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October 30, 2013 at 12:01 PM

How a $15 minimum wage would devastate immigrant businesses

SeaTac Prop 1

Gabriel Campanario / Seattle Times

Raising the minimum wage to this level would be devastating to immigrant-owned small businesses.

On Nov. 5, SeaTac will consider whether to raise the minimum wage to $15 an hour for some airport and hospitality workers with Proposition 1. Efforts are under way to raise the same issue in Seattle. Mayor Mike McGinn, who is running for re-election, has already made it an issue in a zoning permit spat with Whole Foods in Seattle. In fact, he would like to raise it even higher in Seattle. His challenger, state Sen. Ed Murray, has also indicated support for the $15 level. (Read both sides of the debate in Tuesday’s Pro/Con on Prop. 1. Our editorial board recommends a no vote on Proposition 1 in an editorial.)

And while the current ballot issue only affects SeaTac, the next stop for the minimum-wage campaign is Seattle.

Supporters of the $15 campaign say it would help low-income people and families working in these jobs. That presumes poor people are a monolithic group, all of whom want to work those jobs for the rest of their lives.

Many people who now make a minimum wage, including many immigrants, dream of something bigger. Many want to own their own business, whether it’s a restaurant, a grocery store or Google (Google co-founder Sergey Brin is an immigrant.) And raising the minimum-wage dims their chances of ever running a business such as a convenience store or a restaurant.

What determines whether entrepreneurs can start businesses, and expand, is the minimum wage. A higher minimum wage would sound the death knell to entrepreneurs. It would drive them out of SeaTac, Seattle and into the suburbs.

In SeaTac, a higher minimum wage in the hospitality industry would have a disproportionate negative impact on immigrants. South Asian Americans dominate the motel industry, as a 2012 Voice of America story shows. The major hotel chains in SeaTac would budget and cut costs to absorb the higher labor costs. But immigrants who own one or two motels would not be able to do this and still turn a profit.

The Asian American Hotel Owners Association and the Korean American Hotel Owners Association oppose Proposition 1.

If Seattle considers raising the minimum wage, consider the mom-and-pop restaurants in the Chinatown International District operating on wafer-thin margins. Consider the many Korean-owned convenience stores throughout Seattle. The city has already pushed some businesses off the edge with the sick-leave policy, and the ban on plastic bags and plastic food containers.

My parents immigrated to the U.S. from Hong Kong in 1975 with two suitcases. My father, who did not graduate from high school, was a serial entrepreneur who started business after business. Some failed, some succeeded. He managed to bootstrap his way to a middle-class life for our family. He would not have been able to start those businesses had he been required to pay his workers $15 an hour.

Some immigrants, incidentally, got their first jobs in the U.S. at my father’s companies and built middle-class lives for themselves. He now owns apartment buildings in Phoenix, Ariz., which provide affordable housing. Many of his renters are Latino immigrants.

This is just one story in a country rich with examples of immigrants starting businesses that helped other immigrants.

The argument that raising the minimum wage would have no negative effect on employment does not hold water.

David Neumark, an economist at the University of California, Irvine, has done extensive research on raising the minimum wage and how research fails to show that increasing the minimum wage has a negative impact on employment. (He has done other more recent papers that aren’t publicly accessible, but here is a research paper that is publicly available from 2007.)

Stagnant wages, persistent high unemployment rates and a low standard of living are a result of the failure of lawmakers and voters to create and support policies to stimulate the economy. It’s a symptom of the high cost of housing and transportation in the region.

If regional leaders and voters want to raise the living standards for all, this is where they should focus their efforts:

  • Create a dead-simple, friction-free environment for people to start businesses.
  • Increase the affordable-housing stock. This includes making it easier for developers and property owners to create affordable housing. Check out three simple ideas by Sightline’s Alan Durning in an Opinion Northwest blog post by Thanh Tan. Also check out an April audio Seattle Times op-ed by Juanita Maestas.
  • Create a true regional mass-transit system as quickly as possible. The cost of owning and insuring a car needed to travel to work makes the region less affordable for workers earning a minimum wage. The years it has taken to open Sound Transit light rail has not helped.
  • Close the achievement gaps in education and give students the tools, skills and brain power to land the jobs that Washington state is now forced to import workers from outside the state and the U.S.

Comments | Topics: economy, immigration, millennials


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