Thursday, October 23, 2014

Political Pressure to Raise Tacoma Minimum Wage

On Tuesday, 15 Now organizers submitted 1,300 signatures to the City of Tacoma asking the City Council to require all businesses to pay a minimum wage of $15/hr. 

Unfortunately for the business community, several councilmembers seem very interested in raising the minimum wage on a city-by-city basis.

While the proponents have not shared any details of a proposal with the business community, they are likely overlooking the potential impacts to EMPLOYEES including reduced benefits, reduced hours and jobs being moved outside Tacoma. 

With the Seattle economy currently driven by high-skilled/high-paid jobs the cost of living in Seattle is 22% higher Tacoma.  This differential is exacerbated even further when you consider the average home price in Tacoma  is only 40% of the average home price in Seattle.  The idea that Tacoma needs to have a minimum wage comparable to Seattle’s just doesn’t make sense.

For KING 5's coverage, click here.

1 comment:

  1. Hi Mimi,

    I'd like to propose an alternative case.

    First, it doesn't make sense to compare Seattle and Tacoma, especially the housing prices. Virtually anybody working a minimum wage job cannot afford to buy a house, or barely even rent a decent two-bedroom apartment. Tacoma is its own wonderful and growing economy and it is important to stimulate that growth. For years, prices and inflation have out grown the increases in minimum wage, or wages in general. There has to be something done to make it fair for the currently dwindling middle class to keep up as business won't want to start in areas that have higher poverty/crime rates.

    This leads me to my second point, the economics of minimum wage. Currently, many people on minimum wage are also using state benefits as well as other local resource to be able to survive, keeping tax costs high. In addition, people are having to work 12 to 15 hour days between 2+ jobs just to get by. Increasing the minimum wage we will see a drop in benefit usage and less of a need for working longer days. As we have seen in the past, in the 50's through the 70's, a strong middle class is what stimulates the economy and creates growth. When we increase the minimum wage, we increase the purchasing power I.e demand for goods and services in the local economy. This in turn drives up profits, which creates jobs, then goes right back into the economy. Especially with how great Tacoma is at offering so many fantastic community events and shopping. (Shout out to the Chamber for its efforts and events!) with more spending, Tacoma will take off!

    Third, keeping our employees in mind the Federal Department of Labor states: "Small business owners believe that a higher minimum wage would benefit business in important ways: 58% say raising the minimum wage would increase consumer purchasing power. 56% say raising the minimum wage would help the economy. In addition, 53% agree that with a higher minimum wage, businesses would benefit from lower employee turnover, increased productivity and customer satisfaction."

    One of the most expensive and reoccurring costs to a business is their labor. The cost of hiring, training, honest mistakes, negligence, theft, and turnover. When employees feel at their best because they can eat well, they aren't worried about how they are going to pay bills the next month, get a good night’s sleep, not working two jobs, depend on state benefits, can afford their healthcare, struggle with the expensive cost of daycare/ babysitters, and interpersonal issues due to above mentioned factors, they perform better. I would argue that the Opportunity costs of not paying a higher wage far outweighs the cost of an increase of minimum wage.
    Lastly, (I thank you for keeping up with me this far, I promise it's almost over!!) let’s not forget the history behind minimum wage. FDR said it best, and it still holds true:

    "I am fully aware that wage increases will eventually raise costs, but I ask that managements give first consideration to the improvement of operating figures by greatly increased sales to be expected from the rising purchasing power of the public. That is good economics and good business. The aim of this whole effort is to restore our rich domestic market by raising its vast consuming capacity. If we now inflate prices as fast and as far as we increase wages, the whole project will be set at naught. We cannot hope for the full effect of this plan unless, in these first critical months, and, even at the expense of full initial profits, we defer price increases as long as possible. If we can thus start a strong, sound, upward spiral of business activity, our industries will have little doubt of black-ink operations in the last quarter of this year. The pent-up demand of this people is very great and if we can release it on so broad a front, we need not fear a lagging recovery. There is greater danger of too much feverish speed."

    I hope this has provided a different perspective.