Blog – Page 12 – Puget Sound Sage

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.

New Study: Who are Seattle’s Tipped Workers?

The $15-an-hour minimum wage in Seattle has been focused on a debate over tipped workers, who according to our analysis, comprise of less than 10% of workers who earn below $15 an hour.

In this policy brief, we shine a spotlight on all tipped workers in Seattle, so that city elected officials can focus on practical solutions for raising the minimum wage, instead of relying on speculation about who tipped workers are and what incomes they earn. To inform our research, we combined an analysis of government data with interviews of workers in various tipped professions. Our analysis demonstrates that the average tipped worker in Seattle is roughly 32 years old, has at least some level of college education, and earns less than $15 an hour – even if you include tips in their hourly earnings.

Tipped workers generally earn below $15 an hour, including tips. Although there has been much attention paid to a few high-earning, tipped restaurant workers, this group is not representative of the tipped workforce in general.

Highlights:

Tipped employees are more likely to earn low wages: the average annual pay for waiters and waitresses in the City of Seattle is $22,620 per year. Waiters and Waitresses make up 61% of Seattle’s tipped workers.
Tipped workers are disproportionately women: 59% of tipped workers are women, even though women comprise of only 46% of Seattle’s workforce.
Tip credit encourages wage theft: Nationwide, full-service restaurants were found non-compliant in 84% of Department of Labor Wage and Hour Investigations.

New Study: $15 Minimum Wage – Single Best Option to Reduce Seattle’s Gender and Race Pay Gap

A new study by Puget Sound Sage concludes that a $15 minimum wage would create large scale benefits for women and people of color in Seattle, and effectively narrow our city’s gender and race pay gaps. In a policy brief released today, Puget Sound Sage examines the potential outcomes of a $15 minimum wage on the local economy, assesses outcomes by industry sector, and demonstrates that a $15 minimum wage (with a phase-in only approach) is the single best option to reduce Seattle’s gender and race pay gap.

Key findings from the policy brief include:

$526 million dollars will be added to the paychecks of Seattle’s lowest wage workers: a wage increase that is significant for low-income families trying to make ends meet, but represents only 1.7% of Seattle employers’ total payroll costs.
This infusion of new earnings will result in worker spending and re-spending, creating a total ripple effect of $625 million dollars to the regional economy.
Women and people of color living in Seattle currently earn between 44% and 71% of what white men earn.
The over-representation of women and people of color in low-wage industries, such as food services, likely explains much of this pay gap.
Raising the minimum wage is the fastest and most targeted policy option to narrow the gender and race pay gap.

The brief concludes that well-crafted, phased-in increase in the minimum wage can support a thriving economy.

You can find the full report on our website www.pugetsoundsage.org.

Seattle’s Minimum Wage: A Path to Reduce Race and Gender Inequality

Seattlites were deeply unsettled last year when a national study revealed that our metro area has one of the largest gender pay gaps in the country. Action was called for by Mayoral candidates after an internal City study was released. Perhaps less surprising, Seattle also has a large race pay gap, something Sage researchers have been reporting for years. But we have some good new too – action may be around the corner that reduces both race and gender income inequality – an increase to the minimum wage for Seattle workers. Here’s why:

If you are a woman or a person of color living in Seattle, you are likely to earn between 44% and 71% of what white men earn. On the low end, median earnings for black or African women is $23,000, nearly half that of white men at $52,000. Black or African men fare little better, with median earnings of $24,000. Across race and ethnicity, except for Native Americans, women earn less than men, a difference more pronounced for white women than women of color.

The reasons for these gaps have been studied for decades, and one of the biggest drivers is occupational segregation: people of color and women are more likely to work in fields or jobs that simply pay less. A recent national report on the gender pay gap shows that segregation by occupation and industry accounts for nearly 50% of disparity in earnings.

Our analysis of Census data and data from the Employment Security Department shows that over-representation of women and people of color in low-wage industries likely explains much of the pay gap for women and people of color in our region. For example, in food service across King County, nearly 63% of workers earn below $15 an hour. People of color comprise 45% of those low-wage workers, despite making up 30% of Seattle’s total workforce.

The two charts below highlight the link between low-wage industries and who works in them. Table 2 shows the top five low wage industries in King County by two wage thresholds ($12 an hour and $15 an hour).

Table 3 further shows that people of color and women are over represented in the occupations common in these low wage industries.

Raising the minimum wage in Seattle will provide a bigger earnings boost for both women and people of color. Based on sheer numbers, few policies available to a city like Seattle could do more to reduce race and gender income inequality.

2006-2010 American Community Survey, B20002. We used 2010 census data, as a more recent breakdown by race and gender was not available on AmericanFactFinder

Downtown Developers Attempt to Sue Their Way Out of Providing Affordable Housing

2014 looks to be an incredible year to be a big shot developer. The Daily Journal of Commerce reports that, “investors are paying premiums to enter core Seattle neighborhoods, while still achieving yields that are better than the San Francisco, Los Angeles and Vancouver, B.C., markets”. In neighborhoods like Capitol Hill and Eastlake rents have increased by 9.3% in just 12 months. [i]

But despite big returns and a sunny horizon, downtown developers [ii] have attempted to rig the system for their own advantage by suing the City over a marginal fee increase that provides money for affordable housing. Not only does the lawsuit seem absurd given current market conditions, the developers never publically raised their concerns and instead went straight to a lawsuit. Advocates, affordable housing developers, community members and elected officials and many developers have been working hard together to find solutions to the overwhelming need for more affordable housing. We all want to believe that we have the same goal of building a strong city where everyone can thrive, but this lawsuit signals developers’ main interest: their profits.

Additionally, the lawsuit appears to be an escalation of developers’ scare tactics. For years developers have been able to operate incredibly profitably while limiting their public responsibility, threatening to sue if City Council asks them to step up their contribution to affordable housing. Now in 2014, as City Council commits to strengthening its incentive zoning programs, developers sue over a meager fee increase that Vulcan Inc. lobbied for during the South Lake Union rezone.

The pressure on Seattle families and workers to find affordable housing within City limits is growing. Taxpayers have done their part, and stepped up to the plate through the Housing Levy and MFTE (a program that gives developers a tax exemption in exchange for affordable housing). It’s time that local developers in Seattle do the same.

[i] Daily Journal of Commerce, State of the Market: Multifamily rides Seattle’s strong job market,” By TRAVIS ANDREWS and ERIC SMITH Paragon Real Estate Advisors

[ii] The complaint appears to be brought in part by Clise Properties, Inc and Second & Pike LLC owned by Seattle developer Greg Smith who is also the founder and principal of Urban Visions

Why Living Wage Jobs are a Win for Transit Oriented Development and the Environment

There is no question that the success of SeaTac’s Prop. 1 is a win for workers. But it is also a win for Transit Oriented Development (TOD) and our region’s environmental goals. Here is why: the $15 Airport Living Wage means more families will be able to live in their communities of choice.

Recently, the Puget Sound Equity Summit brought together communities across the region to explore strategies that ensure TOD will benefit low-income communities and communities of color. Yet, when it comes to ensuring TOD is equitable the public discussion of policy solutions rarely goes beyond affordable housing.

Housing is only one side of the equation. Living wage jobs are the other side.

Sound Transit light rail should be a regional connector to opportunity. With soon-to-be three stations in SeaTac, the new living wage law is a big move in that direction. Low-income communities all along the light rail corridor currently face gentrification and other factors that economically destabilize communities (see our report, TOD that’s Healthy, Green and Just). A $15 an hour living wage at the end of the light rail will allow low-wage workers to prosper in in place.

How? Let’s use Rainier Valley as an example. An estimated 650 people who live in Seattle’s Rainier Valley work in the city of SeaTac.[1] With airport, hotel and ground transportation jobs making up the vast majority of employment in this small city, hundreds of Valley residents will likely benefit from Prop. 1 (see who is covered, here). Previous to Prop. 1, many of these residents not only made near-poverty wages, few had seen their wage increase over the last five years.

At the same time their wages remained low, the cost of living rose in their neighborhoods, which threatened low-wage airport workers with displacement. The economic pressure between higher costs and stagnant income causes many families to relocate further outside of the city where the cost of living is cheaper, and where they are also more likely to need a car to drive to work. A $15 living wage dramatically changes their odds of being able to stay in their neighborhood of choice.

More money in the pockets of these Rainier Valley families will mean their family earnings will grow with the neighborhood. Instead of new community investments resulting in insurmountable rent increases, workers making a living wage will be more able to take cost of living increases in stride and benefit from the new infrastructure in their neighborhood.

Earning wages that families can actually live on, more people will be able to live in their communities of choice, close to transit and opportunity. It also means fewer car trips for these residents, better environmental outcomes and a big overall win TOD near light rail.

[1] U.S. Census Bureau, OnTheMap Application and LEHD Origin-Destination Employment Statistics (Beginning of Quarter Employment, 2nd Quarter 2002-2011).