Until the turn of the year, few Americans had much reason to have heard of SeaTac, a small community just outside of Seattle, Washington. 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 shined a light on the increasingly febrile, high-energy politics of low pay and also shown something about how paralysis on Capitol Hill is prompting more states, cities and communities in the US to act to improve their prospects.
The issue of chronic low pay has been thrust into the spotlight over the past year by US President Barack Obama, whose proposal to hike the federal hourly minimum wage from US$7.25 to US$10.10 would mean a direct pay rise for more than 16 million workers, with another 8 million benefiting indirectly. By any standard, that would represent a major increase, but it would only restore the federal minimum wage to just above the level it attained 45 years ago, after adjusting for inflation. However, it is a proposal that appears very unlikely to get passed by the US Congress any time soon. For now, low-paid workers will have to look elsewhere for a pay rise.
Illustration: Mountain people
A generation ago, SeaTac was what Americans would call a middle-class town where a jet refueler or baggage handler could earn a decent living, but those days are long gone. These and many other jobs now pay far less, with salaries either at or slightly higher than the local minimum wage.
“It’s gone from being comfortable to a poor town, even in a prosperous corner of the US,” said David Rolf, the influential vice president of the Service Employees International Union and a guiding hand behind events at SeaTac. “This story of a whole community being shut out of prosperity is a microcosm of what’s been happening across America”
It is 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 US middle class and the rise of trickle-up poverty. During the 1980s and 1990s, airlines increasingly outsourced more jobs, benefits were cut back and across the great majority of the airport economy, wages were reduced to about the minimum. 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 about US$13 an hour, while the new contractors take home a measly US$9.
More recently there have been repeated union efforts to organize 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, but again, all failed.
“Given the opposition we faced, only a higher level of disruption was going to shift events,” Rolf said.
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 an increase in SeaTac’s wage floor from Washington’s minimum wage of just more than US$9 to US$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 that saw a couple million dollars spent 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 one’s political leanings.
“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,” Rolf said.
When the votes were cast in November last year, the Yes! campaign won by a tiny majority of 77 votes and SeaTac became a national story. The result meant that, starting last month, about 1,600 employees in restaurants, hotels and car rental agencies received a 60 percent pay increase. A larger number working inside the Seattle-Tacoma airport are awaiting a legal appeal over whether the town’s authorities have jurisdiction over the facility’s premises. It is too soon to judge, but so far there is little sign that the pay hike has led to major price increases or job losses.
SeaTac may have caught the public imagination, but in an important respect it is unexceptional. When I asked Rolf if he expects to see other SeaTacs, he immediately responded: “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 wages. Over the past 15 years, there have been 10 state-level referendums on raising the minimum wage, all of which were won. So far this year, 22 minimum wage-related bills have been introduced across 14 US states, showing that 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, newly installed Seattle Mayor Ed Murray has said he would like to move to a US$15 wage floor across the city. He is waiting for a report on how this can best be achieved. San Francisco raised its minimum wage a decade ago to US$10.74 and overall employee compensation is US$13, including health contributions. The city’s mayor is now calling for an increase to US$15, subject to a review of how this could be introduced. Los Angeles is having a council vote on whether to move to a US$15 minimum wage for hotel workers later this year (its airport already has a US$15 minimum wage), while Washington DC has just agreed to a significant increase to US$11.50 and Chicago has a growing campaign for US$15 for large employers and is staging a non-binding referendum this year.
Meanwhile, New York 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 New York State not having 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?
Relatively little is known about the first question. 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 higher wages impacting 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 US$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,” Dube said.
For that reason, he suspects that 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,” the economist said.
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 said.
So why has the issue of low pay sparked to life? The answer lies in a number of shifts that have reshaped, or are reshaping, US society.
Several decades of broadly stagnant wages for a large swath of working Americans in a time of national prosperity, followed by the recent recession, appear to have shaken up attitudes toward social class. The capacious, optimistic and seemingly ever-expanding great US middle class has gone into reverse. The share of the public thinking of themselves as lower or lower-middle class has spiked from 25 to 40 percent in the years since the financial crisis. This may help explain why, despite the polarized politics that stultify Washington, there is now wide support in favor of boosting low pay: three-quarters — 76 percent — of Americans support a higher minimum wage, including a clear majority of Republican supporters.
Yet stagnating living standards are only part of the story. 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, a trend some have dubbed the “new federalism.” If Washington is not working — whether in the battle against inequality or in getting vital infrastructure built — then cities will just do things for themselves.
This does not 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 organized labor 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 one is 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 labor 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 is important not to overstate what these minimum wage campaigns will achieve; many are in their early stages and some will fizzle out. Millions of low-paid workers will live outside the large metropolitan areas or states where change is most likely and if a campaign succeeds in securing an overly ambitious wage rise — especially in a fragile local labor market — then jobs really will be lost. It is also true that minimum wages can only do so much to stem the tide of inequality that has come to define the modern US, but nonetheless, they do matter.
One of the things that unite the many diverse local communities that make up the contemporary US is 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, and right now, this means looking away from Washington. 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 Resolution Foundation think tank, which aims to improve living standards for low to middle-income families in the UK.
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