Seattle passed a $15 per hour minimum wage law Tuesday.
In a 9-0 vote, the Seattle City Council approved a minimum wage hike from the state’s current $9.32 per hour to $15 per hour, KIRO 7 reports. Washington state already has the highest minimum wage in the country.
Pushed through by Democratic Seattle Mayor Ed Murray and Socialist City Council member Kshama Sawant, the hike is bringing heavy criticism from both Democrats and Republicans. (RELATED: Seattle May Raise Its Minimum Wage To $15 An Hour, And Not All Liberals Are Happy About That)
The phase-in period starts on April 1, 2015. Big businesses such as Starbucks will be required to implement the new wage over three to five years. Smaller business have four to seven years. Many franchise owners have deep concerns about the new minimum wage.
Historically, legal precedent has defined franchise businesses as independently owned and operated. However, the law ignores this precedent and has grouped franchises among other big businesses in the state, forcing them to adhere to the three- to five-year phase-in period.
The law also changes the standards applied to jobs that receive tips. Tips are commonly included in the wage of a worker. With the change, some businesses will be allowed to include tips in employees’ wages during the transition, but after the law is fully implemented, businesses will have to exclude tips.
Many business owners heavily disagree with this change. Tips are included in employee income taxes, and Angela Stowell of Ethan Stowell Restaurants argues tips should therefore be included in minimum wage. “We can show that our front of the house employees are making 35-50 dollars an hour sometimes,” she said.
Stowell and others have vowed to continue to push back against the hike. “Some continued work is going to have to happen in order for the Seattle restaurant scene to stay lively and vibrant,” Stowell said.
City Council member Kshama Sawant doesn’t seem to care. “When businesses campaign openly against me, they will be showing where they stand. They will be showing they are against lifting workers out of poverty.”
Antony Davies, a Mercatus Center-affiliated senior scholar at George Mason University and associate professor of economics at Duquesne University, weighed in on the potential problems the minimum wage law will create.
“The problem is that those who lose their jobs are worse off,” Davies said. “For example, raising the minimum wage from $10 to $15 would put an extra $10,000 in a full-time minimum wage worker’s pocket — provided the worker kept his job. The worker who loses his job has $20,000 removed from his pocket. IOW, the average person who benefits from a minimum wage hike benefits less than the average person who loses, loses.”
Davies compared changes in minimum wage relative to the average wage to unemployment rates among different types of labor in a recent study. The study looked at the last 45 years and how each 10-percentage point increase in the minimum wage affected those different groups.
College-educated workers saw no increase in unemployment. Those with a high school education saw a one-half percentage increase. Workers without a high school diploma saw a one percentage point increase. The worst off are young workers without high school diplomas. They faced a two percentage point increase in unemployment.
“The workers who pay first are the least advantaged,” Davies said. “Sadly, those are exactly the workers who are most in need of our help.”