Seattle has earned a reputation for clunky and head-scratching politics in recent years: An ill-conceived and poorly executed tunnel project is stalled underground until next year; Seattleites are seeing their transit cut by Metro and are still searching for a way to fund it; and reform at the Seattle Police Department is moving incredibly slowly, if at all. Into this pit of dysfunction goes another hugely complex issue: the $15 minimum wage, perhaps the most promising policy solution to address rising social inequality in the city and elsewhere.
Still, of all the places where it could happen, Seattle makes sense. Washington has the highest statewide minimum wage in the country, and Seattle elected Kshama Sawant, a card-carrying Socialist, to its city council last fall. Sawant made her name on the $15 minimum wage, but new mayor Ed Murray supports the idea as well. Local government seems less compromised than Congress, where you’ll see people sticking up for corporate executives and shareholders under the guise of “job creation.” So unlike the national discourse, which feels like a charade, the debate in Seattle seems to be focused on real issues.
A Murray-appointed committee of 24 local politicians, business and labor leaders reached a compromise in the final hours of their meetings and shared it on Thursday. The result is a predictably moderate proposal, with increases to $15 per hour and beyond phased in over a few years, depending on the size of the company, and whether employees receive benefits or tips. Beyond the simple issue of equality for low earners, a big increase in the minimum wage would strengthen the entire economy rather than slow it down.
Big corporations can absorb the extra cost of a pay raise for their employees here, so the question of whether McDonalds, Starbucks, etc. will suffer is besides the point. Not only will they be totally fine, but even if they did have to leave town, they wouldn’t really be missed. The most pressing concerns are from small business owners, especially in the restaurant industry. A big pay raise for their employees (who often make tips) might eclipse their thin margins and push them out of business.
These concerns are important, but reflect a static view of a dollar’s path through the economy, where everything but wages is held equal when considering the pay raise. This is a very incomplete way of looking at something with as wide an impact as a minimum wage increase. Just as plausible, instead, is the idea that employment depends on consumer demand, rather than profits. Businesses hire people in order to match consumer spending, and with a higher minimum wage, they’ll find that they have more customers.
The additional benefits of higher wages are numerous. An increase puts more money in the pockets of lower earners, who consume more of their paychecks than wealthier people do. This stimulates demand even further and also creates more sales tax revenue for transit and public education. Another hidden benefit for businesses would be a decrease in staff turnover, which is partially a byproduct of low wages. A pay raise would also be a simple, market-based mechanism to lift people out of dependency on public welfare payments.
Considering the diverse group of interests that agreed to the current proposal, it’s a pretty workable proposition. Some on the left wanted a more immediate, dramatic increase, but a policy change as unprecedented as this is going to come with some compromise. Success with a minimum wage hike would be a huge return on Murray’s campaign promise to find consensus and create effective policy, a distinction he drew between himself and his feisty predecessor Mike McGinn. The proposal will likely appear on the November ballot and, if passed, begin to take effect in 2015.
It’s an injustice in our wealthy country that someone can work full-time and still struggle to get by. Seattleites are betting that a more equitable economy will be better for everyone, and that promise is finally taking shape.
Editor-in-Chief Jack Clinch is a senior political science major.