The $15 min. Wage: ‘Killing Flies with a Shotgun’

A ballot going to vote this November will give the local city of SeaTac the option of having the highest minimum wage rate in the country–$15 versus the present state minimum wage of $9.19. Washington State already has the highest minimum wage in the country. Proposition 1, also known as the “Good Jobs Initiative” will give SeaTac double minimum wage compared to some parts of the country. This measure will apply to airport workers and those in nearby services such as hotels and car rentals. Further, this bill will give certain workers paid sick leave and job security when contractors change.

When a similar bill was passed in Long Beach, Calif., the workers were faced with a pay bump, but had their hours cut.

According to The Seattle Times, supporters argue this wage hike will create a “liveable wage” for many working-class employees, but the opposition group explains the proposition will kill small businesses that will be unable to afford the higher rate for their employees.

Washington Wire reports the campaign is backed by Working Washington, a group active in the Occupy movement and Service Employees International Union. It appears other major West Coast airports have wages from $13.45 in Oakland and $14.18 in San Francisco; however, this initiative affects the city of SeaTac and not just the airport and its employees.

Minimum wage increases do improve employee income, but they also raise the cost of unskilled labor and can affect a business’ ability to hire more employees.

The Huffington Post, reporting on minimum wage increases, argues increases are good. They allow poor workers to spend money in the local community, expanding business profits as consumer demand grows and therefore creating more jobs, according to the “multiplier effect.”

Forbes argued that “as a poverty program, raising the minimum wage is like killing flies with a shotgun, not very well targeted.” It is explained that 15 percent of the increase will go to people below the poverty line and most minimum wage workers are from above median income families.

Federal figures show one in six SeaTac residents are below the poverty line and The New York Times explains that this is in sharp comparison to one in 10 below the poverty line in King County. Minimum wage workers will be able to make about $30,000 if this bill passes; effectively helping these families in poverty manage living costs.

The Port of Seattle, owner of the airport, does not have a position on the measure.

The Aviation Public Affairs representative has said if the measure does pass there would be no changes at SeaTac at the port.

“The measure does not direct anything to concur within the port, so currently anyone with contracts that we have with tenants, those would still remain in effect until the end of those contracts.”

“We don’t hire any of those people [in the SeaTac area],” said the APA representative. “So those are not our employees—those are the employees of tenants here. Most of them tend to be employees of vendors that are serving the airline and others are hired with concessionaires. These employees already have the rates and rents established in their contracts and those will not change based on this initiative. If they have labor costs that could be affected by this initiative, they would have to figure out how to still pay the same lease rates to the port, so that wouldn’t change.”

Alaska Airlines has taken legal action and filed a lawsuit trying to stop the bill. In a competitive industry, airlines are concerned that many of their deals and rates will be at stake.

Fred DeKay, professor of economics at Seattle University is concerned with the long-term effects of this measure and its overall fairness.

“There is concern that this is going to jeopardize the viability of some businesses in this particular area if they have a different cost structure than their competitors,” said DeKay. “Then there is going to be some incentive for people to go outside of SeaTac to acquire the things they could have acquired in SeaTac if the prices were different.”

There may not be immediately visible changes in the area, explains DeKay. Business may have to limit the amount of employees they hire because if the costs go up without a lot of profits they will not be able to meet all the fiscal demands.

It can be anticipated that in the future businesses, and even customers, will choose to do business just outside of SeaTac in order to avoid these higher costs.

“There is also an issue of fairness,” DeKay said. “Why are we benefiting those people who are working those particular jobs and not everybody else? Of course everyone is going to apply for these sorts of jobs.”

DeKay is concerned this measure could eventually displace workers. Employers may try to automate and turn to machines for cheaper labor. Also, paying a higher salary for low skill jobs will increase the number of employees seeking low skill jobs and they will not have the incentive to acquire new skills and move into a different job. According to DeKay, wages are usually an incentive for people to improve their skills and to move to higher-earning jobs. These kinds of distortions are concerns for economists.

Similar to the stadiums in Seattle, the airport could have customers in a gridlock situation where they are going to be paying outrageous rates for products they could get cheaper elsewhere, but if a customer is already on the premises then they are likely to leave. For travelers with little time inbetween flights, these higher costing foods would be the only option for a quick snack during a layover.