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Tacoma voters to consider new wage floor

This fall, Tacoma voters will be the latest to decide whether to raise their city’s minimum wage. They will also get to choose how far and fast any increase should go.

One option, placed on the ballot by the citizen group 15 Now Tacoma, raises the wage floor to $15 immediately. The alternative, suggested by the city, raises it to $12 and has a phase-in period.

Here’s a look at the issue:

WHAT IS THE MINIMUM WAGE NOW?

Washington state’s minimum wage is $9.47 per hour. Since 1998, it has been adjusted each year to reflect changes in the cost of living.

The state’s cost of living is the 16th highest in the country. But regional differences matter: It’s more expensive to live in Western Washington than Eastern Washington, for example. And Seattle, which is raising its minimum wage to $15 in the next three to five years, has a much higher cost of living than Tacoma’s — almost 34 percent higher, by one measure.

HOW DOES THE STATE’S MINIMUM WAGE COMPARE TO THE REST OF THE COUNTRY?

Right now, Washington state’s minimum wage is the highest in the nation. Oregon is No. 2, at $9.25 per hour. But in 2016, the state’s minimum wage won’t rise as it usually does. Washington’s increase is based on the movement of the national consumer price index in the previous year, and it was flat. So the state’s minimum wage will remain $9.47 an hour next year, and seven other states will race past it to the top of the highest-wage list. Washington D.C. will lead the pack at $10.50 an hour, with Massachusetts and California close behind at $10 an hour next year.

The federal minimum wage is $7.25 an hour. Five states do not have a state minimum wage and therefore pay the federal rate: Alabama, Louisiana, Mississippi, South Carolina and Tennessee.

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WHO WANTS TO RAISE THE WAGE TO $15, AND WHY?

A group of citizens formed 15 Now Tacoma, which gathered enough signatures to place an initiative on the fall ballot to raise the wage floor to $15. The group was inspired by wage increases in SeaTac and Seattle, but members believed those laws didn’t require businesses to implement the higher wage fast enough. So the group wrote its initiative to take effect as quickly as possible.

15 Now Tacoma says the state’s minimum wage, despite being the highest in the nation, is not enough to live on — particularly in this part of the country, which has a higher cost of living than elsewhere in the United States. The Massachusetts Institute of Technology’s Living Wage calculator estimates one adult would need to earn $10.29 per hour to support him or herself in Pierce County. (That estimate is based on 2014 data.)

While operating independently, 15 Now Tacoma is part of a national movement responding to rising income inequality in the United States. The Tacoma group has raised about $3,600, most of it donations from about two dozen individuals or small groups.

WHAT MINIMUM WAGE WORKERS ARE SAYING

“There’s this attitude that people flipping burgers shouldn’t make that money and should just go back to school. Well, some of those people are paying for school. You can’t tell someone who doesn’t have a degree that … if they don’t want to flip burgers they should get a degree. Minimum wage now won’t let you do that. Every argument I hear against this pay increase comes from a very privileged place. ‘I worked my way up’ — well, you went to college when college was $20,000 a year. $15 is a generous compromise when you consider rent is $1,300 a month.”

— Jamika Scott, 28, who has a college degree in creative writing and is working for a non-profit’s children’s program. She earns $14 an hour but is working just 12-15 hours a week. She has applied to other places outside the childcare field, but is told she’s overqualified. She has about $80,000 in student loan debt and is living with her mother on the Hilltop, where she grew up.

“People don’t understand what it’s like to live as a working-class homeless person. I’ve been to debates and to the City Council (meetings). No one there talks about this.”

— Fernando Irizarry, 39, who lives with his girlfriend in their cars while they both work for a temporary staffing firm that pays them $10 an hour and places them with major employers around Pierce County. Irizarry also says he donates plasma and does odd jobs to make extra money.

WHO WANTS TO RAISE THE WAGE TO $12, AND WHY?

The $12 proposal was placed on the ballot by the Tacoma City Council, which convened a working group this summer to come up with an alternative to 15 Now Tacoma’s idea. The 15-person working group included representatives from business, labor, academia and the public.

With a 9-6 vote, the task force recommended that hourly pay for all of the city’s lowest-paid employees should rise to $15 an hour by 2024, and businesses with 150 or more workers should reach that floor four years earlier.

The six task force members who voted against that idea wrote a minority report recommending elevating the city’s minimum wage to $12 per hour by 2019 regardless of business size. The City Council ultimately decided to put the $12 proposal on the ballot, but adjusted it so the wage floor would hit $12 one year earlier, in 2018.

As a compromise measure, the $12 an hour proposal has the support of the Tacoma-Pierce County Chamber and many other businesses, including temporary labor company True Blue, whose corporate headquarters are in downtown Tacoma. A political action committee called $12 For Tacoma was launched in late September by two small-business owners. It has reported two contributions: $2,000 from the corporate owners of Lakewood-based restaurant The Ram, which has an establishment on Ruston Way in Tacoma, and $5,000 from the Washington Restaurant Association.

Supporters of the $12 an hour measure acknowledge that the political will exists for raising the minimum wage, but would like the increase to be smaller and more gradual. To argue against Tacoma’s $15 measure, which would take effect immediately for almost all businesses, $12 supporters point out that even Seattle, with its booming economy, is raising its wage floor to $15 an hour gradually.

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WHAT SUPPORTERS OF A COMPROMISE ARE SAYING

“I’m not anti-15; I’m pro-12,” said Dave Harkness, who is the third-generation owner of Harkness Furniture store, a fixture in South Tacoma since the 1920s. Harkness calculated that his business will see a $40,000 to $50,000 increase in labor costs if the rate rises to $15 immediately. “That doesn’t sound like a whole lot, but … in the recession, there were years we didn’t make that much.”

“Twelve is better than 15,” said Joanna Monroe, chief compliance and risk officer for True Blue. But, she said, any increase puts the city at a competitive disadvantage. “If I’m looking to relocate (my business), I’m not looking to relocate to Tacoma. And if I’m in Tacoma, I’m looking at my lease to see when I can get out of it.”

HOW MANY PEOPLE WOULD BE AFFECTED BY A RISE IN TACOMA’S MINIMUM WAGE?

“That’s a million-dollar question,” said Ali Modarres, the director of Urban Studies at the University of Washington Tacoma. Modarres deeply studies demographic data and was one of the members of the city’s minimum wage task force.

He said arriving at an accurate number is practically impossible.

Modarres’ assessment is backed up by two other analyses done for the task force: one by Scott Bailey of the state’s Employment Security Department and another by Neil Kilgren of the Puget Sound Regional Council. Kilgren used detailed federal data from the U.S. Census Bureau to describe the wages of people who live in Tacoma. Bailey used state unemployment insurance data from 2013 to describe the jobs in Tacoma.

Bailey’s data shows minimum wage jobs make up between 24 percent to 32 percent of all jobs in Tacoma. The percentage depends on which way you count — by the job or by the full-time equivalent — because some jobs are of “very short duration” and others are full-time or more.

Bailey showed that food services, health care and social assistance, and retail make up just over a third of all the minimum wage jobs.

But federal jobs aren’t counted, nor is work in private households (like home health caretakers).

Kilgren’s data is less telling. It is from 2007, before the recession. It shows what Tacomans earned, but cannot show where they earned it — so it doesn’t reveal how many city residents would see any benefit from a minimum wage increase.

HOW MANY BUSINESSES IN TACOMA WILL BE AFFECTED BY EACH PROPOSAL?

The city has 27,700 active registered businesses. That number includes businesses whose offices aren’t in Tacoma but that do work in the city. Some are sole proprietors who don’t have employees and wouldn’t be affected by a higher minimum wage.

The $12 proposal would affect all of the businesses in Tacoma, and many outside Tacoma if their employees work enough hours in the city.

The $15 proposal exempts businesses that make less than $300,000 in gross income a year. Tacoma exempts businesses with $250,000 or less gross income from paying business and occupation tax. Some 17,000 active registered businesses are not required to pay the tax because they are under that threshold, city spokeswoman Maria Lee said. Those businesses would likely not have to pay $15. They include 5,100 businesses located in Tacoma.

HOW WILL THIS AFFECT BUSINESSES WHOSE MAIN OFFICES AREN’T IN TACOMA, BUT WHOSE EMPLOYEES DO WORK IN THE CITY?

The 15 Now Tacoma proposal doesn’t address this. Should it pass, that question would be answered through the public rule-making process.

The $12 proposal takes it an hour at a time: If a person doesn’t work more than 80 hours in a calendar year inside the city limits, the law won’t apply. Also, the law doesn’t apply to employees traveling through Tacoma and stopping only for gas or meals.

IF $15 PASSES, WHAT HAPPENS?

Timing: The $15 per hour ballot measure contains a provision that has it go into effect “on the earliest date allowed by law following the certification of this ordinance.”

City Attorney Elizabeth Pauli said last week that the $15 ballot measure, should it pass, would go into effect 10 days after the election is certified. That means Dec. 4. Pauli said she reached that determination by relying on a section of the city charter that declares ordinances initiated by a vote of the people take effect 10 days after the election is certified.

Adjustment for cost of living? Yes, annually, using the Consumer Price Index.

What businesses are affected: Those making annual gross (before expenses and taxes) revenues of more than $300,000.

Accountability: The measure requires the city’s finance director to file an annual report on compliance and enforcement. It also calls for the establishment of an independent citizen commission to review that report and “certify” that the director has “adequate resources” for administration and enforcement of the minimum wage law. If the commission decides the director’s funding or staffing is inadequate, the commission is authorized to “direct the City Council to rectify the situation.” Also, the ordinance requires business owners to keep wage records for 10 years. State law requires just three.

How do workers report possible violations? The measure provides guidelines for how people can complain to the city’s finance director. More detailed rules would be formed through a public process after the election.

Penalties: The measure gives the city’s finance director the powers of enforcement. If the director finds an employer in violation, the director is required to give documentation to the city attorney for criminal prosecution.

The specter of criminal penalties for a record-keeping error greatly alarms business owners and their advocates.

IF $12 PASSES, WHAT HAPPENS?

Timing: The city’s minimum wage would increase to $10.35 an hour by Feb. 1, 2016. By Jan. 1, 2017, it would be $11.15; and then $12 by Jan. 1, 2018.

Adjustment for cost of living? Yes, annually, using the Consumer Price Index.

What businesses are affected: All businesses, either based in Tacoma or whose employees work in the city for a certain amount of time, regardless of annual gross income.

Accountability: In September 2018, and every two years after, the city manager is required to report to the City Council on the wage’s effect on small businesses, minimum and low-wage workers, and the city’s economy in context of Pierce County and the South Sound region. Businesses are required to certify compliance with the law when they renew their city business license each year.

How do workers report possible violations? The measure provides guidelines for how people can complain to the city’s finance director. More detailed rules would be formed through a public process after the election.

Penalties: The city’s finance director has powers of enforcement, but the consequences are civil, not criminal. The base penalty is $250 but could be higher based on other factors. Before issuing a citation, the director first must try to settle any alleged violations.

MORE ABOUT THE MINIMUM WAGE

To read the Tacoma task force’s final report and supporting documents, go to cityoftacoma.org and search for “minimum wage task force.” Here’s a link to the PDF of the final report.

The National Conference of State Legislators has a breakdown of the minimum wage, state by state, as well as a legislative tracker. Go to ncsl.org and hover over “Research,” then click on “Labor and Employment.” The minimum wage link will be on that page.

Text of the 15 Now Tacoma ballot measure: Click here for a PDF.

Text of the $12 an hour City Council measure: Click here for a link to a PDF.

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