Gwen Davis
Kavey Pollard (left) and his friend Aisha Davis in front of a Denny's in SeaTac. While the Denny's is not affected by the $15 min. wage, the hotels nearby such as Cedarbrook Lodge are.

Raising minimum wage produces economic stimulus, study finds

By Gwen Davis

Kavey Pollard knows the lifestyle struggles of low wage jobs all too well. He makes $12.75/hour as a machine operator, and while he would like to live in SeaTac, Pollard resides in Kent because it’s cheaper.
“I’m not making minimum wage, but even so, I’m barely on the ground,” he said.

Pollard’s in an interesting situation. He hardly makes enough to pay for basic living expenses, such as food and utility bills, yet he makes too much to qualify for special programs that are available to those who make even less.

Which is why he is in support of a $15/hour minimum wage. Those extra few dollars would help him out, and free his mind of constant financial worries.

“Even when you have a job like mine, it’s still hard,” he said.

A brief history: Proposition 1
Prop. 1., which voters approved last Nov. and went into effect in Jan., applies to hotels with 100 or more rooms and at least 30 nonmanagerial employees, and parking lots with more than 100 spaces and at least 25 nonmanagerial employees. An estimated 1,600 workers at a dozen airport-related businesses in SeaTac are covered by the law.

Since then, the City of Seattle jumped on the bandwagon, and now Mayor Ed Murray and Seattle City Council are looking to up the minimum wage city-wide to $15/hour.

“We worked a lot on this issue of minimum wage in Washington for the past 15 years, before it was cool,” said Ben Henry, senior policy associate at Alliance for a Just Society. “It’s interesting to see how things changed over time, and how the movement has evolved.”

Minimum wages were never designed to be living wages, according to Henry.

“For a household with a single adult, you would need to earn $17.55/hour for basic living. That’s just for food, rent, transportation, child care and other basic needs,” Henry said.

A household of four needs to earn $32.11/hour to make ends meet, according to the 2013 Job Gap Report.
“When people don’t make ends meet, they have to make compromises like affordable health care, preschool or buying cheap food without a lot of nutrition,” he said. “Or you get multiple jobs. That’s becoming more and more common.”

“There’s an argument to pick yourself up by your bootstraps, and go get a better job. But it’s not that easy,” he said.

It works, study finds
Recently, San Jose CA raised its minimum wage to $10.15/hour. Before that it was $10/hour, much higher than the national average of $7.25/hour.

“We saw in San Jose that the higher minimum wage was an economic stimulus,” Henry said. “Unemployment went way down, businesses grew and minimum wage jobs grew.”

“What this does essentially is put money into the hands of those who need it the most,” he said. “For minimum wage workers who are earning $15/hour, all of a sudden they’re like ‘hey! Let’s take the family out to the restaurant.’”

That increases the restaurant’s business, which yields a greater profit, and then the restaurant ultimately can expand and hire more employees.

Higher minimum wages produce a ripple effect.

“This isn’t just about the low wage workers, but about stimulating an economy that works for everyone, not just for a select few,” Henry said.

“What we saw in San Jose is their unemployment went down, they didn’t have to cut hours and $100 million was pumped into the economy,” he said. “We could see this success here, but it could be even greater,” due to an even higher minimum wage.

Concerns weigh in
However, despite optimism, there are potential downsides to raising the minimum wage. Small businesses complain that they won’t be able to meet the new standards, and will be forced to close shop.

To address that concern, there may be some kind of exemptions for such businesses, or a phase-in policy, which the city is looking into. However, the minimum wage push ultimately helps everyone, including such businesses, according to advocates. Therefore, city leadership might be hesitant about making exceptions.
“It’s not the small businesses that are targeted,” Henry said. “There are top offenders who not only don’t pay living wages, but don’t offer health care, and forces employees to go out and apply for safety net programs,” which drains money from the state and federal government.

Leading offenders include Walmart and McDonalds.

“Those businesses even turn it into a blame game,” Henry said. “They have online budgeting tools employees could use, and provide very condescending tips like, ‘return unused gifts!’”

Other ideas
Howard Metzenberg director of Blick Art Materials in Capitol Hill said that while he is in support of raising the minimum wage, Seattle should not go at it alone (for the sake of this article, Metzenberg said he is speaking for himself and not for his business).

“What happens when a city of 142 square miles like Seattle raises the minimum wage to a level far above that in neighboring cities?” he asked. “Many businesses in Seattle that manufacture or sell services outside of Seattle would leave the city. A company in Lynnwood or Federal Way would be able to undercut a Seattle company.”
“Ultimately, a $15 minimum wage would be catastrophic, destroying jobs and property values throughout Seattle,” he said.

Others feel it’s simply a bad idea.

“Minimum wage is a hateful thing to inflict,” said Michael Plotke, an IT technician who lives in Seattle. “It encourages embracing a culture of low expectations. It encourages government meddling… All told, it seems to be one of the worst ways to ensure people don't die of starvation or exposure.”

Others ditto the sentiment.

“I think it’s completely ridiculous to have to pay a lot of money to somebody who doesn’t have experience,” said Niyah Gonzales, 19-year-old south Seattle resident. “To me, I think when it comes to raising wages, it’s something you need to work hard for.”

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