Proving trickle-down wrong

SEATTLE — In July 2013, hotelier Scott Ostrander stood before the City Council in SeaTac, Wash., pleading with the town not to adopt a $15 minimum wage.

“I am shaking here tonight because I am going to be forced to lay people off,” he said, according to an account in the Washington State Wire. “I’m going to take away their livelihood. That hurts. It really, really hurts. … And what I am going to have to do on Jan. 1 is to eliminate jobs, reduce hours — and as soon as hours are reduced, benefits are reduced.”

SeaTac, a community around Seattle-Tacoma International Airport, went ahead with its plan, becoming, on Jan. 1, the first jurisdiction in the nation to reach a $15 minimum wage, according to the labor movement. And Ostrander’s hotel, the Cedarbrook Lodge? It went ahead with a $16 million expansion that adds 63 rooms, a spa — and jobs.

Ostrander, then Cedarbrook’s general manager, told Seattle’s KIRO-TV that he was proceeding with the expansion “to try to recoup significant expenses that will be incurred as a result” of the higher wage. So the minimum-wage hike forced the hotel to add rooms, revenues and workers. The horror!

As fast-food workers demonstrate nationwide for a $15 hourly wage, and congressional Republicans fight off a $10 federal minimum, little SeaTac has something to offer the debate. Its neighbor, Seattle, was the first big city to approve a $15 wage, this spring, but that doesn’t start phasing in until next year. SeaTac did it all at once. And, though there’s nothing definitive, this much is clear: The sky did not fall.

“SeaTac is proving trickle-down economics wrong,” says David Rolf, the Service Employees International Union official who helped lead the $15 effort in SeaTac and Seattle, “because when workers prosper, so do communities and businesses.”

Those who opposed the $15 wage in SeaTac and Seattle admit there has been no calamity so far. Paul Guppy, vice president of research at the free-market Washington Policy Center, said SeaTac is a “boutique” case because of its size. Airport workers have been left out for now because of a lawsuit, and union workplaces are exempt, so only about 1,600 workers got raises.

Seattle will be a truer test case, Guppy said — but it will be seven years before the $15 wage is fully in place. So far, at least, “you do not see prices up or jobs going away,” he acknowledged. “Seattle is having a construction boom, so there’s a feeling of prosperity.”

I stopped in at the jammed Palace Kitchen, flagship of Seattle restaurateur Tom Douglas, who runs upward of 15 establishments. He warned in April that the $15 wage could “be the most serious threat to our ability to compete,” and he predicted that “we would lose maybe a quarter of the restaurants in town.” Yet Douglas has opened, or announced, five new restaurants this year.

Likewise, the International Franchise Association has sued to block implementation of the law, arguing that nobody “in their right mind” would become a franchisee in Seattle. Yet Togo’s sandwiches, a franchise chain, is expanding into Seattle, saying the $15 wage isn’t a deterrent.

And a spokesman for Weyerhaeuser, the venerable wood and paper company, says the $15 wage didn’t factor into its decision, announced late last month, to move its headquarters and 800 employees to Seattle from outside Tacoma.

Such early indications aren’t conclusive, of course. As my colleague Catherine Rampell pointed out, the ultimate effects of the $15 wage in Seattle are unknowable. But the effects are a bit more knowable in SeaTac, because the $15 minimum has already been implemented. Nine months in, there have been rumors of employers cutting back on retirement benefits and paid vacations to offset the wage increases. Cedarbrook Lodge has said it may cut back on employee benefits such as free meals and free parking. But there is no significant disruption.

Before the new wage took effect, SeaTac parking-lot operator MasterPark said it might respond by replacing some workers with automation. Instead, MasterPark implemented a 99-cent-per-day “Living Wage surcharge.”

SeaTac-based Alaska Airlines, likewise, spent heavily to defeat the minimum wage, saying it would harm competitiveness. Though the $15 wage for airport workers remains in court, Alaska Airlines apparently isn’t worried: Last month, the port authority moved forward with airport construction that could reach nearly $1 billion — to be paid for by the airlines.

Follow Dana Milbank on Twitter, @Milbank.