What Minneapolis Could Learn from Seattle’s $15 Minimum Wage Fight
It’s tempting to look back at the first successful fight for a $15 minimum wage and figure it was inevitable: Seattle, 2014. Wealthy city. Booming city. Left-of-center politics. A large base of progressive activists.
But David Rolf, the president of SEIU 775 and one of the leaders of the drive to increase the minimum wage in the city to $15, said it was anything but a sure thing. “To start with, we were the first,” Rolf said last week. “We were in completely uncharted territory.”
Even after a minimum wage and paid leave ballot measure was successful in the city of SeaTac, which surrounds the Seattle-Tacoma International Airport, the thought that Seattle might do the same “was an idea that at the time seemed absolutely crazy,” Rolf said.
But it happened. And as dozens of cities and counties have followed, Seattle has been held up by both supporters and opponents of city-only minimum wage ordinances as evidence for both how it was accomplished — and how it is being implemented.
MinnPost talked to three key figures in Seattle's 2014 $15 minimum wage fight, not only to explore the similarities and differences with the current situation in Minneapolis, but to see what advice they might have for the players looking to craft a new ordinance here.
The labor leader
Rolf founded SEIU 775 in 2002 and has grown the membership to 44,000 members in Washington and Montana. He also serves as an international vice president for the union, which has been a leader in state and local campaigns on minimum wages, paid leave and fair scheduling.
Rolf chronicled the Washington state and national campaigns in his book “The Fight for Fifteen: The Right Wage for a Working America.” The effort began in what some might consider an unlikely place, the recently incorporated city of SeaTac, which had grown up around Seattle's international airport. Like most airports, the businesses around it employ lots of low-income workers, including many recent immigrants.
But the 2013 ballot proposal there wasn’t just a minimum wage ordinance. Instead, the proposed law packaged an immediate increase in the minimum wage to $15 an hour, a paid leave benefit, a requirement that employers offer more hours to current part-time workers before hiring additional employees, and a strict ban on wage theft. Rolf called it “the mother of all living wage ordinances.”
Despite a well-funded opposition led by the largest carrier at SeaTac, Alaska Airlines, the measure passed that November by just 77 votes. “SeaTac prototyped the whole thing,” Rolf said.
By the time the effort moved up I-5 to Seattle, backers of the $15 wage campaign had two options: to launch another initiative campaign — or focus on the mayor and city council. Mayor Ed Murray and all nine council members had supported the issue during the 2013 election. And the Seattle Chamber of Commerce had taken a pragmatic position: Members figured that something was going to pass, so they should spend their time trying to work out the details rather than waste their efforts trying to kill it outright.
“It’s hard to say, ‘Go to hell’ when the mayor and all nine council people and a majority of the business community are all saying, ‘We want to sit down and negotiate with you,’” Rolf said “We never gave up the threat of a ballot measure, but we wanted to try negotiating first.”
Still, there was a limit to what labor and progressive activists would compromise on. They wouldn’t settle for less than a $15 an hour minimum wage. And while a phase-in of the wage increase was likely, “We weren’t going to settle for a phase-in period that put McDonald’s at $15 in 2025 or something like that,” said Rolf.
A committee appointed by Mayor Murray, the Income Inequality Advisory Committee (with Rolf and old-money Seattle scion Howard Wright as co-chairs), ultimately crafted a plan with carve-outs for tip credits and for employers who provided health insurance.
Wait, did we say tip credit? Called a “tip penalty” by activists in Minneapolis, the issue has become the hot-button aspect of the debate over $15 minimum wage in Minnesota, with Mayor Betsy Hodges and a majority of the council pledging not to support such a credit in whatever is passed. In his book, Rolf called tips the most difficult negotiating point when it came to dealing with small, locally owned restaurants. “They were the cause of the majority of the drama in Seattle,” Rolf said. “They wanted a full-scope, traditional tip credit which no one was interested in giving them.” As with Minnesota, Washington state did not have a tip credit in its state minimum wage at the time.
In Seattle, as in Minneapolis, local restaurants made the case that labor was a high percentage of their costs and that a large percentage of low-wage workers needed time to adjust to a different wage system. “I’m not sure I believe it, but that was the politics of it,” Rolf said.
At the same time, what Rolf called “the traditional bad guys” — fast food chains, chain retail and national restaurant groups — got no special consideration.
The final plan, which went into effect on April 1, 2015, was based on a compromise proposal offered by a Chamber of Commerce official. Large employers (those with more than 500 employees) had three years to get to $15; large employers that offer health insurance had a four-year phase-in window. Smaller businesses had up to six years to get to $15, with different phase-in schedules based on whether they offered benefits and employed tipped workers. Finally, by 2025, every employer in the city will have to pay at least $18 an hour.
“So the minimum wage rises at different levels depending on other features of the enterprise,” Rolf said. “Is it large, is it small? Do they have health care? And for smaller restaurants only do workers get to take home tips. We didn’t do it as a tip credit. We did it as four different classes of enterprise.”
“A very simple idea — $15 an hour — got expressed in a very complex policy,” he said.
Would the plan look different if it were crafted now? Yes, said Rolf.
“If we were going this summer after 20 million Americans were already covered by a minimum wage law, we’d have been, ‘Let’s do a three- or four-year phase-in, a dollar a year till we get there, and leave it at that.”
What advice would Rolf offer activists and union leaders in Minneapolis?
“It often takes as much effort to do something small as something big,” he said. “I’m convinced that in either SeaTac or Seattle we would have faced the same level of opposition had we tried to raise it by 75 cents, to $10.18. For that reason, we shouldn’t spend our lives doing small things.”
Dave Meinert owns some of Seattle’s most popular restaurants and nightclubs, including the 5 Point Cafe and Big Mario’s Pizza. He is also a music promoter and manager of bands, including for artists such as Fences and the Lumineers. He organized a popular block party and cofounded a political movement that repealed a teen dance ordinance that restricted access to live music to underage patrons. That led to the creation of a political committee, JAMPAC, to support candidates who supported music and nightlife.
He was one of the people asked by Murray to serve on the work group. In the end, however, he called the process a “charade.” He said he thinks the process was designed primarily to benefit the SEIU and, in turn, the local politicians who benefit by the union’s campaign support. “Labor wants to pass laws that encourage union membership, mostly focused on big businesses,” Meinert said. “If SEIU or UFCW could get McDonald’s to unionize, they’d get hundreds of thousands of new members.”
Very few restaurants are unionized, and very few workers affected by the minimum wage debate are union members, Meinert said. But when servers and bartenders tried to get involved in the issue, he says, they were attacked by Working Washington, a group founded by the SEIU, and the alternative newspaper, “The Stranger.” It caused the servers organization to disintegrate.
Meinert is in favor of Seattle's minimum wage ordinance. But he also thinks that once the tip credit ends, the law will hurt restaurant workers more than restaurant owners. Many larger restaurant groups not eligible for the tip-credit phase-out have already rolled the increased costs into prices or have shifted to a service charge model, in which a 20 percent surcharge is added to each tab.
While tips are kept by the server, service charges go to a restaurant owner, he points out, who then can use the revenue to cover the higher wages both in the front of the house (servers, hostesses, bartenders) and the back of the house (cooks and dishwashers).
While some restaurants with service charges still provide a space for tips — money that goes directly to the server or bartender — others have removed a tip line from their credit card slips. (Upwards of 80 percent of restaurant and bar tabs are paid with cards, not cash.) “Ultimately, many businesses in Seattle didn’t fight for the tip credit because they wanted that excuse to raise prices and get rid of tips so they could control the money,” Meinert said. “You have this ironic thing happening where labor is fighting to give owners control of the money.”
Meinert says his restaurants still use a traditional tipping model but will switch to a service charge when the tip credit phases out in 2020. When that happens, hourly wages may go up but total income will not, he said.
And he strenuously disagreed with activists who say that workers in cities that don't have tip credits do not experience reductions in tips for tipped workers. “For activists to say, ‘Don’t worry, workers. It’s all going to be the same,’” he said, “It’s just patently untrue, and we know that with real-world examples in Seattle.”
Meinert said he laments that the debate became so polarized — and that it continues to reverberate three years after passage of the Seattle ordinance. Just last week, after Tweeting that he was opening the third location for his pizza restaurants, a former writer for The Stranger replied: “Damn you, $15 an hour minimum wage! (Amirite, @davidmeinert?)”
It is a common reaction to any news about economic well-being by a business that opposed or wanted changes to the ordinance, implying that all of the predictions of doom were overstated. But Meinert said such critiques miss the point. Seattle, he notes, does not have $15 minimum wage for most workers right now. “If you like the minimum wage structure in Seattle, then you’re agreeing that the phasing it in over time and giving a tip credit and health insurance credit is the right thing to do to make it work,” he said. “And I agree. It’s working because we phased it in over a long time and we have a tip credit.”
His advice for restaurant owners in Minneapolis? “Don't worry about it because at the end of the day it’ll benefit you. It’s the workers who should be worried.”
The council member
Sally Clark was in her second term on the Seattle City Council when the committee she chaired took up the minimum wage ordinance. Before winning election, Clark had been director of community resources for the Lifelong AIDS Alliance, and she resigned her council seat in 2015 to become regional and community relations director for the University of Washington.
As a candidate, Clark recalls being asked about the minimum wage, especially when meeting with labor groups. “I said yes, in concept, people need to be paid more,” said Clark, who described herself as a run-of-the-mill Democrat and a progressive. “But I said it was not ideal for Seattle to do it alone. I’d rather see it done at a wider level” for fear that it would create competitive disadvantages for Seattle employers.
But then came the financial collapse, the foreclosure crisis and the Occupy movement, which, she said, “lit a fire under people on the larger issue of economic equality. “People said, ‘We’re tired of waiting for a larger regional approach,’ ” Clark said. “ ‘It has to start someplace, and we want it to start with you guys.’ ”
While it was certain the Seattle council would pass something in 2014, there were conversations about the number. “Should it be $15? Should it be $12? Should it be $13.25?” Clark said. The SeaTac vote, however, set the wage. And when the task force reached its agreement, “that’s when the gun went off.”
The council still faced protests as it worked on the issue, mostly from the Socialist Alternative, a party that had just elected the city’s first socialist since 1916, and the affiliated $15 Now campaign. Clark said they complained that the council should adopt a $15 wage and apply it immediately and across the board. “If you don’t do that, obviously you are beholden to those corporations who are knocking on your door,” she said, paraphrasing the protesters’ message. “But I don’t recall getting visited by a lot of big companies. People at Amazon weren’t quaking in their boots over the minimum wage.”
The mayor and the council were more interested in what she termed a “flight path to $15” that worked for all of the parties on the working group. “It was about getting everyone to yes,” she said. “It was maybe not on the perfect flight path, but it was a flight path everyone would respect and live under.”
Her recollection of the politics of the tip credit mostly matches that of Rolf and Meinert. Servers and bartenders weren’t really a factor, especially those from lower-priced restaurants. It was restaurant owners — more than other businesses — who were the voices asking for consideration. She characterized the argument like this: “Let me figure out how to pay for this over time by still allowing tips to be counted until I can see how it shakes out, so I can have better equity between the front of the house and the back of the house.”
“The tip credit is so hard,” Clark said. “It is complicated to work through.”
Her advice for Minneapolis? “Set a deadline for when you want to be done and be done. At some point, you’ve got to call the question,” she said. She also suggests investing in an evaluation. That is, make sure someone is independently measuring the impacts and reporting back to the policy makers with the news, both good and bad.
And finally, Clark said, “Don’t let the perfect be the enemy of the good.”
Impact on restaurants
It should be noted here that both SEIU’s Rolf and former Council Member Clark agreed with Meinert that the payment model in Seattle restaurants is changing. Rolf said there are four models in use: restaurants that haven’t made any changes yet; those that increased prices and eliminated tips; those with service charges and no tipping; and those with service charges but that also provide space for tipping.
Larger restaurant groups, not just national chains but chef-owners with a handful of restaurants in the region, have been quicker to go to service charges because they are too big to qualify for the tip phase-out. “If a restaurant has eliminated tipping, I don’t tip,” Rolf said. “If there is space for a tip, I might tip but not the full 20 percent or 25 percent.”
Clark said, “it is still really fuzzy for people. “Anecdotally, I think people are not automatically doing 20 percent the way Seattleites were previously. Maybe 15 percent. Maybe 10 percent.”
In Minneapolis, whether tipped workers will see a decline in tips is a primary point of disagreement between activists pushing against a“tip penalty” and restaurant workers and owners insisting on the “tip credit.” At dueling rallies last week in front of the Buffalo Wild Wings near TCF Bank Stadium, the conflict was illustrated with signs and chants.
“My Pay. My Tips,” chanted servers and bartenders.
“NRA go away. We deserve better pay,” chanted those with $15 Now, Centro de Trabajadores Unidos en Lucha (CTUL) and Neighborhoods Organizing for Change.
A group of servers and bartenders in Minneapolis have built a more resilient activist group than in Seattle, and they want restaurant owners and managers to guarantee that all workers make at least $15 an hour. But they also favor letting owners pay the $9.50 state minimum wage first and only increase their payment to workers to $15 if the server or bartender doesn’t make at least that much in tips. Without such a tip credit, the servers worry that their restaurants will stop accepting tips and pay wages out of service charges — a change that will cost them income.
Activists cite studies that suggest tipping doesn’t decline regardless of whether there is a tip credit. They argue that all workers should be under one pay system — One Fair Wage — and that pressure to get more tips causes workers to overlook harassment and abuse from customers and managers.
They also worry about tip skimming and wage theft, something a lawsuit alleged is common at Buffalo Wild Wings. At one point during the confrontation John Patrykus, a bartender at Mystic Lake Casino and the Minneapolis Events Center, crossed the 10-foot no man’s land and spoke with Andrea Pittel, a pro-minimum wage volunteer. Afterward, Patrykus said he wishes the two groups could sit down and work out a compromise. “We need a meeting with those guys because 90 percent of the time, we agree,” Patrykus said.