The fight for a higher minimum wage: SF vs. Seattle

|
(48)

On May Day, Seattle Mayor Ed Murray proposed raising the city’s minimum wage to $15 an hour.

As a point of comparison, this proposal would put Seattle minimum-wage earners in the position of only having to devote 46 percent of their total pre-tax income toward rent (based on median monthly rental prices) instead of 63 percent.

Here in San Francisco, the Coalition for a Fair Economy is also seeking to raise the municipal minimum wage, by filing for a measure for the November ballot. The proposal would raise the minimum wage from the current $10.74 per hour to $15 an hour, increasing minimum wage earners’ annual salaries from $22,339 per year to $31,200.

“With the growing national movement to lift up wages in our poorest communities, now is the time to be fighting for a $15 minimum wage in San Francisco,” said Political Action Chair Alysabeth Alexander of SEIU 1021, the service workers’ union that is backing the measure. “I am especially fueled by stories of my co-workers facing homelessness despite working full-time jobs as service providers housing the homeless.”

Median rent in Seattle is $1,190. Median rent in San Francisco is $3,200.

Returning again to these median rental price listings, this $15 an hour proposal on the San Francisco ballot would make it so that San Francisco minimum wage earners would only have to work 1.23 minimum-wage jobs to in order to devote 100 percent of their pre-tax income toward rent, versus 1.7 minimum wage jobs under the current rate.

Er, wait. In order to pay for frills (like food), they would probably have to pick up a second job after all. That does sound a bit exhausting, doesn’t it?

Now the Seattle mayor's propsal is pretty damn complicated, and socialist City Councilmember Kshama Sawant, whose successful campaign was based on the idea of raising the minimum wage to $15, is working with a group to gather signatures for an initiative to pass an immediate increase to $15 for the November ballot. But it's worth noting that when Murray floated his $15 an hour proposal, he identified the growing gap between the rich and poor as a major societal problem, saying this increase would "improve the lives of workers who can barely afford to live” in Seattle.

While San Francisco Mayor Ed Lee has expressed support for a minimum wage increase, he’s not backing the idea of a $15 per hour minimum wage per se.

“I said I was open to up to $15 an hour,” Lee said in a recent interview on KQED’s Forum to clarify his stance, “and I didn’t state a number at the beginning.”

Instead, Lee has convened a task force with groups such as the San Francisco Chamber of Commerce, small business, nonprofits, and others to discuss a minimum wage increase. Calls to the SFCOC, to find out what other (presumably lower) hourly wage amounts are being discussed, haven’t yet been returned. But stay tuned as we continue to follow the issue.

When Krasny asked Lee about whether he would invite SEIU 1021 to the table, Lee responded, “They’re invited! They’re the ones who actually put a number out and then told everybody to catch up with it. I don’t think that’s the way to get it done.”

Comments

Not surprisingly, the math and logic are flawed. Why should someone making minimum wage be expected to pay median rent? I'd expect them to pay minimum rent, and they don't necessarily have to live in SF. There are plenty of more affordable places accessible by BART.

It would take me 4.7x of my pre-tax middle-class income to live in an average place in Presisio Heights. And thats before food. Wee wee wee.

Posted by Guest on May. 06, 2014 @ 5:49 pm

on commuting to and from San Francisco would significantly cut into the earnings and savings of a minimum wage worker, thus making a worker less likely to seek employment in San Francisco.

Posted by Guest III on May. 06, 2014 @ 7:33 pm

I'm sure the market would sort that out. That wasn't the point anyway...the point was that its not a reasonable expectation that a minimum wage employee would consider living in a median-rent place in the most expensive city in the nation. Rebecca's logic made that assumption. There are alternatives like moving into an in-law, getting a roommate or living in another area within SF or out of town that's more affordable

Posted by Guest on May. 06, 2014 @ 7:56 pm

By a wave of its supposedly magic wand?

Posted by Guest III on May. 06, 2014 @ 8:11 pm

You can't argue rationally with market fundamentalists. This is religion to them.

Posted by Greg on May. 06, 2014 @ 9:04 pm

would "sort it out" does indeed appear to be a statement of blind faith. I would like "Guest" to tell me the ways in which he/she believes the market would work to address the issue I raised.

Posted by Guest III on May. 06, 2014 @ 9:43 pm

If people working in SF cannot afford SF rents, they find a place they can afford, say in Oakland.

Posted by Guest on May. 06, 2014 @ 10:48 pm

Which means that the the burden will fall to those San Francisco workers will subsidize working in San Francisco via more expensive and time consuming commutes.

Why do these radical market fundamentalists hate San Francisco's working people with such vehemence?

Posted by marcos on May. 07, 2014 @ 7:10 am

We simply do not prejudicially discriminate between people who live in SF over those who live in the rest of the Bay Area.

Posted by Guest on May. 07, 2014 @ 9:53 am

Hi. Guest here. Once again, that was not at all the point of the original post. However, strictly for educational purposes...

Fundamentals of supply and demand. This is what is taught the 1st day of high school economics. When supply of a resource (e.g. workers) changes (e.g. decreases as individuals moves away due to a financial decision), the price of that resource will change such that the supply and demand curves once again match. Assuming that demand for that resource remains constant, the price of the resource (e.g. wages) will increase. Higher wages would tend to make it more attractive for people to make that commute...or if plenty of local supply of labor remains, maybe wages remain pretty constant--still, supply and demand.

This link provides a good illustration of this situation. Wikipedia does a pretty good job too. (Scroll down about 3/4 of the way to the illustration where there are 2 supply curves.) http://www.mindtools.com/pages/article/newSTR_69.htm.

And by the way, the decision for people to move follows similar principles. When demand for a resource increases (e.g. housing) and supply remains constant (e.g. In San Francisco where it's near impossible to build because everyone's objection has to be thoroughly vetted, or paid hush money, and urban infill is subject to CEQA), then prices will go up.

And Greg and "Guest III"--I've never heard anyone challenge these basic economic concepts in a credible way. Can you explain 1) what other conclusion there would be if and when people move away due to high prices? And 2) what better system exists to create and distribute wealth apart from free markets and capitalism? If so, please cite examples. Capitalism certainly has its flaws, and in many situations requires regulation (e.g. Minimum wages, carbon caps, and limits on logging) due to suboptimal behavior of the market caused by microeconomic forces (that can be a lesson for another day), but generally speaking, it's been proven time and again that systems using a free market at their core are the most efficient way to create and distribute goods and services.

Posted by Guest on May. 06, 2014 @ 10:17 pm

at equilibrium, they cease to explain anything.

Posted by Guest III on May. 07, 2014 @ 9:03 pm
Posted by Guest on May. 07, 2014 @ 9:40 pm

You assume that just because someone works in SF, they have to live in SF.

They don't. That's like saying that someone who works in super expensive Presidio Heights has to live there as well.

Oh, and a $15 an hour wage would almost put someone in the global "one percent", which takes an income of $34K a year.

Posted by Guest on May. 06, 2014 @ 10:30 pm
Posted by Guest on May. 06, 2014 @ 10:48 pm

More money in the pockets of the working class means more demand for corporations' products.

The best way to help the rich, is to help the poor.

Posted by Greg on May. 06, 2014 @ 11:09 pm

It just means A has the money rather than B.

Posted by Guest on May. 07, 2014 @ 1:10 am

it's not a zero-sum game? Or does magical thinking apply only when the rich get richer? Seems like market fundamentalist doctrine, like all religions, is hypocritical. When the rich get richer, it doesn't affect anyone else; but when the poor get to keep more of the fruits of their labor, suddenly it's a zero-sum game again.

In reality, it's true that more money for some means less for others. But it's more complicated than that. Every dollar given to the working class (or more accurately, *kept* by the working class, because they are the ones creating the wealth in the first place by virtue of their labor), gets pumped back into the economy, creating more demand. Thus, the economy ultimately derives *more* than $1 of benefit.

By contrast, every dollar that is allowed to be captured by the $1, results in *less* than $1 of benefit to the economy. That's because while *some* of it is pumped back into the economy, some of it is hoarded, including hoarded overseas.

So yes, more money for A results in less money for B, but it matters who A and B are.

The other point is that there are millions and millions in one group, and only a few in the other. The same amount of money that gives one rich person a negligible improvement in their already high standard of living, can result in tremendous improvement for thousands of people.

Increasing wages at the bottom therefore helps both the economy as a whole, and has a material impact on the lives of real human beings.

Posted by Greg on May. 07, 2014 @ 7:37 am

So why don't we pay everyone 100K a year?

It's free money, right?

Posted by Guest on May. 07, 2014 @ 9:55 am

lowering taxes will result in higher tax revenues. Applying the principles of market fundamentalism and the chop logic displayed above, why not lower taxes to zero and have infinite revenues?

Posted by Greg on May. 07, 2014 @ 8:17 pm

That's the magic of the market place at work for ya!

Posted by marcos on May. 07, 2014 @ 8:34 pm
Posted by Guest on May. 07, 2014 @ 8:54 pm

Greg--you allude to some interesting economic concepts, but it's not clear whether or not you have the depth of knowledge to apply them to this situation. I submit that you don't because each and every time, in this example and the ones below (such as restaurants retaining health SF fees), you conclude that "the rich" should be deprived of a portion of their wealth, and it should be redistributed to "the poor". At no time do you provide any context or rationale for in what situations the needle should be moved in favor of "the rich", or in which situations a redistribution may benefit the economy/society as a whole. You also make blanket assumptions that "the poor" are the ones creating wealth without acknowledging that "the rich". "The Rich" are often the ones who are the ones who have taken risks to create jobs by starting a business, building a factory, creating an invention, etc, or who are highly skilled and therefore receive more wealth in return for their labor or services.

It can also be noted that, at least in America, there are not 2 discrete "buckets" of rich and poor people. There is a spectrum, and as far as I am aware, no one has set a clear criteria for who is rich and who is poor.

You also make the assumption that any increase in minimum wage will benefit society as a whole. I agree this is a possibility, but you also need to consider that at some point, a high minimum wage will provide a dis-incentive for individuals to develop their skills and provide value. You also ignore the (very real) fact that we are in a global economy, and employers can and will move their businesses to places with lower labor costs if that's what they think will benefit their business.

I will agree with you though that our current system is way out of whack. The extremely rich "investor class" investor class is very overvalued, and in general, labor is under-valued. I think a part of the solution would be to increase tax rates on individuals with a very high amount of investment income, possibly $1 million (with some exceptions to protect people who come across a one-time windfall such as selling a home, an inheritance, or shares in a company they are employed by), and use the proceeds to provide incentives to employers to create jobs within the US. (Yes, that's a little trickle-down-ish, but the difference between that and classic Reaganomics is that it provides direct benefits only after jobs are created, rather than just assuming the rich will use their money to benefit society, rather than parking their money overseas in a tax haven or on some vacation property.)

Posted by Guest on May. 07, 2014 @ 11:46 am

...I don't disagree with some of your points.

Yes, I am simplifying. It's a chatboard post, not a dissertation. Yes, there is obviously a point where increasing the minimum wage wouldn't yield further benefits. No one can say where it is, but I don't think we're close to reaching it, considering the 1968 minimum wage would be $10.86 in today's dollars. And the CPI that that's based on doesn't take a lot of things into account, like ballooning student loan debt, and high differential in housing costs between locations. For expensive cities like Seattle and San Francisco, a $15 minimum wage doesn't begin to approach 1968 levels.

"you conclude that "the rich" should be deprived of a portion of their wealth, and it should be redistributed to "the poor". "

I prefer to think of it as the working class keeping more of the wealth they create. Our productivity has increased tremendously in the last 40 years, but in that same time period, virtually all of the gains have gone to the top. In order to believe that this is just, you have to believe that the top 1% has been responsible for *all* of the gains in productivity, and the rest of us had nothing to do with it. It goes without saying that this is absurd.

"at some point, a high minimum wage will provide a dis-incentive for individuals to develop their skills and provide value."

Yeah, I just don't think we're there. I'm no Marxist; I do think there should be a gradient to incentivize hard work and development of skills. I just think the gradient is absurdly steep in the US. In a country like Sweden, a blue collar laborer might make $30,000/yr US, an IT specialist might make $50,000, a doctor might make $85,000, and their CEOs don't make anywhere near what they make here. And incentives work perfectly well. I myself am a highly trained and educated professional, and I ask myself, if this was the gradient I faced, would I bother going through my extensive training, or would I just work construction or just sit on the dole? And the answer is that I would still *absolutely* do what I do. Not only would I have the incentive of somewhat more money, but also more prestige, easier work environment, more intellectually stimulating work, etc. Keep in mind that I wouldn't have to become a millionaire just to be able to retire, or have the massive student loan debt, living in Sweden.

Monetary incentives are important, but you need to recognize that there are other incentives that are just as important.

"You also ignore the (very real) fact that we are in a global economy, and employers can and will move their businesses to places with lower labor costs if that's what they think will benefit their business."

I don't ignore this. It's why I believe we need to pull back on the free trade. We need to have more controls on the movement of capital, and less controls on the movement of labor. Not that there should be total control on capital and no control on labor, but it needs to be brought into balance.

I do agree we need a shift toward higher taxes on investment income, inheritance and windfall profits. There are many forms of taxes which could be well targeted so as not to harm working people and even upper middle class people -real estate transfer taxes on commercial properties, transaction taxes for stock purchases, an oil severance tax, etc.

Posted by Greg on May. 07, 2014 @ 8:06 pm

Greg--I have to say I'm impressed! Prior to the last 2 paragraphs, I agree with about 90% of your statements, and I'm shocked I'm saying this, but apart from some of the specific numbers, I think I'm aligned with the concepts you discuss and trade-offs. Regarding the last 2 paragraphs, I think the way to look at it is to "incentivize" keeping jobs here, rather than "controlling" or "limiting". In practice, these 2 approaches might turn out to be identical--but if nothing else, I like the tone of "incentives" better. Regarding the last paragraph, I think we agree that we need to tip the balance a bit to tax "investors" at a higher rate. But I strongly disagree with the taxes you're proposing, especially on inheritance taxes and real estate transfers. Except I'd be very much in favor of high oil severance taxes for new projects, and in fact I think that would be part of a great compromise across the political spectrum: allow new drilling, but tax the hell out of it ($10-$20 per barrel?) to pay for safety and renewable energy projects.

Thanks for thoughtful response and good discussion! And I apologize for the snarky tone of my last few messages.

Posted by Guest on May. 08, 2014 @ 1:24 am
Posted by Guest on May. 07, 2014 @ 1:11 am
Posted by Guest on May. 06, 2014 @ 10:49 pm

Your concern for waitstaffs' tips is noted, but if they're comfortable with the raise than so am I.

Posted by Greg on May. 06, 2014 @ 11:10 pm

But I'm sure they will. They whined when the 4% surcharge was introduced and tips went down.

Posted by Guest on May. 07, 2014 @ 1:09 am

The surcharge was an arbitrary charge that some restaurants chose to put on, and diners accurately perceived they were being screwed. I've heard many say that they'd be fine if those costs were rolled into the meal, but they're unhappy that restaurant owners are choosing to give San Francisco the middle finger this way.

Posted by Greg on May. 07, 2014 @ 7:40 am

People see arbitrary imposed extra costs and respond by tipping less.

Posted by Guest on May. 07, 2014 @ 9:56 am

I hope SEIU puts that on the ballot and it passes. Someone else is gonna have to pay and it ain't gonna be me!

Posted by Guest on May. 06, 2014 @ 11:06 pm

We can all meet for sushi and discuss solutions to the problem.

Posted by Guest on May. 06, 2014 @ 11:15 pm

That will help us afford the food price inflation that over-paying staff will cause.

Steven told me that tips are bourgeois.

Posted by Guest on May. 07, 2014 @ 1:12 am

Seattle's minimum wage will kill low-paying jobs and drive low-income people out of the city. San Francisco should adopt a $30 minimum wage. Leftists will like the way it makes them feel, and yuppies will be happy with the result.

Posted by Guest on May. 07, 2014 @ 6:30 am

Why pay 15 when you can pay 10 for the same thing?

Posted by Guest on May. 07, 2014 @ 9:57 am

Some might do that, but relocation costs money, and there's no guarantee your clients will go with you. If there's a dearth of businesses in San Francisco, enterprising entrepreneurs will happily take the place of those who left, knowing that most people will choose to go where it's more convenient.

Posted by Greg on May. 07, 2014 @ 8:15 pm

If the minimum wage were $100 an hour, it would have little or no effect?

Or better yet, would pay for itself through increased prosperity?

Posted by Guest on May. 07, 2014 @ 8:56 pm

I assume that the SFBG is already paying a $15/hour wage to all of its employees (including delivery people, freelancers, etc.), because it would be so, so, hypocritical if they weren't.

Posted by Guest on May. 07, 2014 @ 8:28 am

Raising the minimum wage is a good thing overall. There will undoubtedly be some jobs lost as a result. Some will be lost to automation - those jobs should probably be automated anyway. Some businesses may relocate, but there won't be shortage of others willing to replace them. Ideally, this would be done in concert with similar measures in SM, Marin, CoCo, and Alameda.

Raising wages for workers means fewer of them relying on government assistance. It's far more effective to put the money directly in the hands of workers than it is to tax businesses more and funnel the money through the government to provide services. It's more money workers have to support local businesses, or even take advantage of community colleges (if ours stays open), trade schools, etc. to further their education (without taking on burdensome debt) and get the better jobs our economy is producing.

Laissez-faire free market economics and socialism fail for the same reason - human nature. Free-market economics assumes people won't be selfish pricks. Socialism assumes every person will want to get out there and work hard and innovate for the good of the whole. I'm a capitalist, but I'm not an orthodox one. We do need some regulation and protections in place to ensure that workers aren't being exploited.

Posted by robco on May. 07, 2014 @ 2:05 pm

"Raising wages for workers means fewer of them relying on government assistance."

Fewer of the employed relying on government assistance, more unemployed. Some people just aren't worth x dollars an hour. That's true when x is 100, and it's true when x is 1. The higher x is, the more people it's true of.

Posted by Guest on May. 07, 2014 @ 2:30 pm

Economists don't agree: http://www.washingtonpost.com/blogs/wonkblog/wp/2013/02/14/why-economist...

The CBO predicts some job loss from raising the minimum wage nationally - http://www.cbo.gov/publication/44995

Adjusted for the Bay Area's astronomical cost of living, $15/hour isn't a lot of money. If a business can't pay a living wage to its employees and stay in business, perhaps they need to reconsider their business model. Of course, there will be other potential benefits, such as reduced turnover - http://www.forbes.com/sites/timworstall/2012/03/04/the-story-of-henry-fo... or http://hbr.org/2006/12/the-high-cost-of-low-wages/ar/1

The numbers just don't add up. Paying higher wages will result an overall net benefit to the economy.

Posted by robco on May. 07, 2014 @ 3:26 pm

As you say, the CBO predicts some job loss due to a higher minimum wage. I'm sure you'd agree that a $50 minimum wage would raise unemployment in San Francisco, and that a $15 minimum wage would do the same in Haiti. I don't see how you can be sure that $15 would be of net benefit.

Posted by Guest on May. 07, 2014 @ 4:48 pm

As one who has, I can tell you that there is one reason and one reason only that businesses hire people. It is NOT "because they can afford to." It's because they need some job done. If you can afford to hire someone, and you don't *need* any more help, you will not hire. Now, if you *need* help and you can't afford it... well then there's a dilemma. You'll probably find a way to make it happen. Maybe you'll decide that you need to increase prices, change suppliers, negotiate other costs, or maybe you'll decide that you'll have to forgo some of your profits for the sake of growing the business. Usually some combination.

Posted by Greg on May. 07, 2014 @ 8:29 pm

how much extra profit that employee brings in.

If hiring you adds $12 an hour to my profits, then I am not going to hire you if it costs me $15 an hour. but I will at $10 an hour.

Posted by Guest on May. 07, 2014 @ 8:59 pm

If you can't hire an employee at a living wage and remain profitable, then the problem is with your business model. See, if you don't pay them well, the rest of us have to pick up the slack through things like food stamps, health care subsidies, child care programs, etc. When you short change your employees, you short change the rest of us. You're asking individuals, and businesses that are more profitable, to subsidize your business. Adjusted for cost of living, $15 an hour would barely put someone over the poverty line here.

You can't get something for nothing. The current level of income inequality is unsustainable. I would rather see workers be paid more and draw less subsidy from the government, than raise taxes and increase government services. It's free market economics - if your business can't pay well and survive, then maybe it shouldn't...

Posted by robco on May. 08, 2014 @ 3:59 pm

It is been said that Heaven help those who helped themselves, The very day that i helped myself was when i contacted Dr.Zabaza through these following details: zabaza.logan@yahoo.com or call +2348182620374. And since that very day it still surprise me how Dr.Zabaza was able to cast that spell that brought my lover back to me within 48 hours. Right now i feel like i am on top of the world with my lover by my side all the night compare to before i met Dr.zabaza when she always choose to spend the night outside.

JAKE FROM LEICESTER UNITED KINGDOM

Posted by Guest on May. 08, 2014 @ 8:33 pm

next year it will be over 11.00 per hour and currently adjusts annually for inflation. Additionally, small businesses over 20 ermployees pay for health care- creating an effective minimum wage over 13 per hour for small employers and 14 per hour for large employers. Only 10% of SF workers earn minimum wage and mosy are directly tipped employees earning well over the minimum when tips are added. Meanwhile the youth unemployment rate in SF is 27% - what incentive does an emplorer have to hite and train an untested worker in SF when skilled workers will commute from all over the bay area to take advantage of a minimum wage 40-60% higher than wages in Marin, Alameda or Contra Costa counties?

Posted by Guest on May. 11, 2014 @ 1:13 pm

because the City will become that much more expensive- this forces businesses to cater to the 1% or wannabe 1% - clearly SF wants to be a place where only the wealthy can afford to live or operate businesses. This forces the working class into the suburbs.

Posted by Guest on May. 11, 2014 @ 1:36 pm

Post new comment

The content of this field is kept private and will not be shown publicly.