UPDATE 3-Seattle approves hike in minimum wage to $15 per hour

Mon Jun 2, 2014 9:10pm EDT

(Adds planned lawsuit by business group)

By Jimmy Lovaas

SEATTLE, June 2 (Reuters) - The Seattle city council voted unanimously on Monday to approve a sharp increase in the city's minimum wage to $15 an hour over the next seven years, marking the first time a major U.S. city has committed to such a high base level of pay.

A business group immediately announced plans to sue to try to prevent the wage increase from going into effect.

Under the terms of the plan, businesses with fewer than 500 workers must raise wages to the $15 mark in the next seven years, an increase of more than 60 percent from Seattle's current minimum wage of $9.32 an hour.

Larger businesses must meet that level within three years, or four if they provide health insurance.

"We have worked alongside organized labor in Seattle who have campaigned vigorously for $15 (an hour)," said socialist council member Kshama Sawant, a supporter of the measure.

"We forced the establishment to lift the wages of 100,000 low-wage workers in Seattle, to transfer $3 billion from business to workers at the bottom of the pay scale over the next 10 years. We did it. Workers did it," Sawant said.

The plan is a product of a committee convened by Seattle Mayor Ed Murray, including labor and business leaders, that spent 16 weeks negotiating a compromise deal.

The long lead-in time for implementation of the Seattle wage measure appears in part a compromise to placate businesses that had wanted to count tips and employer contributions for healthcare benefits toward the wage target.

The International Franchise Association, a Washington, D.C.- based trade organization, said it would sue to stop the wage increase from taking effect, calling it unfair to businesses run as franchises.

"The Seattle City Council and Mayor Murray's plan would force the 600 franchisees in Seattle, which own 1,700 franchise locations employing 19,000 workers, to adopt the full $15 minimum wage in 3 years, while most other small business owners would have seven years to adopt the $15 wage," the group's president, Steve Caldeira, said in a statement.

"These hundreds of franchise small business owners are being punished simply because they chose to operate as franchisees. Decades of legal precedent have held that franchise businesses are independently owned businesses and are not operated by the brand's corporate headquarters."

Seattle is among several cities leading the way in a national push by Democrats to raise minimum wages. The Seattle suburb of SeaTac approved an initiative last year enacting a $15 minimum wage for many workers, although airport employees were later excluded.

President Barack Obama has pushed Congress to raise the federal minimum wage to $10.10 an hour from $7.25, but has failed to win the backing of the Republican-controlled U.S. House of Representatives.

Proposals to raise the minimum wage have been considered in nearly three dozen states in 2014, according to the National Conference of State Legislatures. (Reporting by Jimmy Lovaas; Writing by Dan Whitcomb; Editing by Jim Loney and Peter Cooney)

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Comments (23)
codingkid wrote:
This will be an interesting experiment to watch.

At face value this looks like a win/win for both workers and local business because workers will spend more and some percentage of that will be spent locally. Effectively this means local businesses will see more customers, and will have to meet that demand by hiring more workers (who will also earn $15 and hour).

Sure prices will go up in order for businesses to pay that $15 per hour, but prices will not go up as much as one would think because business volume will also go up (due to the working class having more money to spend). It will all balance itself out, with everyone doing better in the end.

Jun 02, 2014 8:48pm EDT  --  Report as abuse
Jusdaguy wrote:
Walmart is going to pull up roots and move, guaranteed. They did the same thing in Germany years ago.

Im gonna laugh when this backfires. Im not sayin the workers dont deserve a higher wage, most people do to thrive nowadays, but trying to force a business like walmart to pay its workers higher wages is a joke.

Jun 02, 2014 9:00pm EDT  --  Report as abuse
Lord_Humungus wrote:
Well it’s official. Just wanted to say congratulations to the city of Seattle, and the massive entry level layoffs that will occur, the teen unemployment that will skyrocket, and the invariable quality control issues that will come from skeleton crews at many businesses, particularly fast food. Minimum wage is meant for 16 year olds. Show me anyone “supporting a family” on minimum wage, I’ll show you someone whose labor isn’t worth a dime.

Jun 02, 2014 9:02pm EDT  --  Report as abuse
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