wages, flood into SeaTac to take those jobs.

So, if not Proposition 1, what?

In the short term, all minimum wage workers should be informed about the federal Earned Income Tax Credit, which provides up to $6,044 per year for low-income working families. For the lowest level workers, that’s equivalent to a $3.00 per hour wage hike.

The long-term solution is economic growth. As the economy expands, more jobs are created and employers compete for workers with higher salaries and better benefits. Trying to artificially impose higher wages will slow job creation — the opposite of what we need and want.

Don Brunell is the president of the Association of Washington Business. Formed in 1904, AWB is Washington’s oldest and largest statewide business association, and includes more than 8,100 members representing 700,000 employees. AWB serves as both the state’s chamber of commerce and the manufacturing and technology association. While its membership includes major employers like Boeing, Microsoft and Weyerhaeuser, 90 percent of AWB members employ fewer than 100 people. More than half of AWB’s members employ fewer than 10. For more about AWB, visit www.awb.org.

 

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