Are Living-Wage Minimums As Helpful As Advertised?

Living wages far above the federal minimum wage are popular with voters but hotly debated among advocacy groups.
By @katierucke |
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    FILE - In this Aug. 29, 2013, file photo, protestors demonstrate outside a fast-food restaurant in Los Angeles. Thousands of fast-food workers and their supporters have been staging protests across the country to call attention to the struggles of living on or close to the federal minimum wage. The push raises the question of whether the economics of the fast-food industry allow room for a boost in pay for its workers. (AP Photo/Nick Ut, File)

    In this Aug. 29, 2013, file photo, protestors demonstrate outside a fast-food restaurant in Los Angeles. Thousands have been staging protests across the country to call attention to the struggles of living on or close to the federal minimum wage. (AP Photo/Nick Ut, File)

    Since 2008, the national rate of those who live below the poverty line has steadily increased — affecting about 46.2 million, or 15 percent of all Americans. Partly due to the economic collapse in 2008, the prices of many items such as food, gas and electricity have become more expensive.

    As the price of many items increased, wages did not, prompting many labor leaders to campaign for legislation that ensured all employees earned a living wage.

    Inspired by the city of Long Beach, Calif.’s efforts to pay hospitality workers a living wage, as well as labor activists’ efforts across the country to increase the minimum wage at fast-food chains, voters in SeaTac, Wash., a Seattle suburb, will decide next month whether or not the city should adopt its own living-wage policy.

    Known as Proposition 1, if passed, SeaTac’s ballot measure would increase the minimum wage for those who work at the Seattle-Tacoma International Airport as well as nearby hotels, parking lots and car-rental agencies, from around $9.19 to $15 per hour.

    Washington state currently has the highest minimum wage in the U.S., and if the measure passes, some SeaTac-based employees may earn a wage that is more than twice the federal minimum wage of $7.25.

    Supporters of the initiative say that increasing the minimum wage would not only help low-wage workers escape a life in poverty but allow them to spend more money at local businesses, which they anticipate could lead to an additional $54 million being put into the economy every year.

    Though the measure would only increase wages for about 6,500 workers in a city with more than 27,000 residents, the pay raise is 63 percent more than Washington’s current minimum wage. The biggest beneficiaries would likely be airport contractors, who currently earn $9.95 per hour.

    However, opponents argue that Proposition 1 would increase labor costs so much that employers would have no choice but to lay off workers and reduce their workforce by about 5 percent. Others expressed concern that businesses will relocate to other cities.

    Richard Davis is the president of the Washington Research Council, a business-backed research organization that opposes Proposition 1. He said that due to the magnitude of the wage increase, many employers will simply change how they do business.

    Instead of offering full-service dining experiences in hotel restaurants, Davis said many may switch to buffet dining. Cashiers in parking lots may also be replaced with credit-card machines.

    “The employees fortunate enough to retain their jobs will make more money, but that will come at the expense of workers who lose their jobs,” he said.

    But Don Liberty, owner of the Bull Pen Pub in SeaTac for the past 33 years, says his cooks and bartenders, who are not covered by the proposal, earn $12 to $16 an hour, not including tips. Liberty said a pay increase for airport workers would be good since those employees will have more money to spend at business like his.

    Chris Smith, who recently worked as an aircraft fueler, said he quit his job because he was only making $10 an hour and has three children to care for. “Fifteen dollars an hour would really help — it would enable people to pay their bills on time and fix up their houses,” he said.

    In addition to raising the minimum wage, Proposition 1 would also give about six paid sick days to many employees.

    But as the Seattle Times reported, if Long Beach’s living-wage legislation is any indication of what will happen to SeaTac, Proposition 1 won’t do as much good as supporters hoped — but won’t be as bad as opponents warned. Labor organizers are hoping to include a similar measure to the ballot this fall that would expand the living-wage law to those who work in other tourism-related jobs.

     

    Long Beach’s living-wage reality

    For 10 years, Jorge Sanchez struggled to support his family on his $9.75 hourly wage he earned by working as a dishwasher at the Hilton Hotel in Long Beach, Calif. So when the city proposed a piece of legislation last year known as Measure N or the Living-Wage Law, which would increase hotel operators pay to $13 per hour or allow employees to unionize, Sanchez said he threw his support behind the initiative.

    Despite protests from the Long Beach Area Chamber of Commerce and hotel chains in the area, who claimed that the initiative was an attempt to “unionize the city” and would “burden operators and limit their ability to compete with surrounding cities,” the legislation passed after receiving support from about 64 percent of voters.

    Measure N went into effect on December 21, but Sanchez says that instead of taking home more money as he expected, his employer reduced his workweek from 40 hours to 30.

    “Measure N was good because it raised our wages,” Sanchez said, “But in reality, what the hotel did was cut our hours, so it hasn’t made a change.” He added that while the measure has not helped him per se, it has helped employees who work full-time.

    Donald Blackwood is a bellman at the Hilton Hotel in Long Beach and one of the full-time employees who has been positively impacted by the measure. Blackwood said the increase in his hourly wage — from $8 to $13 — has resulted in his ability to take home about $800 a month more than he was earning before.

    “Before Measure N, I couldn’t afford a car. I had to ride the bus. And sometimes, I didn’t have enough money for the bus,” said Blackwood. “If I didn’t make enough tips, I’d have to buy a bag of potatoes and eat that with butter.”

    “Measure N was a way to fool voters who were uninformed, who didn’t read the fine print,” Long Beach Area Chamber of Commerce President Randy Gordon said, explaining that big hotels are exempted from paying employees a living-wage if the management agrees to engage in collective bargaining with a unionized workforce.

    He said that under the measure, hotels with 100 or more rooms are forced to pay employees at a rate that is almost double California’s current minimum wage of $8 per hour, since the measure starts employees at $13 per hour and increases by 2 percent annually or at a rate based on inflation or the federal minimum wage.

    Gordon says that since employees at two Hyatt hotels in the city opted to unionize with the help of the organization Unite Here, the measure was likely a “backdoor ploy to unionize hotels here that had been on the hit list and the wish list of the unions here for many years.”

    But Jeannine Pearce, director of the Long Beach Coalition for Good Jobs and a Healthy Community, said that though wages at hotels where employees decided to unionize may be less than those at other hotels, “workers may negotiate terms to their benefits or duties to make up for a difference in pay.”

    And while Gordon expressed concern that hotels will have to either raise their rates or reduce the size of their workforce to absorb the extra $1 million to $2 million spent on wages due to the measure, Pearce said higher wages would likely lead to reduced turnover and better service from hotel staff.

    Plus, those employees are spending the extra money in the community. “Right now, 2,000 workers are making a living-wage,” Pearce said. “They’re putting food on the table. They’re buying refrigerators when they had ice boxes before. They’re buying laptops for college.”

    John Self is a professor at the Collins College of Hospitality Management at California State Polytechnic University. He said sometimes we forget that “people are our biggest asset,” but added that “sometimes unions forget that we have to be profitable.”

    He called the legislation a “lose-lose situation,” and said employers in the hospitality industry could have prevented the passage of legislation such as Measure N by paying workers a higher wage from the start.

    “Sometimes, by being so cautious,” he said, “you shoot yourself in the foot and create an opening for the unions to come in.”

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