We are now just two and a half weeks away from the rollout of Seattle’s new minimum wage—the history-making, big-fucking-deal highest minimum wage in the country—and there are still as many questions as there are answers.
We’ll have more coverage in coming weeks, but right now everyone’s focus is on this federal lawsuit in which megarich corporations like McDonald’s are arguing their franchises can’t afford to pay workers a higher wage. Before the judge rules on the merits of that argument, he'll have to decide whether to stop the rollout of the minimum wage while the case is argued. He's expected to do that today. Here's what's going on:
Don’t we already have a $15 an hour minimum wage?
The minimum wage increase approved last year includes a rollout that gets low-wage workers to $15 an hour by 2017, 2018, 2019, or 2021, depending on the size of the business and the benefits they offer. On April 1 of this year, large businesses will have to start paying $11 an hour and small businesses will have to pay $10. Under that law, franchises of fast food restaurants are considered large employers. Visual learners, here’s a chart:
And McDonald’s seriously says it can’t pay $11 an hour? Give me a goddamn break.
The Washington, DC–based International Franchise Association is making some big claims, including that the minimum wage law violates the constitution’s Equal Protection Clause by discriminating against franchises and violates the Commerce Clause by discriminating against businesses based out of state.
The law is discriminatory, the IFA argues, because it takes two business models that are effectively the same—a locally owned corporate franchise and a locally owned non-franchise restaurant—and treats them differently.
“Franchisors and franchisees are separate corporations,” write the franchise lawyers in their complaint. “A franchisee is not the employee of the franchisor. And the employees of a franchisee are not employees of the franchisor.”
And—using things like statements from Mayor Ed Murray, Nick Hanauer's e-mails, and a tweet from Kshama Sawant as evidence—they're trying to paint a portrait of a city government hell-bent on destroying franchises altogether because they believe local businesses are better for the economy. (Or, in the IFA lawyers' actual words, an "improper motive is afoot.")
KUOW did a good job of explaining here how this case can be seen as a sort of referendum on the franchise model itself.
To make a decision, Judge Richard Jones is considering whether there's sufficient evidence that—as both sides go on arguing this case—franchises will be damaged by having to raise their wages. In its request that the judge halt the rollout for franchises, the IFA argues franchises could be forced to close or suffer "a loss of customers and consumer goodwill."
What does the other side say?
The city, supported by labor groups like Working Washington, argues that franchises get enough advantages by being part of a big corporation and that they are not, in fact, the same as local businesses, even if they’re of a similar size. The benefits franchises get from being affiliated with the large mothership corporation—advertising, branding, training, menus, etc.—are enough to give them an advantage over locally owned businesses. When someone opens a Burger King or a Subway, for example, they're likely to have customers right away who know the brand, where an independent business will have to gain customers over time.
And, they add, a complaint filed late last year by the National Labor Relations Board links McDonald's to its franchises as a "joint employer," meaning the corporation could be held liable for labor law violations committed by its franchises. That, for supporters of keeping the minimum wage phase-in rules as they are, is a big sign that franchisees aren't divorced from their corporate parents making huge profits.
Why is this such a big deal?
Nationally, big business is nervous about the growing movement to increase the minimum wage, and stopping it in Seattle would be a significant victory for them—and a significant loss for workers.
In a secret meeting described by participants to the Guardian here, an executive at the American Hotel and Lodging Association told conservatives they should focus on small franchises when fighting minimum wage increases to present "the right face, and that’s one of the things we’re focusing on… Not the Hyatts, not the Hiltons, not the Marriotts, but the small business people, telling their story about the American Dream—the independently owned Holiday Inn, owned by an Asian American who came to this country, put all their life-savings into it, and now they’re going to lose this business because they can’t afford a $15 wage."
Here in Seattle, if the judge rules against the city and grants an injunction, the wage increases that are supposed to take effect April 1 would be on hold for fast food workers. (The groups defending the minimum wage law will likely appeal to try to get the injunction overturned.) That’s obviously shitty for those workers. But it will be especially disappointing considering that it was fast food workers who really drove the effort to get this issue before city leaders to start with.
And, remember, we're not even talking about $15 an hour yet.
Dmitri Iglitzin, a lawyer who represents labor groups that have filed a "friend of the court" brief supporting the city, calls the case "a sign of the passionate intensity with which corporate interests are opposed to the idea that they might actually have to pay working people even slightly more than they are paying them now. We are talking about $11 an hour for the remainder of 2015."
By the way: $11 an hour is just $22,880 a year—less than half the median income in the city ($65,280) and less than a third of median income countywide ($71,800).
Iglitzin continues: "That's not something anyone can get close to living on."
UPDATE: Solidarity to those of you who spent the day rabidly refreshing Twitter and the federal courts website waiting to hear what the judge decided (just me?). He hasn't decided anything yet. A spokesperson in the city attorney's office tells me: "The latest from the judge is [he will issue the decision] tonight or tomorrow."
UPDATE #2: The judge has denied the IFA's request.