Nine city or county governments across the country have increased their minimum wage. A University of California, Berkeley study commissioned by Seattle Mayor Ed Murray’s income inequality committee concludes that a higher wage floor can increase productivity and reduce turnover, cushioning the macro-economic cost. Based on studies, it suggested companies could “adjust to higher minimum wages without cutting jobs or hours.”
But the report’s conclusion includes a big caveat:
While these studies are suggestive, they cannot tell us what might occur when minimum wages are increased significantly beyond existing local, state, or federal mandates.
Important, because an across-the-board increase from the already-top-in-the-nation state wage of $9.32 to $15 is, well, “significantly beyond existing local, state or federal mandates.” And the experience of the nine other cities and counties with higher minimum wages shows they included a raft of trade-offs and concessions. As I write in my column today, such trade-offs are described by Seattle Council member Kshama Sawant as “two steps back.”
The highest current wage among the nine cities is $10.66 an hour (in Santa Fe city and county). Seven included lower minimum wages for workers who made tips. Seven phased in higher wages, over as long as four years. Federal and state workers were often exempted.
The $11.50 wage, passed in December by the city council in Washington D.C. had all three. The wage sprang from an effort to impose a higher wage at big box stores, said Michael Wilson, lead organizer of Respect D.C., an umbrella coalition of unions, social justice groups and leaders in the religious and African-American communities. When the Mayor, Vincent Gray, vetoed a big-box wage ordinance to allow three new Walmarts in the District, council members went further.
The District coordinated with adjoining Montgomery and Prince George’s counties to all raise wages, “to undercut the argument that it’ll drive business away to other jurisdictions,” Wilson said. It was phased in – over three years in D.C., four years in the counties – on the belief that “a timed implementation allowed businesses to catch up to the rising labor costs.”
The biggest trade-off was continuation of a “tip wage” – a $2.77 an hour rate for workers who make tips. (Washington is one of seven states without a tip wage; servers make $9.32 an hour.) Wilson said “a huge push” by the restaurant industry prevailed, but his group instead got an existing sick pay ordinance extended to tipped workers, who’d been excluded.
Overall, “People see it as a huge thing,” said Wilson.
For comparison, D.C. – with a higher cost of living and similar deep-blue politics – got to yes on a minimum wage that is less than half what Seattle’s advocates are proposing, with a trade-off (a tip wage) that is called “draconian” here, and did it in a way that doesn’t put D.C. on a higher-wage island.