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Starting Jan. 1, a new minimum wage of $15 an hour took effect in the community of SeaTac in Washington state.
But most workers there are not receiving it.
Last month a judge declared that workers at the SeaTac airport couldn’t receive the new wage because the city had no jurisdiction over the airport, where airlines have contracted out many jobs.
Union leaders who support the measure, which SeaTac voters barely approved last November, will appeal the decision.
Business leaders say a $15 an hour minimum wage would cost jobs and hurt the economy.
Washington state already has the highest minimum wage in the country; it jumped from $9.19 an hour to $9.32 an hour on New Year’s Day.
Here & Now speaks with Scott Ostrander, general manager of the Cedarbrook Lodge in SeaTac, who says he has temporarily closing several rooms in his hotel so that he doesn’t need to comply with the law, which compels hoteliers with more than 100 rooms to pay workers $15 an hour.
Ostrander makes the distinction between a living wage, which he thinks should be commensurate with an employee’s experience and “the totality of their tenure in the work force,” and a minimum wage, which he says is an entry-level wage.
However, Ostrander isn’t opposed to incremental minimum wage increases. His objection to the Seatac increase is that it is too much, too fast.
“What this initiative does is this increases the minimum wage by 63 percent, and a lot of businesses cannot stay in business based upon that type of expansion, so they are going to have to adjust their business models accordingly,” Ostrander said. “The city of Seatac is going from $9.19 to $15, and they’re doing it in a 24 hour period.”
However David Rolf, vice president for the Service Employees International Union and president of SEIU 775NW, says 77 percent of minimum wage worker are adults and over 25 percent are over 40.
“No one who works for a living full time ought to depend on public assistance and the generosity of the tax payers in order to pay the rent,” Rolf said.
SEIU 775NW led the campaign in SeaTac and is the driver behind the fast food minimum wage movement in Seattle.
“In the long run this is going to help small business because when workers have more money to spend, businesses have more customers,” Rolf said. “This is not a new idea, it’s not a radical idea, it’s called Henry Ford economics. And it comes down to the idea that whether you put fuel in jets or clean a hotel room, that you ought to someday be able to buy a ticket on one of those airplanes.”
MEGHNA CHAKRABARTI, HOST:
From NPR and WBUR Boston, I'm Meghna Chakrabarti.
ROBIN YOUNG, HOST:
I'm Robin Young. It's HERE AND NOW. And it was a happy new year for some workers: higher minimum wages now in effect in 13 states and four cities in the U.S., Washington state with the highest. Wages went up to $9.32 an hour in Washington on New Year's Day and up even further in the Seattle suburb of SeaTac after that voter referendum pushed the minimum wage up to $15 an hour and also made SeaTac the latest flash point in the national debate over raising the minimum wage.
CHAKRABARTI: That's right, they went up everywhere in SeaTac except Seattle-Tacoma International Airport. And last month a judge ruled that the city has no jurisdiction to impose that $15-an-hour minimum wage at the airport, which is in SeaTac, the airport being a major employer at the city.
Union leaders vow to appeal the ruling, which blocks the measure known as Proposition 1, and in a few minutes we'll hear from a labor leader who's a driving voice in the fast food living wage campaign. But business leaders have a different view. So let's start with Scott Ostrander. He's general manager of the Cedarbrook Lodge in SeaTac. Scott, welcome.
SCOTT OSTRANDER: Thank you so much, it's a pleasure to be here.
CHAKRABARTI: First of all, explain to us why you think that paying $15 an hour as minimum wage may be good or bad for your business, the Cedarbrook there.
OSTRANDER: Well, I think that there's a big difference between a minimum wage and a living wage. Certainly a living wage I think is perceived by people as to be people that are established in the workforce, and they deserve a minimum wage based upon their experience and the totality of their tenure within the workforce, whereas a minimum wage is more of an entry-level wage, or most importantly, obviously, for those of us in the Pacific Northwest or in the Seattle market, obviously for immigrants.
CHAKRABARTI: Is that who works at the Cedarbrook Lodge, or do you have, you know, long-term employees who have been there for many, many years?
OSTRANDER: Well, that's a great question. Obviously when you look at the hospitality industry or the tour and travel industry by and large, the greater majority of our employees are entry level. They are new to the workforce. So for example at Cedarbrook Lodge we have 117 employees. Of those 117, 83 of those total positions, out of 117, are actually entry-level positions that do have opportunity for advancement, but they are entry-level positions into the workforce.
CHAKRABARTI: Now, I understand that the Cedarbrook Lodge has 104 rooms. Is that right?
OSTRANDER: That's correct, yes ma'am.
CHAKRABARTI: OK. Now is it true that, say, if you just cut down the number of rooms to below 100 that you would be exempt from the $15-an-hour minimum wage?
OSTRANDER: That is correct. In essence, we certainly could just eliminate five or six of our guest rooms and not have to be in compliance.
CHAKRABARTI: Are you going to do that?
OSTRANDER: We are not going to do that long term. We are doing that short term but only because we are actually - we've taken a much different approach than most of the businesses in SeaTac. Whereas a lot of the hospitality businesses in SeaTac are looking at closing restaurants, laying off employees, reducing their workforces, our ownership group has decided to invest in the city of SeaTac by making a $15 million commitment to expand the hotel by 67 rooms and adding a full-service spa.
Proposition 1 would have put us out of business if we didn't drive additional revenues, and the only way to drive additional revenues is to add guest rooms and to add services to our small hotel.
CHAKRABARTI: OK, so I take your point that in the short run you are shutting down a certain number of rooms in order to not have to pay the $15-an-hour minimum wage. But nevertheless, in the medium and long run, you're expanding. As you just said, you're - the business is continuing to invest in SeaTac despite Proposition 1. I mean, another option could've been to move out of town entirely, right?
OSTRANDER: Well, unfortunately we just can't pick up 18 acres and move it out of town. However, with that said, you're correct. We are going to be creating jobs. However, Proposition 1 is not a proposition that is necessarily creating jobs.
CHAKRABARTI: You've been in the hospitality business long enough to know that the minimum wage, both at the federal and the state of Washington level, has gone up a couple times in the past. But after the initial sort of disruption of the increase in that wage, it's not really those wages that drive what happens in the hospitality business. You guys, you're there. You survive regardless. It's other things that, like, really drive the business up and down.
OSTRANDER: Well sure, and again everything is relative. You know, obviously in the past when you look at the federal minimum wage increases or even the increases in the Washington state minimum wage, which is already the highest in the nation, those increases are, you know, a half-percent, one percent, one-and-a-half percent. And what this initiative does is this increases that minimum wage by 63 percent. And a lot of businesses cannot stay in business based upon that type of expense, and so they're going to have to adjust their business models accordingly.
CHAKRABARTI: I see, so it's the big one-time jump that's a problem.
OSTRANDER: Right. If you look at what's happening in the state of California, and the state of California just recently passed a new minimum wage, and I don't know the exact amount, but I believe they're increasing their state minimum wage to the neighborhood of around $10.50 an hour. But they're doing it over a couple of year period.
The city of SeaTac is going from $9.19 to $15. That's 63 percent. And they're doing it in a 24-hour period.
CHAKRABARTI: Right. Well, Scott Ostrander is the general manager of the Cedarbrook Lodge in SeaTac. Scott, thank you.
OSTRANDER: Thank you very much for your time. I appreciate it, and a happy new year.
YOUNG: Well, now let's get the view of labor unions, which heavily backed the campaign for the $15-an-hour minimum wage in SeaTac, pouring in more than a million dollars, double the amount that business groups spent opposing Prop. 1. David Rolf is vice president of the Service Employees International Union and also president of local SEIU 775, which led the campaign in SeaTac and, by the way, is the driver behind the $15-an-hour fast food minimum wage movement in Seattle.
So David, your thoughts on what we just heard, a hotel manager in SeaTac distinguishing between a living wage and minimum pay, which he says is for entry-level jobs.
DAVID ROLF: Well listen, I don't know anything about running a luxury hotel with two presidential suites, expanding a hotel by 67 rooms or serving foie gras. What I do know is that 77 percent of minimum wage workers in this country are adults, that 25 percent of them are over 40, that over 20 percent are moms and no one who works for a living fulltime ought to depend on public assistance and the generosity of the taxpayers in order to pay the rent.
YOUNG: OK, well you got your digs in, what you perceive is a high-end business owner, but other smaller businesses are saying that this is going to hurt them. We are reading about Mike's Community Cup, a cafe that says they're going to have to move because of it. And others are saying that even though this wage hike might not affect them because it's targeted at businesses that are somewhat larger, it may affect them in the long run because if there is a $15-an-hour job available, they're not going to get somebody for the $9-an-hour job that they have.
ROLF: Well, in the long run this is going to help small business because when workers have more money to spend, businesses have more customers. This is not a new idea. It's not a radical idea. It's called Henry Ford economics. And it comes down to the idea that if you - whether you put fuel in jets or clean a hotel room that you ought to someday be able to buy a ticket on one of those airplanes.
YOUNG: Yeah, well, and there are others who agree with you. You have U.S. Rep. Adam Smith, who grew up near the Seattle-Tacoma International Airport, where his dad worked as a ramp serviceman for United Airlines, and the congressman said his dad used to make $16 an hour with full benefits. Now that's down as low as $9 an hour. Others like economist Emmanuel Saez of the University of California Berkeley are pointing out that the top 10 percent of earners took more than half of the total income in the U.S. in 2012.
And Smith and others are saying Prop. 1 is a way to get some of that money into the hands of the other 90 percent of workers.
ROLF: Well that's exactly right. And what voters in SeaTac said and what voters in New Jersey and I think voters in New York City said is enough is enough. They're tired of waiting for CEOs or congressmen to make the right decision, and they're going to take these matters into their own hands and say it's time for the economy to work for everybody.
YOUNG: We're looking at other airports. The Los Angeles City Council in 2009 extended the minimum wage at the airport there to over $15 to all airport workers. And others are saying that most of the costs of these wages can be passed on to travelers, who come through and pretty much pay the wages for the people of SeaTac.
ROLF: It's also possible they could just take it out of their CEO pay or their shareholder dividends.
YOUNG: Well, you obviously are making a case based on your feelings about pay inequality, a growing topic now. But make the case that a higher minimum wage is better for employers.
ROLF: If you run a coffee shop, if you run a small restaurant, if you run a bar and grill, like a guy named Don Liberty, who was one of our big supporters, who runs a place called the Bullpen Bar and Grill in SeaTac, when airport workers or hotel workers or restaurant workers make more money, they're more likely to come into your business and spend it.
YOUNG: Well, there are also so many studies that show that higher wages are linked to lower turnover rates, which means far less costs for training for employers, far better for employers in the long run. But as you know, there are people who feel that this is something that's being forced on businesses and workers by unions without first of all a full debate among workers, but also the Seattle Times editorialized against Prop. 1 and made the point that part of the proposition is that new employers that, let's say, take over businesses have to keep workers for up to three months, that this ties the hands of employers.
ROLF: Ultimately those businesses get to decide who their employees are going to be. What Proposition 1 says, and what the whole living wage movement is about, is whoever your employees are going to be, they ought to be able to, at the end of the day, put food on the table without relying on government assistance.
YOUNG: David Rolf, vice president for the Service Employees International Union, SEIU. David, thank you.
ROLF: Thank you, Robin.
YOUNG: Well, how about you? Your thoughts on the boosted wages in SeaTac and the income inequality debate in general. Some say this is going to be the topic of 2014. We welcome your thoughts at hereandnow.org.
CHAKRABARTI: And meanwhile a quick note on that storm that's blanketing a third of the country, Robin. Do you have your boots, your snow boots?
YOUNG: Oh, I have my skis.
CHAKRABARTI: Your skis, OK.
CHAKRABARTI: I've got my boots here today because we're looking at blizzard-like conditions with extremely low temperatures, again across a third of the country. Aaron Colt(ph) told WABC in East Rutherford, New Jersey, that he spent the morning buying groceries.
AARON COLT: The store was kind of picked over, I'll say that. But, you know, I got everything I need for a couple of days.
CHAKRABARTI: Well Trevor Shindorf(ph), a snowplow operator in Toledo, Ohio, told local affiliate WTVG that hey, it's not all that bad.
TREVOR SHINDORF: More snow, more money, so I like it.
YOUNG: What's not to like, more snow, more money? Keep those roads clear, Trevor, and everyone else, do stay safe. You're listening to HERE AND NOW. Transcript provided by NPR, Copyright NPR.