A $15 Minimum Wage, Introduced too Quickly, Could Hurt Seattle

At first blush, our cover this month might seem a little simplistic. After all, the $15-an-hour minimum wage that labor advocates are pushing is not going to solve all our problems, nor is it going to destroy our city. But the proposed 61 percent increase in the minimum wage to a point where it would be more than twice the federal minimum wage and 40 percent more than any other big city in the country is such a big rise that we think it warrants ringing some warning bells.

There is no question that the widening gap between the rich and the poor is bad for the community and bad for the economy. Even the conservative International Monetary Fund recently warned that rising inequality would have a dampening effect on economic growth.

But the minimum wage is a blunt instrument and we should be careful how we wield it. While most of the increased wealth in recent years has gone to the top one percent who own large portfolios of stocks, land and other assets, the costs of a higher minimum wage would be paid for by the small and midsize businesses whose owners operate restaurants and retail stores in this city. Simply exempting nonprofits and the smallest businesses from the wage hike does not address the problem. Retailers and restaurateurs of all sizes operate on thin margins yet employ many of our workers. They would have to raise prices, cut jobs, reduce training programs and, in some cases, shut down operations if minimum wages were raised too high, too fast. Meanwhile, among the largest beneficiaries of the minimum wage increase would be servers in restaurants, some of whom already make more than $70,000 a year when factoring in their tips. Thats above our median income.

Successful cities are complex ecosystems that include such varied elements as government services, arts organizations, transportation infrastructure and health care services. Each interlocking part is critical to the smooth functioning of a municipality. Businesses are also critical to a citys vitality. They provide most of the jobs and generate the incomes that support nonprofits and help cover the costs of government services. Without its restaurants, hotels and retailers, Seattle would be a shadow of what it is today.

When we mess with such a vast and complex system, we should tread cautiously. If we must have a $15 minimum wage, then introduce it gradually over a five-year period to reduce the shock, and allow businesses to include the money they spend on health benefits and the earnings employees receive as tips. Employers who offer benefits to workers should not be penalized for their good will.

If we want a minimum wage increase to take effect on January 1, 2015, then we should make it a more moderate amount. A $12 minimum wage would still represent a 28 percent increase. And it would still put us 20 percent above the national minimum wage President Obama has proposed, and far above the minimum wage rates of higher-cost cities like New York and San Francisco. We need to find a way to allow more workers to share in the citys growing wealth without harming the very source of that prosperity.