As expected, the Seattle City Council yesterday unanimously adopted a $15 minimum wage, hewing close to Mayor Ed Murray’s proposal. They did this, as the Seattle Times reports, without knowing what the consequences will be.
“No city or state has gone this far. We go into uncharted territory,” said Seattle City Council member Sally Clark before the council agreed to give workers a 61 percent wage increase over what is already the country’s highest state minimum wage.
One immediate consequence is a lawsuit filed by the International Franchise Association. Perversely, the Seattle ordinance treats franchisees as big businesses, rather than the small business they are. We wrote about that here.
Matthew Haller, IFA vice president, says he and others plan to file the lawsuit soon, but “it’s not about the wage.” No other city council or state legislature has ever characterized franchisees as employees of the franchisors, he said, and Seattle’s decision to do so will set a dangerous precedent for other cities considering increasing the minimum wage.
At a recent hearing, City Councilmember Kshama Sawant said franchise owners can afford to pay workers more. “In order to be a franchisee, you need to be very, very wealthy,” she said.
Sawant’s statement underscore how much of the debate continues to be on targeting the wealthy. And she makes clear that this is just the beginning.
“Today’s message is clear: if we organize as workers with a socialist strategy, we can tackle the chasm of income inequality and social injustice,” she also said. “Fifteen in Seattle is just the beginning. We have an entire world to win.”
You can watch the video of the council meeting here.
Most councilmembers apparently believe they were taking a step that was both bold and measured: First in the nation, highest in the nation, unchartered waters and yet responsive to business concerns, incremental, and including a training wage and credits for tips and health care. Publicola notes the audience response to the “moderation.”
[The] meeting was an object lesson in the split personality of the $15 movement, whose supporters alternately booed, hissed, and screamed at council members who voted in favor of “pro-corporate” (as Sawant put it) compromises (like the subminimum “training wage” and the “tip credit” provision, which allows employers to pay less than minimum if their customers make up the difference in tips), and cheered raucously when the full council unanimously adopted the legislation…
Publicola also has an interview with Murray, who says he never believed the deal would fall apart.
The claims of moderation and business-friendly compromises are overstated. The Washington Restaurant Association offers a different take. (Follow the link for an excellent video featuring Seattle restaurateurs.) The Seattle Restaurant Association (SRA) was repeatedly rebuffed in its efforts to modify the proposal.
…The requests were:
- Ensure that all local Seattle restaurants are treated fairly;
- Permanently recognize all real income, including tips, that restaurant employees receive in the compensation calculations;
- Put in place a six month training wage so we can continue to hire youth, the disadvantaged and others in our community that simply need a second chance;
- Have the implementation date for the ordinance on July 1, 2015, which was the date agreed to by the IIAC.
Unfortunately our requests were denied.
There will be consequences. Howard Husock, writing in Forbes about the president’s call for an increase in the federal minimum wage, offers a stark illustration.
Among those with whom the President might want to check in are the small business owners of a nation he has long admired: South Africa. There, as I’ve written for City Journal, small employers are required to pay high minimum wages set by national bargaining councils, where government and labor unions negotiate—without considering the small businessman or entrepreneur. The result has been staggering unemployment —38 percent overall, and 49.8 percent among youth—significantly higher than the 13 percent rate when apartheid ended. Similar damage has been wreaked by the unrealistic labor laws of France, Spain and Greece. It’s a path the U.S. ought not to choose.