Until the turn of the year, few Americans had much reason to have heard of SeaTac, a small community just outside Seattle. Those aware of the town’s existence knew it as a place that exists to serve the city’s bustling Seattle–Tacoma international airport. But SeaTac is now firmly on the map.
Recent events there have shone a light on the increasingly febrile, high-energy politics of low pay. And they also tell us something about how paralysis in Washington DC is prompting more states, cities and communities to act to improve their prospects.
The issue of chronic low pay has been thrust into the spotlight over the last year by Barack Obama, whose proposal for a hike in the federal hourly minimum wage – from $7.25 (£4.35) to $10.10 (£6.07) – would mean a direct pay rise for more than 16 million workers, with another eight million indirectly benefiting. By any standard that would represent a major increase, but it would still only restore the federal minimum wage to just above the level it attained 45 years ago, after adjusting for inflation. It is a proposal that appears, however, very unlikely to get passed by Congress any time soon. For now, low-paid workers will have to look elsewhere for a pay rise.
A generation ago SeaTac was what Americans would call a middle-class town. A jet-fueller or baggage handler could earn a decent living. Those days are gone. These and many other jobs are now paid far less – either at, or just over, the local minimum wage. As David Rolf, the influential vice-president of the Service Employees International Union, and a guiding hand behind events at SeaTac relates: “It’s gone from being comfortable to a poor town, even in a prosperous corner of the US. This story of a whole community being shut out of prosperity is a microcosm of what’s been happening across America.”
It’s a familiar tale and one worthy of a chapter in last year’s spellbinding book The Unwinding by George Packer, which narrates the decline of the great American middle class and the rise of trickle-up poverty. During the 1980s and 1990s, ever more jobs were outsourced from the airlines, benefits were cut back and across the great majority of the airport economy wages were reduced to around the minimum wage. In 2005 one of the big airlines operating at SeaTac fired nearly 500 baggage handlers and hired contractors to replace them. Those who lost their jobs earned around $13 an hour, the new contractors just $9.
More recently there have been repeated union efforts to organise workers, but to no avail. An escalation of traditional forms of protest – marches, rallies, press campaigns – all sought to get the airlines and other employers to lift pay or improve conditions. Again, all failed. “Given the opposition we faced, only a higher level of disruption was going to shift events,” Rolf says.
This disruption came in the form of a petition that easily garnered enough support to force a local referendum on the minimum wage. A coalition of unions, faith and community groups decided to push for a hike in the wage floor in SeaTac from Washington’s minimum wage of just over $9 to $15 (with exemptions for small employers). The campaign was fought by both sides – unions and community groups versus employer bodies – with an intensity normally reserved for a swing state in the runup to a presidential election. Large sums of money were spent (a couple of million dollars) on an electorate of 12,000 voters. “Yes! For SeaTac” – those pushing for the pay rise – knocked on the door of each home an average of four times. Both sides knew the cost of failure would be high.
For a highly local campaign the nature of the argument was surprisingly “big picture”: a battle of competing ideas about the national economy. It was either “middle-out” economics versus “trickle down”, or “free-enterprise” versus “big government”, depending on your political leanings. As Rolf puts it: “We had no idea that we were about to host a national election on fairness and the future of the American economy in our own backyard.”
When the votes were cast last November the Yes! campaign won by a tiny majority of 77 votes and SeaTac became a national story. The vote meant that, starting last month, about 1,600 employees in restaurants, hotels and car-hire agencies received a 60% pay rise. A larger number working inside the airport are awaiting a legal appeal over whether the SeaTac authorities have jurisdiction over the airport premises. It’s too soon to judge, but so far there is little sign that the pay rise has led to major price hikes or job losses.
SeaTac may have caught the public imagination, but in an important respect it is unexceptional. When I ask Rolf if he expects to see other SeaTacs, he responds immediately: “We already are.” An upsurge in civic energy on the charged issue of low pay has resulted in a growing number of mayoral campaigns and popular votes aimed at raising pay. Over the last 15 years there have been 10 state-level referendums on raising the minimum wage. All were won. So far in 2014, 22 minimum wage-related bills have been introduced across 14 states. This is no longer about one or two isolated cases.
The most ambitious campaigns on low pay have been rooted in cities, especially those with high living costs. Next door to SeaTac, the new mayor of Seattle, Ed Murray, has said he would like to move to a $15 wage floor across the city. He is waiting for a report on how best this can be achieved. San Francisco raised its minimum wage a decade ago – it is now $10.74 and overall employee compensation is $13, including health contributions. The mayor is calling for a rise to $15, subject to a review of how this could be introduced. Los Angeles is having a council vote on whether to move to a $15 minimum wage for hotel workers later this year (its airport already has a $15 minimum wage). Washington DC has just agreed a significant increase to $11.50. Chicago has a growing campaign for $15 for large employers and is staging a non-binding referendum this year.
Meanwhile, New York’s mayor, Bill de Blasio, has made his desire to act on poverty pay clear but, in contrast to some of these other cities, he is constrained by the fact that New York state has not delegated authority to the city to set its own legal wage floor. De Blasio has lobbied the governor of New York state to cede authority.
This bubbling-up of state- and city-level initiative poses two questions: What will be the impact of these big jumps in the minimum wage in metropolitan areas? And why is there so much energy in this issue right now?
On the first of these, relatively little is known. There is, of course, no shortage of voices happy to assert that any significant hike in a minimum wage will be a job-killer. But one economist, Arindrajit Dube, from the University of Amherst in Massachusetts, says that much of the fear of higher minimum wages is not backed by careful evaluation of the evidence. A major new study of San Francisco reveals little sign of an impact on job growth – the pressures seem to have been absorbed by sharp falls in staff turnover together with some modest increases in prices.
Whether that would still be the case following a move to a $15 minimum wage in a big city such as Seattle is uncertain. “Fifteen dollars is past the higher end of the experience – it’s a journey into the unknown for a major city,” says Dube. And for that reason he suspects any move in this direction would be brought in gradually. But he is not surprised that some cities are pushing the boundaries of what a minimum wage can do. “Given the pervasive nature of low wages in our economy, we’re due a bit of experimentation with higher pay.”
This note of cautious support is echoed by former White House senior economic adviser Jared Bernstein. “Fifteen dollars is somewhat above the range of past increases, so we’re less certain about its impacts. The smart approach is to try it in select localities, perhaps with a phase-in,” he says.
Why has the issue of low pay sparked to life? The answer lies in a number of shifts that have reshaped, or are reshaping, American society.
Several decades of broadly stagnant wages for a large swath of working America in a time of national prosperity, followed by the recent recession, appear to have shaken up attitudes towards social class. The capacious, optimistic and seemingly ever-expanding great American middle class has gone into reverse. The share of the public thinking of themselves as lower class or lower middle class has spiked from 25% to 40% in the years since the financial crisis. This may help explain why, despite the polarised politics that stultify Washington DC, there is now wide support in favour of boosting low pay: three-quarters (76%) of Americans support a higher minimum wage, including a clear majority of Republican supporters.
Stagnating living standards are only part of the story, though. There has also been a shift in the nature and location of political power in the US. The paralysis of Washington politics seems to have spurred on the already growing assertiveness of cities and states as authors of their own economic reforms. Some dub it the “new federalism”. If Washington isn’t working – whether in the battle against inequality or in getting vital infrastructure built – then cities will just do things for themselves.
This doesn’t, of course, mean that what happens in the capital is irrelevant. The decision by Obama to make economic inequality in general, and the minimum wage in particular, a defining theme of his second term in office and this year’s mid-term elections has helped start a debate.
Another factor, even if it is a long-running one, is the decline of organised labour and the resulting search for new ways of pursuing the interest of working Americans. Listen to the rising generation of union leaders such as Rolf and you are struck by the urgency and bluntness of their “innovate or perish” message for their own movement. The events at SeaTac are a manifestation of this thinking. There is also a sense that new labour campaigns are in part a response to the experience of the Occupy movement. There are similarities, such as the dispersed leadership. But just as telling are the contrasts: sharply defined goals rather than broad expressions of discontent about the iniquities of capitalism; and the ability to register support by voting in a ballot rather than spending months sleeping in a tent.
It’s important, of course, not to overstate what these minimum wage campaigns will achieve. Many are in their early stages, some will fizzle out. Millions of low-paid workers will live outsi e the large metropolitan areas or states where change is most likely. And if a campaign succeeds in securing too ambitious a wage rise – especially in a fragile local labour market – then jobs really will be lost. It’s also true that minimum wages can only do so much to stem the tide of inequality that has come to define modern America. But they do, none the less, matter.
One of the things that unite the many diverse local communities that make up contemporary America is the fact that they are governed by a capital that – for now at least – is locked into a pattern of politics that is as adversarial as it is inert. New ideas, political momentum and reforming energy should be celebrated wherever they are found. Right now this means looking away from Washington DC. Whether it is cities such as Seattle, San Francisco, Chicago, New York or formerly obscure towns such as SeaTac, these are the places to watch.
Gavin Kelly is chief executive of the UK’s Resolution Foundation thinktank
Source: http://www.theguardian.com/world/2014/feb/22/seatac-minimum-wage-increase-washington
