It is to the real advantage of every producer, every manufacturer and every merchant to cooperate in the improvement of working conditions, because the best customer of American industry is the well-paid worker. —Franklin D. Roosevelt
Despite the Koch Brothers spending a fortune, last year, to defeat the proposed $15 minimum wage in the town of Seatac, Washington, a community around the Seattle-Tacoma International Airport, it passed. In the run-up to the election, employers threatened layoffs and shutdowns, some because they believed they couldn’t make it paying workers a living wage. The Washington Post reported:
In July 2013, hotelier Scott Ostrander stood before the city council in SeaTac, Wash., pleading with the town not to adopt a $15 minimum wage.
“I am shaking here tonight because I am going to be forced to lay people off,” he said, according to an account in the Washington State Wire. “I’m going to take away their livelihood. That hurts. It really, really hurts. . . . And what I am going to have to do on Jan. 1 is to eliminate jobs, reduce hours — and as soon as hours are reduced, benefits are reduced.”
So what happened to Scott Ostrander’s Cedarbrook Lodge? Instead of folding, the hotel went ahead with a $16 million expansion, adding 63 rooms, a spa and more $15 per hour jobs.
Ostrander may have been crying crocodile tears to persuade people not to pass the wage increase—or he could have been genuine. It’s hard to say.
Like many business owners, he may think that the best management approach is the greed-driven, scarcity-based business model developed by Walmart, fast food chains, Amazon and other large companies who hire low-wage workers, and/or outsource labor to low wage countries The idea is: squeeze workers wages, push them to higher levels of productivity, and increase profits. It’s a short-sighted business model that creates disengaged, unenthusiastic workers and impoverished communities. In the end, nobody wins except a small minority of owners and stockholders.
The good news is that the experiment in Seatac has not only helped the small town turn around economically, but it has publically driven a stake into the lie of trickle-down economics. Increasing the minimum wage did not destroy businesses. On the contrary, it has helped businesses profit.
Nearby Seattle has also enacted a $15 minimum wage but, unlike Seatac, it will be seven years until it is fully in place. Yet even with that increased labor cost looming, businesses in the area are expanding. The Washington Post gave a few examples:
Tom Douglas, who runs fifteen restaurants in the Seattle area, warned that a higher minimum wage law being considered by Seattle would force the shutdown of a quarter of his restaurants. Instead, after the results in Seatac, he is opening five new restaurants to meet demand. And this story is being repeated, over and over again, throughout the region.
SeaTac-based Alaska Airlines, likewise, spent heavily to defeat the minimum wage, saying that it would harm competitiveness. Though the $15 wage for airport workers remains in court, Alaska Airlines, the dominant SeaTac carrier, apparently isn’t worried: Last month, the port authority moved forward with airport construction that could reach nearly $1 billion—to be paid for by the airlines.
And kudos to Togo sandwiches:
Likewise, the International Franchise Association has sued to block implementation of the law, arguing that nobody “in their right mind” would become a franchisee in Seattle. Yet Togo’s sandwiches, a franchise chain, is expanding into Seattle, saying the $15 wage isn’t a deterrent.
The $15 minimum wage is an idea that is catching on. On September 4, fast food workers all over the country took to the streets to demand a $15 per hour living wage. Most now make on average $9 per hour, and many of these jobs are part time.
Opponents of the $15 minimum wage claim that prices will have to go up, causing businesses to go under. The New York Times reports that Ken Jacobs, chairman of the University of California, Berkeley, Center for Labor Research and Education, estimates a $15 per hour wage would probably cause a 10 percent price increase, but that higher pay would save restaurants money by reducing turnover and increasing productivity. Of course, nothing says a franchise owner has to raise prices. He or she could swallow some of the increases in exchange for a more stable and productive work force.
And, let’s not forget, raising the minimum wage would save the government the billions it now spends on public assistance for minimum wage workers at fast food restaurants and low-paying, big box stores like Walmart.
As little Seatac is showing, when people are allowed to make a living wage, communities and businesses thrive. People have a way to save, go to school, support themselves and their families—and they have money to spend, which in turn helps the economy. We’re the wealthiest nation on earth yet we have a growing population living in poverty. It’s time to address income inequality with a $15 minimum wage.