June 3, 2014 / 12:55 AM / 5 years ago

Seattle approves hike in minimum wage to $15 per hour

SEATTLE (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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