A Debate Over Wages and Rhetoric

Council Member Kshama Sawant Replies to Small-Business Owner Mike Klotz

by Kshama Sawant

Dear Mr. Klotz,

Thank you for your support of my campaign for city council, your interest in progressive change in Seattle, and for reaching out with your concerns about minimum wage during the campaign. I would like to address several of the concerns raised in your letter in last week's Stranger.

1. Let's stand together and push back against big business and the super-wealthy
In your recent letter, you suggest that I have been unwilling to engage in discussion with small-business owners. I would respectfully say this has not been the case. As part of my effort to raise wages, I’ve listened to the ideas of a great many Seattleites, including hundreds of small-business owners. I’ve done this as an individual council member, and in multiple forums as part of both the Mayor’s Task Force on Income Inequality and the city council’s Select Committee on Income Inequality. I have had small businesses visit me in my office at City Hall, both individually and as part of delegations from groups such as the Seattle Restaurant Alliance and the Greater Seattle Business Association. I have engaged in numerous informal conversations with small-business owners. I will continue to listen respectfully with an open mind to their ideas and concerns. My door has always been open and it remains so.

2. Pushing back against the top 1 percent - together
You express concern that the debate over a minimum-wage increase isn’t focusing on the small-business-friendly policy proposals I outlined during my election campaign. During my campaign and since taking office, I have tirelessly highlighted the obstacles faced by small-business owners in this corporate-dominated economy. Workers and small businesses struggle, while big business and big banks are making record profits. My position has always been that we should tax big business and the super-wealthy to subsidize those small businesses (and nonprofit human service providers) that can prove they need assistance to ensure all workers are paid at least $15/hour.

During my three months as city council member, I have aggressively advocated for tax credits and subsidies for small business, progressive changes to our tax structure, and for a municipal bank that can free small businesses from being indebted to big bank vultures. I have been pushing for these policies both in my public statements and in my dealings with other city and state leaders. Not a single elected official has so far joined me in this effort, nor have small businesses. Yet I remain fully committed to continuing this fight and building a strong grassroots base that will demand these changes. I look forward to working together with you for such real progressive change.

3. No excuses for big business – but phase in small businesses
Your letter also laments a lack of discussion of an incremental approach to $15. It seems you must have missed my recent proposal. On March 15, I proposed including a three-year phase-in for small businesses and nonprofits. My proposal is intended to insure that small businesses are given an advantage in cost structure over large corporate competitors for a substantial period, enabling you to adjust to the new marketplace.

This advantage, coupled with the increased spending power of consumers, will help to offset much of the increased cost of labor. The capitalist economy is driven by customer demand, and paying low-wage workers closer to a living wage is an effective way to increase consumer spending and benefit businesses like yours. Research shows that local businesses benefit when working families have discretionary income to spend.

Under my proposal, small-business employees will start with an $11/hour minimum wage in 2015, and reach a full $15 plus cost of living in three years. This leaves no chance for big business to hide behind small businesses. McDonald's, Burger King, Taco Bell, QFC, Safeway, Starbucks, and all other big chains and franchises should immediately pay $15 to their workers. I hope we agree that their model of earning super-profits on poverty wages has to end.

4. $15 will not destroy jobs or small businesses
In addition, your letter describes your fears about the impacts of implementing a $15/hour minimum wage on your business and on other small businesses. You assert that as a result of additional costs, small, independent restaurants would be forced to lay off workers and raise prices, with many having no choice but to close. Fortunately, a vast body of evidence from past minimum wage increases, in Seattle and Washington State and elsewhere, demonstrate this isn’t what happens. Instead of laying off workers and closing up shop, the vast majority of businesses gain through an expanded consumer base and a higher worker morale and lower labor turnover, which reduces training costs.

There is no evidence that an increase in the minimum wage is proportionately reflected in prices. When looking at other municipalities that have raised the minimum wage, the only statistically significant price increase found is within the restaurant industry, where there is generally a small, one-time price increase of less than one-tenth of the minimum wage jump. These costs to consumers are real, but households are facing an already skyrocketing cost of living. Any small price increase resulting from a $15/hour wage would pale in comparison to the widespread improvement in living standards.

I applaud your choice to purchase from local suppliers, farmers, and ranchers, and to adhere to standards of sustainable and responsible business. As you correctly point out, we live in a community where many customers are willing to pay a higher price for products produced with more responsible practices. My discussions with fellow Seattleites indicate that many would spend $13 rather than $12 for their lunch, were that to happen, if it means the waitstaff and dishwashers are able to pay their rent and afford food or clothing for their kids.

Please know I take seriously the concerns of small businesses who are struggling to survive and get by in an economy stacked against them by giant corporations and a government that does not listen to their needs. I will continue to fight for the interests of everyone who is oppressed and marginalized, and one way to do this is to reverse the income inequality in our city.

Sincerely,
Seattle City Council Member Kshama Sawant