Seattle's leading conservative commentator, Jason Rantz, wasted no time pouncing on the dark words at the end of Bethany Jean Clement's recent article about the announced closing of the highly regarded upscale restaurant, Sitka & Spruce. Owner Matt Dillon believes that rising costs and wages have made it too difficult to survive in Seattle's business climate. His conclusion, which is worth considering, is that we can't have it both ways, high costs and high wages: “There’s gonna be a reckoning, big-time... I don’t think it’s gonna be pretty.”
Upon reading these closing words, Jason Rantz found evidence that high wages are the problem, and interviewed a former Sitka & Spruce employee, Simone Pitzka Barron, who, as expected, verified that high wages are hurting employers. Rantz also interviewed former restaurant owners who stated that, along with "rent increases" (not a biggie), high wages (the biggie) are making things so much worse.
It's easy to dismiss Rantz, who represents the old, conservative metaphysics of wages: the lower they are, the better for all. We can call this metaphysics not because it is just a belief, but because it is a belief that has no idea it is such. But I want to take Matt Dillon's point seriously. The reckoning he speaks of is, in my opinion, real. Seattle has a number of contradictions that are sharpening by the day. One is that it offers no public housing, but will not permit slums. Meaning, it will not provide what the market clearly cannot provide—really affordable housing—but it bans the poor from solving this market flaw on their own. Another contradiction: it wants wages to rise, but the market to determine the key costs of living in the city. My reading of Dillon's point is, exactly, you can't have both.
My position on the matter begins with this passage from Samuel Stein's Capital City: Gentrification and the Real Estate State:
When manufacturing firms exited post-war urban centers [in the 1960s], they left behind not just a tremendous amount of property but also a political vacuum. Since the industrial revolution took hold, cities had been governed by the political party that could best bridge the divide between the needs of industrial capital and its workforce. But with the flight of manufacturing from cities, real estate and finance became the remaining major urban power bloc and the key to rebuilding local economies. Real estate was an especially potent force in urban politics, because while finance can be ephemeral, real estate is always place-based. A friend of industry and a champion of industrial unions was no longer a viable strategy for winning (or financing) elections. By the late 1960s, it was becoming much more important to be a friend of real estate capital and the service and building trades unions.
To bring things together, the passage above, which is on page 58 of the book, must be connected with this passage on page 68:
Different types of capitalists, however, make different demands on the state. Industrial landholders reject environmentally strenuous zoning that restricts the location of their operations in the city; real estate capitalists would welcome such regulations because pollution diminishes their property values. Industrial capitalists might demand affordable housing for their workforce in order to stave off demands for raises; real estate capitalists would object to any constraint on their ability to maximize rental or sale profits.
If both passages throw light on Matt Dillon's statement about a reckoning, then there is no need to read the rest of this post. If they do not, here is the skinny. If you live in Seattle and are paid those damned high minimum wages that drive the right insane, it hardly matters because you have no major capitalist to form an alliance with. Under the post-war industrial regime, the urban capitalist in the industrial sector wanted to keep wages low, but they also knew that this required that the cost of living in the city must be low as well. This kind of understanding, and the resulting alliance, is not at all unusual, when seen from the perspective of economic history.
The second major work of the political economy, David Ricardo's 1817 On the Principles of Political Economy and Taxation, is about the Corn Laws. And what were the Corn Laws about? Cheap food, which could not be provided by the aristocratic landowners of Britain, but was available in places like the United States. Ricardo defended free trade not because it makes perfect sense, but because the manufacturers, whose point-of-view is described as economic laws by Ricardo, wanted to keep wages low. This required cheap "corn." Eventually, free trade won, tariffs were lowered, and the US exported cheap food and products to the workers of Great Britain, the leading capitalist economy of that time. If this arrangement looks at all similar to the one between the US and China today, then you are up on things.
In a city of the 21st century, the leading capitalists (tech, real estate) have no interest in affordability. Couple this with political resistance to all forms of social housing, and you have a situation where the bulk of wage increases can only end up in the pockets of those whose profits are derived from the endless inflation of property values. And the inflation of wages (which never match the inflation of property values—compare the increase of wages by democratic means to that of property values by market means) contribute to the running costs of small businesses that, on the political level, do not have the influence enjoyed by real estate speculators (or, put another way, the rentier class). If no democratic action is taken to check the power of speculators, then, yes, there will be a reckoning. But sadly, we are likely to blame it all on wages.