Washington Policy Watch

News and perspective on public policy issues affecting Washington's economy and quality of life, brought to you by the Economic Opportunity Institute.

February 2, 2012 • 8:32 am 0

Restaurant owners taking the ‘high road’ report better loyalty, creativity and productivity

Taking the High Road: A How-to Guide for Successful Restaurant Employers

A new report from Cornell University and Restaurant Opportunities Center United highlights examples of restaurateurs across the country who have created “win-win-win” solutions for workers, diners, and employers by using “high-road” employment practices.

Nationally, restaurant workers typically earn very low wages; 90% do not receive paid sick days, paid vacation, or health insurance through their employer either. The Cornell/ROC report highlights just how much those policies cost employers: between $4,000 and $14,000 per employee turnover. Costs include recruitment and screening, training, uniforms, admin, and unemployment insurance — as well as negative impacts on team morale, trust building, and relationships with regular customers.

The alternative is “high road employment”, which employers in this report define as practices that support workers and unleash their loyalty, creativity, and productivity to make the restaurant successful. Those practices include livable wages, a healthy workplace through paid sick days, vacation, or health insurance; and career ladders for employees through training and internal promotions policies.

Several prominent local restaurant owners were part of the campaign for a paid sick days ordinance in Seattle, citing the positive effects paid sick days have on the bottom line by improving morale, reducing turnover and reducing the spread of illness. The high-road employers interviewed for this study also reported that the benefits of increased productivity and reduced cost of employee turnover outweigh short-term costs of improving workplace practices. Summary | Full report

Filed under: minimum wage, paid family leave, paid sick days, , ,

February 1, 2012 • 11:42 am 2

Bills to cut Washington’s minimum wage get hearing in Olympia

Rep. Cary Condotta

In yesterday’s “Labor and Workforce Development Committee“ Washington’s best-in-the-nation minimum wage was under attack yet again.

The latest offensive came in the form of three bills, introduced by Rep. Cary Condotta, which would:

  1. reduce the minimum wage for tipped workers,
  2. lower automatic cost-of-living adjustments (COLA) that track inflation, and
  3. suspend the minimum wage COLA when unemployment is above 7.5%.

Rep. Condotta, for his part, argues in favor of the bills because “the cost of labor is driving [restaurants] out of business.” His evidence to back up this statement, as he points out, is not empirical, but rather “on the ground” experience: “We can talk about theories and we can listen to all the think tanks talk about what they have to say – I’m on the ground,” said Rep. Condotta at the hearings.

Perhaps Rep. Condotta doesn’t rely on the empirical evidence because it doesn’t support his theory. Recent research proves there is no significant impact on employment numbers resulting from minimum wage increases.

In addition, Rep. Condotta’s statement that the cost of labor is driving restaurants out of business is inaccurate. The cost of labor – the minimum wage – is stable and rises with inflation. But commodity costs such as dairy, coffee and food have far outpaced inflation, and Rep. Condotta himself points out “restaurants are facing a 9% increase in food costs.” Certainly increased costs are cutting into employers bottom lines, but they’re cutting into everyone else’s too!

See, it’s not just business owners who are paying higher costs for bread, milk and butter – so is everyone else. Rising commodity prices – which are borne by everyone – should not be used as a surrogate for cutting the minimum wage, especially when costs for food, health care and gas are rising. That’s poor economic theory, and a recipe for more economic insecurity for working people.

Those who argue for a reduction in the minimum wage would do well to remember that employees are customers, too. Nearly every dollar of the minimum wage is pumped back into the economy because few workers can afford to save – creating a multiplier effect that ripples throughout the local economy. When the minimum wage is cut, economic activity also decreases.

People earning minimum wage don’t have wiggle room in their finances - their proverbial “belts” have already been tightened. Cutting the wages of the people struggling to get by will only hurt our economy, and likely lead to more working people utilizing government assistance to make ends meet.

Filed under: minimum wage, , , , , , ,

February 1, 2012 • 9:10 am 1

Tax the rich: They need services too

From the Everett Herald | By John Burbank:

We’ve had a lot of talk about the privilege of the top 1 percent, and how they are grabbing more and more of our national income. Once, productivity increases were proportionally shared between corporations and workers. Now they’re mostly grabbed by companies and their top executives, while workers are left with decreased retirement savings, increased health-care costs and depressed wages.

This shift in prosperity and prospects didn’t just happen. It’s the result of conscious policy-making, including tax decreases for the wealthy, government policy that turns a blind eye to corporate union-busting, and “free trade” agreements that export jobs out of our country.

The result may appear to be manna from heaven for the wealthy, but that too is an illusion, because the wealthy need a civil society to prosper, too. They need good roads and a rail system to deliver materials to factories, and to distribute the products of these factories. They need fully functioning ports to export raw materials to factories they’ve established in China and import consumer goods to sell to Americans.

The wealthy need skilled workers for high tech and remaining industrial production — so they need good schools, community colleges and universities that are accessible to middle class students. And because workers don’t work so well when they — or their kids — are ill or injured or sick, the wealthy benefit from health coverage for the many.

Gated communities, private planes and private elite schools don’t fit the bill. The wealthy might think they can live in isolation and privilege, but the reality is, they can’t escape from the downsizing of the middle class. It hurts them too.  Read the rest of this entry »

Filed under: tax and budget, , , , , ,

January 31, 2012 • 2:04 pm 0

Credit agencies go negative on Washington’s debt outlook – can we buy enough pants to boost our economy?

Either we ask the rich to pay a bit more in taxes to support opportunity and middle class prosperity, or billionaires like Nick Hanauer are going to have to start buying a hell of a lot more pants, say Moody’s and Fitch, the credit rating agencies that recently revised Washington’s debt rating outlook from “stable” to “negative”.

Okay, that’s not exactly how they put it, but that’s the takeaway. While affirming the state’s nearly top-notch credit ratings of Aa1 and AA+, the analysts cited a steeper-than-expected housing downturn, one-time budget fixes, and cyclical trends in our aerospace industry as negatively affecting the state’s outlook. This come as no surprise – we’ve been hearing this since the start of the Recession.

But Moody’s and Fitch also specifically cite the state’s structural deficit as one of the principle drivers of the downward revision. What’s a structural deficit? From Fitch:

The state, with no income tax, relies on consumption-based revenues. This makes Washington particularly vulnerable to reductions in consumer spending and limits the prospects for quick revenue recovery.

In other words, Wall Street’s recovery and corresponding salary increases and bonuses for high-income individuals don’t translate into significant consumer activity in Washington – so sales tax collections have remained flat. An income tax would help that, by diversifying Washington’s revenue collection, and ensuring revenue collections matches overall economic activity.

As wealthy venture capitalist Nick Hanauer wrote in a recent article, the economy will not recover until consumer spending rebounds – which cannot happen if all the wealth is concentrated at the top:

The annual earnings of people like me are hundreds, if not thousands, of times greater than those of the average American, but we don’t buy hundreds or thousands of times more stuff. My family owns three cars, not 3,000. I buy a few pairs of pants and a few shirts a year, just like most American men. Like everyone else, I go out to eat with friends and family only occasionally.

So goes the myth of trickle-down economics. Either we ask the rich to pay a bit more in taxes to support opportunity and middle class prosperity, or Nick Hanauer is going to have to start buying a hell of a lot more pants.

Filed under: state economy, tax and budget, , , ,

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