Business

Tacomans have mixed feelings on state minimum wage and sick leave ballot issue

Russel Brunton, co-owner of downtown Tacoma restaurant Indochine, checks the day’s reservations while manager Samuel Kirbawy wipes down the gelato bar. Of Initiative 1433, which will raise the state’s minimum wage and make paid sick days a mandatory benefit, Brunton says: “Businesses will suffer, people will get laid off, businesses will close.”
Russel Brunton, co-owner of downtown Tacoma restaurant Indochine, checks the day’s reservations while manager Samuel Kirbawy wipes down the gelato bar. Of Initiative 1433, which will raise the state’s minimum wage and make paid sick days a mandatory benefit, Brunton says: “Businesses will suffer, people will get laid off, businesses will close.” dmontesino@thenewstribune.com

An initiative to increase the state’s minimum wage and require employers to pay for sick leave has both activists and business interests frustrated.

“Businesses will suffer, people will get laid off, businesses will close,” said downtown Tacoma restaurant owner Russel Brunton.

I-1433 asks voters to increase the statewide minimum wage to $13.50 per hour by 2020, and, starting in 2018, to require businesses to offer its employees paid sick leave. Employees would accrue one hour of paid sick leave for every 40 hours worked. Workers could start using sick leave after 90 days of employment, the initiative states.

If these topics seem familiar to Tacoma voters, they are. Early in 2015, the Tacoma City Council passed a law requiring businesses to provide employees who work in Tacoma at least three days of paid sick leave per year.

And last November, nearly 60 percent of Tacoma voters approved an increase of the minimum wage for workers in Tacoma, which goes up to $12 per hour by 2018.

Voter support of I-1433 appears to be on a similar tack, according to the latest statewide Elway Poll, where 57 percent of likely voters said they supported the measure in an early October poll.

The state minimum wage currently sits at $9.47 per hour and is slated to increase by 6 cents next year because of a slight bump to the cost of living. Employers are not required to provide paid sick leave except in a few cities that have laws on the books, including Tacoma.

But activists here, both for and against the state issue, say the state initiative is not ideal.

STATE ISSUE FAMILIAR TO TACOMANS

Tom Pierson, CEO of the Tacoma-Pierce County Chamber, said the state initiative is “quite a bit different” than Tacoma’s laws, namely with the amount of paid sick leave it requires employers to provide, compared with Tacoma’s three days per year.

Last year, the chamber also advocated for the lesser of two proposed minimum wage increases, calling a $15-per-hour increase right away “too extreme” for Tacoma. Pierson said then he preferred a statewide approach rather than having wages dictated by individual cities.

Similarly, a blanket increase to $13.50 by 2020 isn’t appropriate for all areas of the state, Pierson said recently, because “$13.50 in Seattle is a lot different than $13.50 in Prosser.”

A higher minimum wage might prevent a new company from locating here, but wages are only one of many factors a business might consider before choosing a new home, said Susan Suess, senior vice president for business recruitment for the Economic Development Board for Tacoma-Pierce County.

Site selection consultants often ask the EDB questions about the area, “particularly when Seattle approved their minimum wage,” she said.

The consultants will weigh minimum wages, the area’s cost of living and other qualities their clients might desire when choosing among several sites around the nation, Suess said.

“They need a strategic location that fits whatever their business model is,” Suess said. “Workforce is really a huge thing. Sometimes it’s the No. 1 criteria a company requires to relocate.”

ADVOCATES AT ODDS

Sarah Morken, who campaigned on behalf of 15 Now Tacoma, called the state issue “not very inspiring.” 15 Now Tacoma backed raising Tacoma’s minimum wage to $15 per hour. The campaign raised $8,342 during its campaign, according to the state Public Disclosure Commission. Instead, voters picked a competing measure to increase to $12 per hour by 2018.

“With the meager resources we had, we did something pretty significant and this campaign just…” Morken sighed. “When I looked at how much money they had to spend and all of the paid staff they have at their disposal, it’s uninspiring.”

Raise Up Washington, which advocates for I-1433’s passage, has so far raised more than $4.2 million. Morken said with their money the group could have taken more risks to increase the wages for the poorest workers.

“People are still going to be living on the street” under the new minimum wage law, “and that’s just not acceptable,” Morken said.

But Raise Up Washington spokesman Jack Sorensen said the group wanted to take a measured approach that mirrors Seattle’s minimum wage issue, which started taking effect in 2015. There, an increase to $13.50 per hour by 2020 applies for those who work for companies with 500 or fewer workers.

“This isn’t about picking an arbitrary number that is the highest number that we can get on the ballot,” Sorensen said. “This is about a number that we think makes sense for all of Washington’s communities.”

Sorensen said the issue’s sick leave provision, which allows for nearly seven paid days off per year for a full time worker, makes sense for working families.

“Most people get a cold for a day or two, but all of us have been knocked out with a stomach flu for a week,” Sorensen said.

Even if voters pass a higher statewide wage, Tacoma’s minimum will remain higher than the state’s for several years. In 2018, for instance, workers in Tacoma will earn $12 per hour while the statewide minimum would be $11.50. The state’s minimum increases to $12 the following year, while Tacoma’s wage increases by the cost of living.

CONCERN OVER SICK DAYS

Though Raise Up Washington said business owners were consulted in crafting the state initiative, Yvette Ollada, spokeswoman for the no on I-1433 campaign, said some groups were left out of the process, namely trade groups representing the state’s restaurant and hospitality business.

Ollada said a raise to $13.50 is too much for many areas of the state. And by requiring companies to pay for up to 52 hours of sick leave, the real cost approaches $14 per hour by 2020, she said.

Business owners interviewed cited the sick leave component more often than increased wages as their stumbling block in supporting I-1433.

Dan Curtis, general manager of Tacoma-based retail marijuana store Two Five Trees, said he starts his employees at $12 per hour — the wage guaranteed in the measure in 2019.

“We’re trying to provide a fair wage and fair compensation,” Curtis said.

However, the less than 1-year-old business does not offer paid sick leave.

“We’re still a young business,” Curtis said. “We haven’t mapped out the pros and cons (of sick leave.)”

The accounting firm for Tacoma-based American Custodial, Inc. met with the company’s management and owners recently to discuss the initiative.

The janitorial services company came away with, “No questions, no complaints,” said office manager Tony Nguyen.

“We’ve been paying a lot above the minimum wage,” Nguyen said. The company also pays its 60 employees sick days as is required in Tacoma. Most of them have been with the company for more than 10 years.

Andrew Miller, co-owner of Graham-based Integrity Building Maintenance, also pays his 22 janitorial service employees above minimum wage.

“I believe workers deserve a livable wage because I was there at one time,” he said. “Minimum wage is hard.”

But he chafes at the sick leave requirement.

“If you have under 20 employees that could be very burdensome,” he said.

He fears a scenario of paying out sick leave to recently hired employees who just end up leaving permanently.

Miller feels that sick leave should kick in after a reasonable amount of time on the job.

He has a core group that has been with him for years.

“Those, I wouldn’t mind taking care of,” he said.

Kent Kingman, owner of Gig Harbor’s Minterbrook Oyster Co., is against the initiative. He already pays his workers more than minimum wage.

It’s the paid sick leave, which he figures at $1,000 per employee annually, that’s going to hit him hard.

“It puts me in a place where I have to raise my prices for my oysters,” Kingman said. “We either absorb or we increase our prices. Our industry is not really flush.”

“I’m surely not going to vote for it,” he said.

WORKING FOR TIPS

Downtown Tacoma restaurant owner Russel Brunton is also voting “no.” He and wife Ly Ngov own Indochine Asian Dining Lounge.

Brunton feels the measure imposes an inflexible expense on the constantly in-flux restaurant world.

“As a small business operator it’s very difficult already to balance everything in order to meet the needs of your customers, meet the needs of the employees, meet the needs of all the taxing bodies,” he said.

He fears customers will not accept an I-1433-induced price bump on menu items.

“If you raise prices you just have less people coming in the door,” he said.

If I-1433 passes Brunton said business owners will either choose to make less money or cut expenses. For many businesses, labor is the No. 1 expense. The measure guarantees workers an hourly wage. It does not guarantee them a set number of hours or a weekly wage.

All Indochine employees make at least $10.35 an hour — Tacoma’s current minimum wage. Salaries go up from there based on experience and skills.

I-1433 does not address the issue of tips. Traditionally, service staff wages are low in restaurants because much of their income comes from tips. Some areas of the country allow a “tipped wage” that dips far below the minimum wage, but not in Washington state.

In order to address inequality among his serving staff and back-of-the-house staff over tip wages, Brunton began charging an 18 percent service charge on all in-dining checks starting in June 2015. All employees share in the service charge. Any tips beyond that go only to service staff.

“We can pay people fairly now, based on their contribution, their abilities, how long they’ve been here. All the typical stuff,” he said.

The pro-1433 side’s argument in the state voter’s pamphlet spends over 25 percent of its text talking about sick workers spreading disease, thus making the case for sick days.

But state regulations already forbid ill workers from serving food in Washington restaurants. They are required by law to notify management when sick.

“Instantly, you’re off the schedule. Regardless if we can cover it or if we really need you,” Brunton said of his staff.

He said he monitors staffing levels and workload closer than he ever has. If I-1433 passes that will only increase.

“If everybody is going to get a raise, they’re going to have to do more for that money,” Brunton said.

Craig Sailor: 253-597-8541, @crsailor

Kate Martin: 253-597-8542, @KateReports

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