Sound Progress

Research and insights from Puget Sound Sage.


Seattle City Council Committee Approves $15 Minimum Wage

A Seattle City Council committee unanimously voted today to pass the Mayor’s proposal for a $15 minimum wage.  The ordinance passed out of committee will phase in the minimum wage over the next three to seven years.  Specifically, it will require large businesses (500+ employees) to pay $15 by 2017 or 2018, and small businesses (less than 500 employees) to pay $15 by 2019 or 2021.

This historic vote represents a huge victory for workers, communities of color, and progressive leaders through the U.S.  The final vote in Council is expected to occur next week.

$15/hour minimum wage proposal passes through Seattle City Council's committee with a unanimous vote.

Seattle’s $15/hour minimum wage proposal passes through City Council’s committee with a unanimous vote.

In the end, City Council did not make some of the dramatic changes recently rumored in the media, but they did make some modest amendments that alter the deal struck by the Mayor’s Income Inequality Advisory Committee.

Below, we highlight and explain some of the most significant changes:

Amendments that support workers:

Council strengthened the power for the City to enforce the minimum wage throughout the ordinance.  The City of Seattle is undergoing a separate stakeholder process that will determine how the City handles all labor enforcement strategies; however, the amendments passed today allow for stronger mechanisms than in the Mayor’s proposal.  They include:

  • Extending the period a worker has to report a violation after it has occurred, from just 180 days to three years, which dovetails Washington State law.
  • Ensuring that, if wage theft occurs, employers must not only pay back wages to wronged workers, but they may be subject to a penalty up to $500 for first time violations, $1000 for second time violations, and $20,000 for subsequent violations.

Councilmember Sawant successfully inserted a provision that codifies the City’s intent to identify additional funding for non-profit organizations.

Amendments that weaken the ordinance for workers:

Council pushed back the effective date to April 1, 2015 from January 1, as originally proposed.

The City will allow employers to pay a sub-minimum wage (85% of the minimum) to 14 and 15 year old youth, people with certain disabilities, and apprentices.  Employers must apply for a waiver granted by the Department of Labor and Industries – a practice already done under State law.  This provision will potentially allow for discriminatory wage practices that are currently allowed under State law.  However, the employer will also have to apply to the City for a permit as well.  Between the two permits, the requirement for a waiver will create transparency for workers and the public about which employers are requesting and have received permission to pay sub-minimum wages.


Implications of the Mayor’s Proposal for a $15 Minimum Wage

What is the Income Inequality Committee’s proposal to raise the minimum wage?


If the Council approves the Mayor’s proposal to raise the minimum wage, low-wage workers in Seattle and our local economy will see significant economic gains.

  • 46% of Seattle’s low-wage workforce, who work for large employers, will make $15 by 2018.
  • Local small businesses and small non-profits will have 5 to 7 years to phase in the minimum wage to $15, and will reach parity with big businesses in 2025.
  • After all businesses have phased-in the minimum wage, the minimum wage standard will be equivalent to roughly $14.30 in 2015 dollars.

Table 1. Mayor of Seattle’s Minimum Wage Proposal

Table 1. Mayor of Seattle’s Minimum Wage Proposal

The Mayor’s proposal phases in the minimum wage in four separate tiers: A, B, C, D.   As of January 1, 2015, the minimum wage for most businesses in Seattle will be $11/hr.  The minimum wage standard will be tied to inflation starting on January 1, 2018.  By the end of 2025, all businesses in the Seattle will pay the same exact minimum wage:  an estimated $18.13/hr with a 2.4% adjustment for inflation.

Table 2. Phase-In Tiers For Proposed Minimum Wage

Table 2.  Phase-In Tiers For Proposed Minimum Wage

Who Will Benefit from the Mayor’s Income Inequality Proposal (And When)?


Who will see a wage increase, and when, depends entirely on who you work for and what types of benefits you receive.  Combining government data with a report produced by the Center for Economic and Policy Research, we estimate that nearly half of Seattle’s 102,000 work for large businesses, and 26% receive health-care coverage.  For exact breakdowns of workers for each tier of minimum-wage phase in, see Table 3.

Table 3. Number Workers affected by Tier of Minimum Wage Phase-in

Table 3. Number Workers affected by Tier of Minimum Wage Phase-in

How much more money will workers earn?


Over the next 10 years, low-wage workers will earn nearly $3 billion dollars more than their current wages (assuming current wages rose in line with inflation).  Our recent report shows that Seattle’s low-wage workforce earns an average of $11.95 per hour and works roughly 32 hours per week.  We estimated their new earnings based on the difference between the proposed minimum wage and the current average wage of a workers making less than $15 an hour.  The table below shows that  how much more in earnings workers affected by the policy will make in each year of the phase-in.  For example in 2017, when large businesses who do not provide health insurance reach $15 per hour low wage workers will earn nearly 150 million more in 2017, than if their wages had only increased with inflation.  Over the 10 year phase-in period, the cumulative earnings for affected workers would be $2.9 billion dollars.

Table 41 Our recent report showed that roughly 102,000 workers earn below $15 an hour. Using Economic Census data to estimate that 46% of workers are employed by large businesses with more than 500 employees anywhere in the nation.  A national report, from the Center for Economic and Policy Research, indicates that only 26% of low wage workers receive healthcare coverage, and our own analysis of Census MicroPUMS data indicates that there are nearly 10,000 tipped workers in Seattle.


New Study: Who are Seattle’s Tipped Workers?

The $15-an-hour minimum wage in Seattle has been focused on a debate over tipped workers, who according to our analysis, comprise of less than 10% of workers who earn below $15 an hour.

In this policy brief, we shine a spotlight on all tipped workers in Seattle, so that city elected officials can focus on practical solutions for raising the minimum wage, instead of relying on speculation about who tipped workers are and what incomes they earn. To inform our research, we combined an analysis of government data with interviews of workers in various tipped professions. Our analysis demonstrates that the average tipped worker in Seattle is roughly 32 years old, has at least some level of college education, and earns less than $15 an hour – even if you include tips in their hourly earnings.

tips

Tipped workers generally earn below $15 an hour, including tips. Although there has been much attention paid to a few high-earning, tipped restaurant workers, this group is not representative of the tipped workforce in general.

Highlights:

  • Tipped employees are more likely to earn low wages: the average annual pay for waiters and waitresses in the City of Seattle is $22,620 per year. Waiters and Waitresses make up 61% of Seattle’s tipped workers.
  • Tipped workers are disproportionately women: 59% of tipped workers are women, even though women comprise of only 46% of Seattle’s workforce.
  • Tip credit encourages wage theft: Nationwide, full-service restaurants were found non-compliant in 84% of Department of Labor Wage and Hour Investigations.


New Study: $15 Minimum Wage – Single Best Option to Reduce Seattle’s Gender and Race Pay Gap

A new study by Puget Sound Sage concludes that a $15 minimum wage would create large scale benefits for women and people of color in Seattle, and effectively narrow our city’s gender and race pay gaps.  In a policy brief released today, Puget Sound Sage examines the potential outcomes of a $15 minimum wage on the local economy, assesses outcomes by industry sector, and demonstrates that a $15 minimum wage (with a phase-in only approach) is the single best option to reduce Seattle’s gender and race pay gap.

 Key findings from the policy brief include:

  • $526 million dollars will be added to the paychecks of Seattle’s lowest wage workers: a wage increase that is significant for low-income families trying to make ends meet, but represents only 1.7% of Seattle employers’ total payroll costs. 
  • This infusion of new earnings will result in worker spending and re-spending, creating a total ripple effect of $625 million dollars to the regional economy.
  •  Women and people of color living in Seattle currently earn between 44% and 71% of what white men earn.
  • The over-representation of women and people of color in low-wage industries, such as food services, likely explains much of this pay gap.
  • Raising the minimum wage is the fastest and most targeted policy option to narrow the gender and race pay gap.

The brief concludes that well-crafted, phased-in increase in the minimum wage can support a thriving economy.

You can find the full report on our website www.pugetsoundsage.org.


Seattle’s Minimum Wage: A Path to Reduce Race and Gender Inequality

Seattlites were deeply unsettled last year when a national study revealed that our metro area has one of the largest gender pay gaps in the country.  Action was called for by Mayoral candidates after an internal City study was released.  Perhaps less surprising, Seattle also has a large race pay gap, something Sage researchers have been reporting for years.  But we have some good new too – action may be around the corner that reduces both race and gender income inequality – an increase to the minimum wage for Seattle workers.  Here’s why:

If you are a woman or a person of color living in Seattle, you are likely to earn between 44% and 71% of what white men earn.   On the low end, median earnings for black or African women is $23,000, nearly half that of white men at $52,000.  Black or African men fare little better, with median earnings of $24,000.  Across race and ethnicity, except for Native Americans, women earn less than men, a difference more pronounced for white women than women of color.
Media Earnings for Seattle Residents by Race and Gender
The reasons for these gaps have been studied for decades, and one of the biggest drivers is occupational segregation: people of color and women are more likely to work in fields or jobs that simply pay less.  A recent national report on the gender pay gap shows that segregation by occupation and industry accounts for nearly 50% of disparity in earnings.

Our analysis of Census data and data from the Employment Security Department shows that over-representation of women and people of color in low-wage industries likely explains much of the pay gap for women and people of color in our region.  For example, in food service across King County, nearly 63% of workers earn below $15 an hour. People of color comprise 45% of those low-wage workers, despite making up 30% of Seattle’s total workforce.

The two charts below highlight the link between low-wage industries and who works in them.  Table 2 shows the top five low wage industries in King County by two wage thresholds ($12 an hour and $15 an hour).

Table 3 further shows that people of color and women are over represented in the occupations common in these low wage industries.

Raising the minimum wage in Seattle will provide a bigger earnings boost for both women and people of color.  Based on sheer numbers, few policies available to a city like Seattle could do more to reduce race and gender income inequality.

2006-2010 American Community Survey, B20002.  We used 2010 census data, as a more recent breakdown by race and gender was not available on AmericanFactFinder