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Apr 21, 2014 valume commented on What's Going on with the Tip Credit/Tip Penalty?.
This would actually be incorrect, #23. The tipping would not be outlawed, but it will decrease or stop, for the following reasons.
1. Some people detest it, so it would be a great excuse for them.
2. Most people- probably about 90% of the population, will not get a pay raise. The second new price= old price plus 20-25% increase kicks them in the pocket book, they will not have the disposable income to afford tipping extra. Or if they do, they will have to skip few nights out a month.
3. Those who got their wages increased, will pay about 9.5% more for everything out there (rule of thumb is 1.5% overall price hike for every 10% wage increase- across all wholesale and retail). They gonna get their rent jacked up- nobody can stop landlords of benefiting that, since there is under supply of rental properties. So, they gonna have very little extra to spend out in general.
Apr 21, 2014 valume commented on What's Going on with the Tip Credit/Tip Penalty?.
Some journalist sometime, somewhere, has to tell the whole truth to the public- that if the minimum wage in the restaurant industry goes up 63% with no tip accounted for, restaurants and bars which are running on 4-8% profit margin have no place to get the 20-25% extra revenue needed to cover that cost hike. The inflexibility of the union's stand and Sawant's point comes from the elementary mistake to assume that the 25% profit McDonald's made last year translates to small bars and restaurants, which are already paying the back of the house 25-50% higher wages than the state floor, utilize better bartending and server talent that has to be rewarded accordingly, and use a supply system which provides for quality of product, as opposed to the big chains "bottom of the barrel" crap.
Consequently, the only way to comply with across the board, no tip credit system, is to raise the prices with about 20-25%. Since new pricing= old pricing+tip, that's the only way those establishments can stay in business, but that means two things:
Few customers- which results in fewer shifts and partial lay offs, or
No tipping in addition to the new prices, which ensures that a lot of service industry pros will lose part, a significant part of their income.
Sawant's uncompromising stand would ensure $15 for everybody, but a definite decrease in currently solid middle class income for a lot of skilled service pros. Regardless of the intellectual and ideological disagreements that she and others might have with that, their stand is deceitful, ingenious and misleading.
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Apr 9, 2014 valume commented on Council Member Sawant, Can We Talk?.
Data? Here it is, coming from a multitude of studies:
1988/89 wage increase with 50% cost brought 11.7% lay-offs amongst the 100,000 people it affected. With time passing half of them were rehired, but the older and more experienced. Youth employment tanked.

10% wage increase = 1.5% overall price hikes. 63% would result in overall 10% price hike.

Restaurants are more affected than any other business, since a lot of employees, albeit considered minimum wage, are actually not- since their tip income + hourly currently = $28/ hour.

Restaurants run on slim profit margins, which normally are used not just as proprietor's pay, but to service business debt, re-investments and improvements and taxed as capital gains. That percentage varies, but is generally between 4% (Tom Douglas) and 8% (Dave Meinert). Or in between, but rarely higher.

McDonald's realized 4.4 billion of profits- or 25% last year.

If tip is not taken in consideration, restaurant prices will rise with about 25%- to compensate for wage increase and wholesale hike of 10%. Since most of the population will not get wage increase and their disposable income stays the same, they will not be able to afford gratuity. So, server's wages would increase from 9.32- 12, to 15- 18, but since tipping will be out, from actual wage of average of 28, they'll drop to their new hourly rate alone. Except few high end restaurants serving upper middle class and the rich, where tips can still be part of the income.

People on fixed income will be hit the worst, because 10% overall price hike will not be mitigated by any benefit increase.

Unions are basing their support on their national agenda, and not the interests of the local population. Requiring exemption for the sake of job retention is a benefit that is important for every employee and employer- not just their constituency. They are driven not by the progressive values and agenda of the city, but their own- mostly their national leadership, which is using Seattle as a test tube. Why?

Because we all care.
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Apr 2, 2014 valume commented on Your Favorite Indie Shop Is Out of Business if $15-an-Hour Happens.
Hardly. The whole thing locally is a zero sum game- or it should be, right? It is a way to divert disposable income from the lower middle class to the working poor, and that's really bullshit. Upper middle class and the rich don't care, they have plenty to spend.
If the unions are that gutsy, they should take on the main culprit- corporate loopholes and welfare, on a federal level, and dramatic tax hike on the 1%.
They can't, they are weak, so they pick on the little guy, who is actually part of the class they are trying to defend. In this case, that's Andrew.
He's not your enemy, he doubtfully makes more than you do. Go after the real assholes.
Apr 2, 2014 valume commented on Total Compensation Is a Deceptive System That Would Effectively Gut a $15 Minimum Wage.
If gratuity is not income, then car salesman commission or retailer sales clerk bonus/ commission structure does not qualify as income too. Even though IRS treats it as such and State agencies tax the employers on it as well.
Where is the logic?
This whole piece will have a complete merit if it there was a proposal lowering the state mandated current MW floor for servers, based on their tip income. I'm assuming that's what Virginia does.
I'm yet to hear anybody proposing such a travesty.
What's there to even discuss?
Apr 2, 2014 valume commented on Total Compensation Is the Only Way to Raise Workers' Income and Preserve Your Local Favorite Small Business.
The bizarre thing is that NOBODY has ever proposed Deep South style tip credit- to drive wages down to $2-3 buck an hour. For all that I know, what's being discussed is retaining the current minimum wage as a base, and if tip does not supplement enough to reach the new level of MW- employer has to supplement that. This way currently tipped employees would still make at least 9.32 (or higher), plus retain the amount of tips they are currently making. Reason- overall prices at restaurant would not raise 25-30%- as they would if tip is not counted in the wage calculation- but by 5-10%, which the public can afford and will not decrease tipping or attendance frequency. The actual result is no astronomical price hikes, no restaurant closures, no job loss of any kind.
If tip is not taken in consideration in the wage formation, restaurant prices will rise with 25-30%. That means dramatically decreased tipping- cause the public's spending ability has not improved by said percentage. Or, as I'm overhearing, the restaurants can raise prices by 25-30% and forbid tipping- Starbucks style. Then the restaurant would have the discretion to decide what wage overall to pay its servers. My guess is that restaurants would calculate wages based on their worst months of performance, resulting in actual DECREASE of overall home bring cash by servers, bartenders and even back of house. In other words, half ass thought through policy by the unions and 15NOW will decrease the income of restaurant employees. I wonder, if they are pro- interest of the working public, why would they want that? What is the sick political calculation behind it? No server or bartender I've talked to supports the idea of tip not factored in the equation.
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Apr 2, 2014 valume commented on Your Favorite Indie Shop Is Out of Business if $15-an-Hour Happens.
Just for the sake of statistical fairness:
1988/89 wage increase which bumped MW in WA up with 50% was a result of adjustment- WA MW was BELOW the federal minimum. Considering that fed minimum always trail regional and local wages, it is reasonable to believe that there was enough wealth accumulated locally to cruise to the federal level with little to no repercussions. In contrast, the current minimum wage far surpasses the federal one- it's the highest state wage in the country. Increase by 63% will make it the highest MW in the state, the country, and the world. With cost of living in Seattle being way less than the one in hundreds of cities and communities around the globe. Food for thought.
Apr 1, 2014 valume commented on Mayor Murray Tells Activist He's Been Against Tip Credits "Since 1997," But Co-Sponsored a State Tip Credit Bill in 2001.
The so called "tip penalty" in Seattle is a myth- let's call things with their rightful names.

If a server made 9.32 and pulled 7 dollar tip and their wage got decreased to 2.32 that would be absolutely correct- it's a robbery. But it doesn't happen here and noone advocates it.

If a server makes 9.32 and pulls 10 dollars tip, here, in this city, it is a wage of 19.32. It's called a decent wage.

If a server in future Seattle makes 15 an hour and gets...hm... may be some tip, it's called income decrease.

If a server in future Seattle makes 15 and gets somehow 10 dollars tip... stop here, they won't, they'd be jobless. Noone else got a raise, but their prices went up, remember?

If a server in future Seattle gets 9.32 with COLA annually, plus the same 10 dollar tip, they'll make 19.32. While McDonalds workers get their well deserved raise, while Wal- Mart and Costco workers get their well deserved raise.

It's not "sweetening", it's not "compromise", it would be a smart city- wide policy making.
And it might guarantee the mayor a wide coalition of voters to ensure his re- election, so further progressive policies could be enacted. It's good politics, too.

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Apr 1, 2014 valume commented on Mayor Murray Tells Activist He's Been Against Tip Credits "Since 1997," But Co-Sponsored a State Tip Credit Bill in 2001.
The bizarre thing is that NOBODY has ever proposed Deep South style tip credit- to drive wages down to $2-3 buck an hour. For all that I know, what's being discussed is retaining the current minimum wage as a base, and if tip does not supplement enough to reach the new level of MW- employer has to supplement that. This way currently tipped employees would still make at least 9.32 (or higher), plus retain the amount of tips they are currently making. Reason- overall prices at restaurant would not raise 25-30%- as they would if tip is not counted in the wage calculation- but by 5-10%, which the public can afford and will not decrease tipping or attendance frequency. The actual result is no astronomical price hikes, no restaurant closures, no job loss of any kind.
If tip is not taken in consideration in the wage formation, restaurant prices will rise with 25-30%. That means dramatically decreased tipping- cause the public's spending ability has not improved by said percentage. Or, as I'm overhearing, the restaurants can raise prices by 25-30% and forbid tipping- Starbucks style. Then the restaurant would have the discretion to decide what wage overall to pay its servers. My guess is that restaurants would calculate wages based on their worst months of performance, resulting in actual DECREASE of overall home bring cash by servers, bartenders and even back of house. In other words, half ass thought through policy by the unions and 15NOW will decrease the income of restaurant employees. I wonder, if they are pro- interest of the working public, why would they want that? What is the sick political calculation behind it? No server or bartender I've talked to supports the idea of tip not factored in the equation.
If I were Ed Murray- I wouldn't be concerned about the attacks on him on that vote, whenever it was. Unions are not the only voting public and his past performance puts him on the right side of the debate.
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Mar 27, 2014 valume commented on What If We Made Only Businesses with $1 Billion in Yearly Sales Pay $15 Minimum Wage?.
I have an idea- abolish wages altogether. Regardless of occupation and profession- pay people with vouchers based on hours of work. Jeff Bezos and the cook at McD get paid 10 vouchers each for 10 hours of work. Vouchers will have no pre- set value- you can get a hamburger or a 55' TV for one voucher. From everyone according their abilities, to everyone according to their needs. It will work, it will work well, it will level the playing field. That's a sound economic model.
How do I know? Marx said so.
 

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