Labor’s minimum wage mayhem

Aug 14th, 2014

Issue is impacting the entire country


By Sean P. Redmond

U.S. Chamber of Commerece Labor unions and their worker center allies have garnered a fair amount of at­tention in recent months, with made-for­media protests against large retailers and fast food companies in a quest for inflated wages and benefits.

In addition to harassing employers, or­ganized labor also has set about pressuring various local governments run by sympa­thetic politicians to impose artificially high minimum wage rates. In June, Seattle ac­quiesced to these demands and became the first major city to implement a $15 an hour minimum wage.

The tale of Seattle’s whopping 60 percent minimum wage hike reportedly had its roots in Mayor Ed Murray’s determination to increase the rate one way or another, albeit under pressure from labor groups. With the support of the city council, as well as the $15 minimum wage precedent set by the nearby airport town of SeaTac, Murray all but strong-armed his own task force of business and union leaders to broker a deal, which they did at the end of April. The city council adopted the proposal unanimously on June 2.

As written, the law implements stag­gered increases through a convoluted schedule based on an employer’s pur­ported size, whether they provide health benefits to employees and whether their employees receive tips. Employers with 500 workers or more will pay $15 an hour by 2017, but if they provide health insur­ance, they will have one additional year to comply. Smaller businesses will have until 2021 if their employees are not tipped, while businesses with tipped employees must ensure that workers’ pay, including tips, total $15 an hour by 2019. By 2025, all employers will pay the same minimum wage.

However, at the behest of the Service Employees International Union (SEIU), which was part of Murray’s task force, the law misclassifies small businesses, such as franchises, as large employers when the parent company has 500 or more employees nationwide.

This facet of the law could spell disaster for mom-and-pop shops unequipped for the sticker shock that will come, and it is willfully ignorant of the reality of the fran­chise system. By assuming small employers affiliated with a national chain are, in fact, large employers themselves, the law con­flates two very disparate pieces of the fran­chise business model, which seems to be part of labor’s endgame. Not surprisingly, this prompted an almost-immediate legal challenge to the wage law.

Meanwhile, a coalition of Seattle businesses dubbed Forward Seattle has spearheaded a grassroots ballot initiative to let voters decide whether to implement the new minimum wage statute. That ef­fort cleared a major hurdle on July 7 when Forward Seattle submitted approximately 19,500 signatures to repeal the law.

Although the battle is still brewing, unions and their allies seem intent on pressing other cities to pass similar laws. The minimum wage debate doesn’t appear to be going anywhere in Washington, D.C., but it’s certainly heating up in the rest of the country.