Washington city votes to raise minimum

wage to $15
By Emily Jane Fox @emilyjanefox November 7, 2013: 11:39 AM ET


Airport workers in SeaTac, Wash., are poised to have their minimum wage raised to $15 an hour.
NEW YORK (CNNMoney)
It's a good day for low-wage workers in New Jersey and the city of
SeaTac, Wash., after residents on Tuesday favored ballot measures that
will raise the minimum wage.
The SeaTac initiative will raise the minimum wage to $15 an hour for hospitality and transportation
workers in and near Seattle-Tacoma International Airport. The current minimum wage in
Washington State is $9.19.
With all precincts counted, the 'Yes' vote was leading by 54% to 46%, but opponents say it is still
too close to call. There are still uncounted votes, due to Washington's mail-in voting system.
SeaTac Proposition 1 also calls for paid sick leave and tip protection.
Proponents of the measure say it will boost the local economy and drive consumer spending by
putting money in the pockets of low-wage workers. Those on the other side argue that such a
dramatic hike will burden small businesses and end up costing the city of SeaTac money to
enforce it.
David Rolf, president of a local Service Employees International Union, said that voters were sick
of waiting for companies and Congress to take action against stagnant wages.
"People have been waiting a really long time for this," he said. "For the first time in many years, the
people who put fuel in jets might just be able to buy a ticket on one."
Related: It's the most unequal place in America
While not quite as dramatic of an increase, New Jersey residents voted to raise the state's
minimum wage by $1 to $8.25, The ballot initiative also put an automatic annual cost of living
increase for the minimum wage in place.
Both the New Jersey and SeaTac measures would take effect Jan. 1.
These wage hikes come a little more than a month after California lawmakers voted to raise the
state's minimum wage to $10 an hour from $8. Earlier this year, New York and Connecticut
approved measures that would increase minimum wages to $9 over the next few years.
Organizers in a number of other states, including South Dakota, Massachusetts and Idaho, are
gathering signatures to place similar measures on ballots in November 2014.
States must pay at least the same as the federal minimum wage, which has been set at $7.25 an
hour since 2009. But as of January, New Jersey will join 19 other states and Washington, D.C., in
having minimum wages that exceed the federal level.
The fight for a living wage has played out beyond the election booth and onto picket lines across
the country. Over the last year, workers from Wal-Mart (WMT, Fortune 500)and fast food
chains have walked off work and protested for higher wages, better hoursand benefits, and
the right to form an union without retaliation.
Related: Fast food workers, share your story
Those in favor of minimum wage raises such as those in SeaTac or New Jersey say that the new
measures will generate economic growth.
"When you increase the purchasing power of the lowest paid workers in a state, you drive
consumer spending and that can promote job growth and end up supporting small businesses,"
said Jack Temple, a policy analyst at the National Employment Law Project, an advocacy group
that focuses on low-wage workers.
But those on the other side say that small businesses can't afford the higher wages, and people
will end up having a harder time finding jobs.
Common Sense SeaTac, a group opposed to the SeaTac ballot measure, says that small
businesses will suffer and young people just starting out will find it harder to get their foot in the
door.
"These private-sector issues should be negotiated between employers and employees, not
imposed by our small city," the group said in a statement.

Recently, SeaTac, Washington took the initiative to increase the minimum wage of hospitality and
transportation workers in and around the Seattle-Tacoma International Airport. This will raise
minimum wage from $9.19 to $15 per hour. Those who aid this say this will generate economic
growth. Those who oppose this explain that smaller businesses wont be able to afford the increase in
wages and many people will face increased difficulty in finding a job.
Minimum wage is a form of minimum (high) price control (when the government sees the need to
intervene and set prices to help the consumer or producer by setting a price; in this case, the workers).
The government then sets a price above equilibrium price (the price (wage) at which the quantity
demanded=quantity supplied eg. Qeq and Peq in Fig.1), preventing producers from reducing the price
further. Here, employers are required to pay workers no less than the minimum wage of $15.
Minimum wage is usually set in order to ensure that workers are earning enough to lead a reasonable
existence.

A price control of minimum wage will lead to excess supply (supply is greater then demand at same
price) of workers (people aged 16-65 who are willing and able to work), due to the fact that at this
new price firms and businesses are less able to afford employing the same number of employees they
had prior to the increase. Meanwhile, people will be more willing to work as increased wages might
increase their standard of living. The immediate consequences of this implementation is that many
people will find it much more difficult to find employment while others may find themselves out of a
job they previously had. The prospect of losing ones job is more likely if that person is part of a
minority (eg African Americans were proven to be most likely in a minimum wage job in a study
carried out by Michigan State University), particularly one that is generally unskilled. Also, this
prospect is especially negative in cases where households only have one working member. Most
working at the minimum wage level are teenagers, so raising minimum wage would make entering the
work-force more appealing, leading to a drop in number of teenagers in school, hurting their chances
of maintaining a job and being promoted in the long run. On the other hand, those who maintain or
gain employment will experience increased standards of living, as, assuming other prices have not
increased, they will now be able to afford more. They will experience an increase in their income.


As seen in Fig.1, increasing the minimum wage will attract more potential employees, apositive note
for firms that are struggling to find employees. Due to unemployment, Eq isnt considered the market
state that existed prior to the increase in minimum wage, as it isnt the point in which the forces of
demand and supply are equal as theres a surplus in supply of workers yet no demand for them. Min
price 1 is the old minimum wage, in which supply is greater than demand, and this increases to Min
price 2 in which supply is greater still then demand.
Fig. 1 The market for workers
Qeq Quantity of workers
P
e
q



P
r
i
c
e

o
f

w
a
g
e
/
h
o
u
r

(
$
)

S
D
Min. price (min. wage)1
Min. price (min. wage)2
Excess supply (surplus)
Equilibrium (Eq)

Peter Driers perspective, backed by studies, indicates otherwise. Drier believes that businesses, and in
turn the state, would benefit from raising minimum wage; raising minimum wage will boost the
economy in the long run (though damaging expendable employees incomes in the short run) as low
wage workers will now have a better ability to consume necessary goods, which will increase demand
(as seen in Fig. 2 in the shift of demand from D1 to D2) for those goods from local sources (benefitting
domestic economy). Local businesses will in turn earn more (Peq2>Peq and Qeq2>Qeq); many will be
willing to hire more workers in order to keep up with increased demand, leading to the cycle
beginning again.
To try decrease surplus, the government might aid small businesses through grants and similar
subsidy-like funds. They could encourage early retirement to make way for younger, newer working
generation as when firms experience turnover gaps in jobs that retired workers previously held can be
filled by experienced workers will have the opportunity to be promoted and new workers will have
the opportunity of employment, as governments priority is decreasing unemployment and increasing
standard of living.

Theoretically, raising the minimum wage would not be the best economic choice in the short run.
However, all points considered, raising the minimum wage would be the better economic choice
overall.




Qeq Qeq2 Quantity of food
P
e
q




P
e
q
2







P
r
i
c
e

o
f

F
o
o
d

(
$
)

S
D1
D2
Fig. 2 The market for food