Minimum-wage proposal a $15 paradox for the poor
The $15-an-hour minimum wage leaves many nonprofit social-service providers in a bind. A lot of them
support the idea, but their organizations can’t afford it.
By Danny Westneat
Seattle Times staff columnist
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Bill Hobson says the $15-an-hour wage movement is the most electrifying change in thinking he’s
witnessed on an issue in more than 30 years of advocacy for the poor.
“I’m something of a 1960s radical,” Hobson says, “and I don’t think I’ve ever seen such a rapid societal
shift as the $15 wage.”
There’s only one hitch, and it’s a doozy: He can’t pay it.
Hobson, as director of the Downtown Emergency Service Center, is Seattle’s largest employer of social
workers and counselors to the homeless. He’s got 520 full-time workers running a network of
apartments, shelters and crisis clinics for the city’s sickest and most vulnerable — thousands of mentally
ill or drug-addicted folks who, on any given day, would be out lying on sidewalks or under bridges
without the help of Hobson’s crew.
Of that crew, though, 171 make less than $15 an hour. His 30 janitors start at $11.75. The hundred-plus
counselors who staff the agency’s buildings start at $12.75 — a “travesty,” Hobson says, considering
many have college degrees in social work.
But paying $15 will cost him $1.25 million he doesn’t have.
“In principle, I’m all for the higher wages,” Hobson said. “But I can’t pay it. Without some major infusion
of cash from the city, I would have no choice but to cut services.”
He said he would consider closing the “Day Room,” a facility at the Morrison Hotel on Third Avenue that
gives 300 street homeless a place to get out of the elements or to shower during the day, when other
shelters are shut.
“Those 300 would be wandering the streets,” he said.
Hobson is not alone: Nearly every social-service group, child-care center and nursing home in Seattle is
in the same bind. A recent survey found a $15-an-hour wage would cost more than $10 million for a
sampling of social-service agencies, while child-care centers could take up to a $20 million hit. Nursing
homes were not surveyed, but would doubtless add many millions more.
The survey, by the Seattle Human Services Coalition, reached a delicate and blandly worded conclusion:
that higher wages are of course desirable, but must be implemented “in a thoughtful manner to prevent
unintended consequences.”
Hobson is a Seattle treasure not only for his decades of work for the poor. He also doesn’t do bland.
“What it means is we’d have to raise taxes,” Hobson said. “I’ll get in trouble for saying this, but we can’t
run from it. We can’t talk about income inequality and act like the $15 wage is cost-free, with the
burden borne only by someone else. We have to address how we’re going to pay for it. That includes
taxpayers.”
Has anyone heard the word “taxes” mentioned in this debate before now?
Hobson believes it would take a significant city tax increase to help pay for wage boosts at an array of
human-services nonprofits. Just the cost figures cited above, which are only a sampling, suggest the $15
wage could require tens of millions of dollars in new social-services revenue. Hobson said the higher
wage would definitely help his employees, but not his clients because most are considered
unemployable.
To be clear, Hobson’s view is Seattle should seek to raise wages anyway, and then also raise taxes to
help cover the hit — something he guessed the city is probably not prepared to do.
“The worst thing they could do is just impose a one-and-a-quarter million-dollar expense on us,” he said.
Is the city even aware of these problems? I would hope so, but who really knows. Mayor Ed Murray
regrettably chose to have his Income Inequality Advisory Committee meet in secret.
If you ask what they’ve been talking about for the past two months, they demur, saying they’ve been
sworn to secrecy.
In that vacuum, people like Hobson and the restaurateur I featured last weekend are doing their
budgets, filling in the blanks for themselves. And electrifying is giving some ground up to reality.
Danny Westneat’s column appears Wednesday and Sunday. Reach him at 206-464-2086 or
dwestneat@seattletimes.com
A do-gooder tells why $15 wage is bad idea
A Seattle liberal pokes his head up to challenge Seattle’s $15 minimum wage.
It would be hard to find more of a liberal do-gooder in the local business community than John
Platt.
His restaurant, St. Clouds, in my own Madrona neighborhood, doubles as a sort of local relief
agency. Drop by there and Platt is likely to be cooking 500 meals for the homeless. Or
volunteering to be chef for public-school auctions. Or running dine-out fundraisers for everyone
from environmental activists to immigrant high-schoolers trying to get to college.
So when I asked if he’s worried about getting blowback for the stance he’s now taking, he said
he hadn’t considered it.
“Are they going to say John Platt doesn’t care about people?”
They might.
Because Platt is coming out hard against the cause of the year, the $15 minimum wage. The
proposed wage hike is “outlandish” and “a radical step,” he told me the other day. That it seems
to already have majority support among the political establishment — one City Council member
told me flatly that $15 was “guaranteed” to pass — has Platt wondering whether Seattle has
finally gone round the progressive bend.
“I feel like the politicians are all afraid of Kshama Sawant,” Platt said. “So they’re running with
this number picked out of a hat. It doesn’t feel like it’s been given much thought.”
For a small restaurant, where waiters make minimum wage but rely mostly on tips, the math of
the wage-hike proposal is brutal.
It works like this. About one-third of Platt’s costs are labor. Those costs will rise up to 60 percent
if the wage is lifted from $9.32 to $15 per hour. His cost of goods also will rise, though not as
sharply. The bottom line is St. Clouds’ total costs could easily go up 25 to 30 percent.
If he passes that on to his customers, then St. Clouds’ burger with green chili aioli, which sells
for $13, could cost $17. The top of the menu, pan-roasted duck, could go from $32 to more than
$40.
“It isn’t fear-mongering; it’s just math,” says Burke Shethar, who runs the Madrona Ale House
across the street from St. Clouds. “We could be the city of the $18 hamburger.”
But economists say these new costs are so steep they can’t be passed completely along to
customers, who would balk at paying them. Small businesses would be forced to eat some
portion, and try to recover the rest by a combination of reducing staff hours or benefits as well as
raising prices. Bigger companies, as were affected by the SeaTac wage measure, have more
flexibility to absorb such “cost shocks.”
Nobody has ever tried a 60 percent wage hike before.
“You’re in uncharted territory,” said Barry Hirsch, a labor and wage economist at Georgia State
University who has looked at how the minimum wage affects the restaurant industry.
Hirsch has joked he hopes Seattle passes the $15 minimum wage “because we want to come out
there and study what happens.”
Platt says his love is cooking, not math or experimental economics. He has no idea how he’d
deal with a 25 percent increase in costs. At first, he said he would close St. Clouds and “just do
something else.” Later, when I pressed him to brainstorm, he mentioned he buys 80 percent
health insurance for his full-time employees, so he could maybe cut that and send them to the
Obamacare exchanges instead.
“So that’d be a terrible result. I’d be saying, ‘Hey, here’s a raise, but now you’re on your own,’ ”
Platt said.
Phasing in more gradual wage hikes would be a huge relief for small businesses, Platt said.
There’s also the issue that many nonprofits pay less than $15 — and most can’t raise prices to
cover an increase. But advocates for the higher wage, led by new councilmember Sawant, are
pushing for the full $15 by Jan. 1, on everyone, or they’ve said they’ll run an initiative.
When some Capitol Hill business owners questioned the $15 wage last month, a few were
personally attacked for being too rich or for exploiting the working poor. Platt said the
movement is starting to acquire a cultlike feel.
“We all seem to be following the socialist, but why?” he said. “I’m just asking Seattle to think
long and hard about this. We need to have this debate.”
Well, consider it started — at least in my liberal neighborhood!
Danny Westneat’s column appears Wednesday and Sunday. Reach him at 206-464-2086 or
dwestneat@seattletimes.com