Sound Progress

Research and insights from Puget Sound Sage.

Seattle Times Ed Board Makes A Long Reach On Long Beach and Proposition 1

Seattle Times

Seattle Times

Recently I was invited to sit down with the Seattle times Editorial Board to talk about how SeaTac’s Proposition 1 would boost the local economy, create new jobs and why it’s the right thing to do.  Coming along with me was a UW Professor of Labor Economics and an airport worker to share her personal experience.

Although we were able to point to credible information and analysis that shows Proposition 1 would boost the economy by $54 million, create over 400 jobs and put more money into the pockets of workers, they were not persuaded.

The editorial rested its case on a recent story by one of their journalists on a similar living wage initiative that passed last year in Long Beach, CA.

Amy Martinez, who has been covering Proposition 1 for several months, did the hard work of finding workers, employers and other observers in Long Beach to put together a balanced and fair front page story.

Funny thing about the editorial is that it lifted only some of the findings from Martinez’s story. So, in fairness, I’d like to point out some others.

Seattle Times

Seattle Times

First, some context. Measure N won at the ballot in November 2010 by 64% of the vote.  The measure is not apples to apples with Proposition 1 – it covers only large hotels, whereas Proposition 1 covers large hotels, in addition to ground transportation and airport workers in SeaTac. The new wage floor is $13 an hour there (while Proposition 1 would set a floor of $15 an hour). About 2,000 workers at over a dozen hotels were expected to be covered. It went into effect on January 1st, less than 10 months ago.

It’s really a bit early to tell the full effect of Measure N on workers, the hotel market and the broader community. As employers find ways to adjust for the new requirements, the dust needs to settle a bit to see the big picture.

But, here is what we know for now. According to Martinez,

      • Unemployment dropped from 12.4% to 11.2% since 2012. (That’s no small drop.)
      • Revenues per hotel room, a standard industry measure for profitability, went up by 2.9%.  And occupancy rates went up faster than the rest of the county.
      • Two workers interviewed had their hours reduced, one did not. But it’s not clear whether Measure N was the cause. Regardless, even at a 25% loss in hours, the 33% gain in wages meant their paycheck did not go down. If the reduced hours were seasonal, as suggested in the article, Measure N preserved their income.
      • Two hotels downsized to 99 rooms, avoiding Measure N coverage. However, Martinez also found that at least one of these hotels was planning this downsize before Measure N was even introduced.

If we add to this preliminary look at Long Beach to evidence from other cities and airports with living wage standards, a better and stronger picture appears.

In our report, Below the Radar, Puget Sound Sage showed how four airports have all seen growth and prosperity since living wage policies were adopted.  In Los Angeles, which has a living wage standard for hotels just outside the LAX, the overall market is doing well (occupancy rates and revenue per room both up 3%, according to hotel analysts PKF Consulting).

So, before we reach a conclusion about the outcomes of Long Beach’s very popular Measure N, let’s take initial findings with a grain of salt and take the longer view where we have years of data.

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