May 2014 – Puget Sound Sage

Seattle City Council Committee Approves $15 Minimum Wage

A Seattle City Council committee unanimously voted today to pass the Mayor’s proposal for a $15 minimum wage. The ordinance passed out of committee will phase in the minimum wage over the next three to seven years. Specifically, it will require large businesses (500+ employees) to pay $15 by 2017 or 2018, and small businesses (less than 500 employees) to pay $15 by 2019 or 2021.

This historic vote represents a huge victory for workers, communities of color, and progressive leaders through the U.S. The final vote in Council is expected to occur next week.

$15/hour minimum wage proposal passes through Seattle City Council's committee with a unanimous vote. — Seattle’s $15/hour minimum wage proposal passes through City Council’s committee with a unanimous vote.

In the end, City Council did not make some of the dramatic changes recently rumored in the media, but they did make some modest amendments that alter the deal struck by the Mayor’s Income Inequality Advisory Committee.

Below, we highlight and explain some of the most significant changes:

Amendments that support workers:

Council strengthened the power for the City to enforce the minimum wage throughout the ordinance. The City of Seattle is undergoing a separate stakeholder process that will determine how the City handles all labor enforcement strategies; however, the amendments passed today allow for stronger mechanisms than in the Mayor’s proposal. They include:

Extending the period a worker has to report a violation after it has occurred, from just 180 days to three years, which dovetails Washington State law.
Ensuring that, if wage theft occurs, employers must not only pay back wages to wronged workers, but they may be subject to a penalty up to $500 for first time violations, $1000 for second time violations, and $20,000 for subsequent violations.

Councilmember Sawant successfully inserted a provision that codifies the City’s intent to identify additional funding for non-profit organizations.

Amendments that weaken the ordinance for workers:

Council pushed back the effective date to April 1, 2015 from January 1, as originally proposed.

The City will allow employers to pay a sub-minimum wage (85% of the minimum) to 14 and 15 year old youth, people with certain disabilities, and apprentices. Employers must apply for a waiver granted by the Department of Labor and Industries – a practice already done under State law. This provision will potentially allow for discriminatory wage practices that are currently allowed under State law. However, the employer will also have to apply to the City for a permit as well. Between the two permits, the requirement for a waiver will create transparency for workers and the public about which employers are requesting and have received permission to pay sub-minimum wages.

Implications of the Mayor’s Proposal for a $15 Minimum Wage

What is the Income Inequality Committee’s proposal to raise the minimum wage?

If the Council approves the Mayor’s proposal to raise the minimum wage, low-wage workers in Seattle and our local economy will see significant economic gains.

46% of Seattle’s low-wage workforce, who work for large employers, will make $15 by 2018.
Local small businesses and small non-profits will have 5 to 7 years to phase in the minimum wage to $15, and will reach parity with big businesses in 2025.
After all businesses have phased-in the minimum wage, the minimum wage standard will be equivalent to roughly $14.30 in 2015 dollars.

Table 1. Mayor of Seattle’s Minimum Wage Proposal

The Mayor’s proposal phases in the minimum wage in four separate tiers: A, B, C, D. As of January 1, 2015, the minimum wage for most businesses in Seattle will be $11/hr. The minimum wage standard will be tied to inflation starting on January 1, 2018. By the end of 2025, all businesses in the Seattle will pay the same exact minimum wage: an estimated $18.13/hr with a 2.4% adjustment for inflation.

Table 2. Phase-In Tiers For Proposed Minimum Wage

Who Will Benefit from the Mayor’s Income Inequality Proposal (And When)?

Who will see a wage increase, and when, depends entirely on who you work for and what types of benefits you receive. Combining government data with a report produced by the Center for Economic and Policy Research, we estimate that nearly half of Seattle’s 102,000 work for large businesses, and 26% receive health-care coverage. For exact breakdowns of workers for each tier of minimum-wage phase in, see Table 3.

Table 3. Number Workers affected by Tier of Minimum Wage Phase-in

How much more money will workers earn?

Over the next 10 years, low-wage workers will earn nearly $3 billion dollars more than their current wages (assuming current wages rose in line with inflation). Our recent report shows that Seattle’s low-wage workforce earns an average of $11.95 per hour and works roughly 32 hours per week. We estimated their new earnings based on the difference between the proposed minimum wage and the current average wage of a workers making less than $15 an hour. The table below shows that how much more in earnings workers affected by the policy will make in each year of the phase-in. For example in 2017, when large businesses who do not provide health insurance reach $15 per hour low wage workers will earn nearly 150 million more in 2017, than if their wages had only increased with inflation. Over the 10 year phase-in period, the cumulative earnings for affected workers would be $2.9 billion dollars.

1 Our recent report showed that roughly 102,000 workers earn below $15 an hour. Using Economic Census data to estimate that 46% of workers are employed by large businesses with more than 500 employees anywhere in the nation. A national report, from the Center for Economic and Policy Research, indicates that only 26% of low wage workers receive healthcare coverage, and our own analysis of Census MicroPUMS data indicates that there are nearly 10,000 tipped workers in Seattle.