What Do We Want? $15! When Do We Want It? In a Little While!
The secret history of Seattle’s minimum wage law.
Mayor Ed Murray threw open the door of the small second-story conference room at city hall. “Now you’re just fucking with me!” he told the half a dozen people seated around the table, including Tutta Bella restaurant chain owner Joe Fugere, Ivar’s seafood CEO Bob Donegan, and Capitol Hill Chamber of Commerce head Michael Wells—all representatives from the business faction in the city’s historic minimum wage negotiations.
Red in the face, the mayor took a seat between Fugere and Wells and harangued everyone at the table for botching his $15 minimum wage deal. The meeting with the full committee—the mayor’s Income Inequality Advisory Committee—including representatives from the labor faction, had just collapsed upstairs on the seventh floor. And the media, at the mayor’s invitation, was now waiting, expecting a big announcement.
“You’re just fucking with me,” the mayor repeated, dismissing lead business negotiator Donegan, who explained his notes showed the latest version of the deal wasn’t what they’d all agreed on the night before. Murray simply told the group to “fix it.”
He stood up, threw open the door again, inadvertently slamming it against his chief of staff, Chris Gregorich, and stormed out.
The $15 deal was critical for the new mayor. He had banked his political reputation on it. Raising the minimum wage was his first major policy initiative, and the 24-member committee he’d appointed to figure out a plan was now—on the afternoon of April 24, 2014—stalled, a week before his self-imposed April 30 deadline.
He also had something to prove. At 59, the longtime state senator had a 90 percent lifetime pro-labor voting record. Prone to quoting his heroes (John Kennedy, Robert Kennedy, relatively obscure Catholic Workers’ movement leaders), Murray is a deliberative social justice Democrat who, as the state’s most prominent gay politician, had been startled during the bruising 2013 mayoral election to find himself painted as a conservative.
The incumbent, populist Mike McGinn, had sewn up the lefty vote by picking fights with business. But Murray’s campaign trail critique of his opponent, whose liberal beliefs he largely shared, was that, despite Seattle’s unified liberal agenda, the mayor’s combative style had created discord rather than deliverables. Why, he asked of McGinn-era gridlock at city hall, are liberals fighting liberals?
Despite the lack of support from much of the progressive community (or even his home turf, the left-of-Amsterdam 43rd District in Seattle’s Capitol Hill neighborhood), Murray, with the help of business dollars, defeated McGinn. An incrementalist most famous for nudging the state legislature toward gay marriage, Murray had pledged results. Getting Seattle labor and business to agree on a $15 minimum wage would prove that his calibrated approach was the better way to go than McGinn’s bomb throwing, while simultaneously cementing his progressive bona fides.
But now, as the clock was ticking, business wasn’t the only thing thwarting the mayor. The left, particularly newly elected city council member Kshama Sawant and her 15 Now movement, was threatening to send the process sideways by running a ballot initiative if Murray’s deal wasn’t progressive enough. Sawant, a proud socialist, had transformed her campaign machinery, which elected her on a $15 minimum wage platform, into an initiative army-in-waiting. Meanwhile a coalition of businesses and some nonprofits called One Seattle were threatening to run an initiative from the right.
Those pesky initiatives represented the most trying problem of all: the quicksand of the Seattle process. Seattleites had warred at the polls on a monorail measure five times in eight years, for example, and on a waterfront tunnel measure twice over five years. Process-addled Seattle was the last city in America you’d expect to make a big decision and lead a decisive policy revolution.
“Even though this is a process obsessed city, this city wants someone to make a decision,” Murray later recalled. “And that was a revelation to me. ’Cause it was kind of scary; it was scary for me, you know? God, I could blow up business. I could blow up labor.”
Committee member David Meinert, a bar and restaurant owner on the business side of the debate, remembers Murray sitting the group down during the first week of the process and demanding that they come up with a way to raise the minimum wage. “Ed comes in and gives this little speech,” Meinert remembers, quoting the mayor, “ ‘Look…. I want you guys to get into this and argue. And I expect that there should be blood on the floor.’ ”
Cast as a conservative during 2013's brusing mayoral race, the longtime Democrat shored up his liberal bona fides - and eventual election win - with a promise to tackle income inequality in his first term.
The local union boss is largely credited with focusing the national income inequality debate in the form of a proposed $15 minimum wage.
The fish-and-chips restaurant chief entered negotiations as a known $15 opponent, having funded the anti–minimum wage campaign in SeaTac.
The Socialist sensation made a $15 minimum wage the centerpiece of her 2013 campaign; her legions of lefty supporters and intractable rhetoric made her impossible to ignore.
The erstwhile banker is credited with cooling tensions with a diagram of the crucial tip phase-out part of the deal on a city hall whiteboard.
The liberal, yacht-loving tech mogul penned a Bloomberg editorial making the case for a $15 minimum wage; dropped more than 10 grand to help pass the $15 initiative in SeaTac.
The $15 minimum wage crusade can trace its roots to the Occupy movement that grabbed the nation by the white collar in the fall of 2011 and, with crisp sound bites about the 99 percent and the 1 percent, started a conversation about income inequality—one that was powerful enough to sink Mitt Romney’s presidential run when he was caught on tape belittling the working class. And echoes would eventually end up in President Obama’s 2014 State of the Union when he called for a $3 boost in the minimum wage.
“If you think about Occupy,” says United Food and Commercial Workers policy director Sarah Cherin, “the national narrative shifted to talking about income inequality. It created the space for us to do this.”
Trying to capture the energy of Occupy, which ultimately fizzled due to its lack of specific demands, the Service Employees International Union, SEIU, fused Occupy’s bumper-sticker politics with a clearer demand. Bankrolling fast food worker strikes in the spring of 2013, SEIU settled on a number of its own. The 99 percent could rally around $15.
Two Seattleites are largely responsible for focusing the national debate: SEIU’s boyish looking local leader David Rolf, and his unlikely comrade in arms, wealthy investor Nick Hanauer.
Rolf, 44, was obsessed with trying to reinvent labor after Occupy and spent much of 2012 giving talks that featured a grim PowerPoint presentation documenting labor’s decline. Hanauer, 55, is a TED Talk liberal who made millions as an early Amazon investor, going on to found and sell a company to Microsoft for $6.5 billion. He currently owns and runs the Seattle investment firm Second Avenue Partners when he’s not funding gun control, charter schools, and high-earner income tax initiatives.
“It was my idea,” Hanauer says. “Not the whole thing, but for sure picking the number”—$15—“and just recognizing that you had to put a stake in the ground. That you had to anchor the number in an economic framework…that changes the conversation, that trickle down economics wasn’t true.”
In the spring of 2013, Hanauer and Rolf gave a presentation to the influential Democracy Alliance, a group of rich liberal donors, successfully making the case that raising the minimum wage should be the left’s premier cause. In June 2013 Hanauer wrote an influential national editorial (which Rolf helped write) for Bloomberg BusinessWeek titled “The Capitalist’s Case for a $15 Minimum Wage.”
Meanwhile, after years of labor talks with Alaska Airlines had come to a standstill at the Port of Seattle in the working class city of SeaTac, SEIU bankrolled a $15 minimum wage ballot measure there. Rolf staffed the effort with SEIU organizers.
In that same campaign season, a little-known community college econ professor named Kshama Sawant was making noise of her own. She had run a losing race for state rep the year before but was picking up momentum in her bid for Seattle City Council, making an issue of longtime incumbent Richard Conlin’s vote against paid sick leave, another class conscious issue that riled people’s sense of workplace injustice.
The SeaTac initiative, where SEIU spent $400,000, won. So did Sawant.
Ed Murray had sealed his mayoral race with a promise to address income equality too. After ceding a number of union endorsements to Mayor McGinn, he had received a fat labor endorsement of his own when Rolf’s SEIU endorsed him promptly after the candidate came out for the $15 minimum wage. (Murray was the only person holding up a “Yes” card at a candidate forum when asked if he would support such a measure, says Rolf.) Murray acted quickly, announcing in December 2013 that he would soon lay out a plan to address the minimum wage. He scheduled a press conference for December 19.
Council member–elect Kshama Sawant beat him to it. She held a surprise press conference inside city hall—two days before Murray’s presser. Flanked by fast food workers, she announced she would soon roll out her own $15 minimum wage proposal. “In principle, our bottom line,” she said, surrounded by reporters, “is that all workers in the city of Seattle will make close to a living wage in the very near future.… If our bottom line is not able to be met, we will have to take it to the people.”
Not an empty threat. Rolf and Hanauer helped frame the case against big business—and enlisted the new mayor—but the grassroots movement of fast food and low-wage workers was powering the cause. And that gave Sawant real legitimacy and momentum.
Murray was annoyed at Sawant’s move. (Her raucous crowd also upstaged his supporters at the swearing-in ceremony a month later). But, in his signature style, Murray responded with an olive branch and successfully invited her to join his minimum wage committee.
On December 19, after getting on the elevator at the Seattle Municipal Tower to cover Murray’s IIAC kickoff press conference on the 27th floor, I was startled to see Sawant in the elevator with me. I had just covered her defiant press conference two days before. Was she there to protest or there to stand up front with the mayor? I asked.
“I’ll be with the mayor.”
Murray’s advisors had been against the idea of bringing Sawant on board, but the mayor had taken a lesson from his work in the legislature to pass transportation taxes by bringing Republicans such as anti-transit ideologue and then state senator Jim Horn to the table to pass a gas tax. “I believed I might get [15 Now] there at the end if they were at the table, in the room,” Murray says, likening Sawant to the hard-line GOPers he’d dealt with. “It was important for this city not to have a battle at the ballot over the minimum wage. It would have been a colossal waste of money on everyone’s part. It would have poisoned our ability to work as partners between labor and business.”
Staving off an initiative battle was, in fact, the driving force behind Murray’s commitment to getting a deal. The left had the advantage of taking the idea, which polled off the charts, to the ballot box. And the right had the advantage of outelectioneering them in a nasty campaign with deep pockets.
“As I told both sides,” Murray recalls: “What price is that victory going cost you? Not just in dollars, but in the conversation we have in this city? I believe we would have had a mini class warfare and it would have had ramifications across this country.”
Having Sawant on the committee never truly diminished the fear of an initiative war, though. She represented a constant threat. If she didn’t like what was happening on the committee, she could have snapped her finger and 15 Now would have jumped into action.
“We knew from the election of council member Sawant…that this would be an issue that was dealt with,” says Ivar’s Bob Donegan. “It was too big an issue to be the first issue the mayor had to deal with. But I understand why he had to do it. Kshama put him in that position.”
On April 24, with one week to go before Murray’s self-imposed IIAC deadline, Sawant didn’t like how the negotiations were going and held another press conference at city hall to say Murray had “failed.” It’s “time to build a grassroots campaign” for a $15 minimum wage, she said in her now-familiar academic tone and the British-inflected accent of Mumbai, where she grew up. “Our goal now is to stop focusing on the committee. The committee is done. It is over.”
Sawant’s prognosis wasn’t far off. Murray’s group was stuck. “The restaurant association threatened me with an initiative. Labor threatened me with an initiative. They didn’t believe the process was going to work,” Murray says.
The committee spent $30,000 on a professional mediator (no luck) before resorting to trust-building exercises, like the time participants were asked to pair off around the table to get to know each other. Ivar’s Bob Donegan, who helped fund the anti–$15 minimum wage initiative campaign in SeaTac, was paired off with Kshama Sawant.
“The mayor’s staff decided the reason we couldn’t get to a deal is because ‘I didn’t know what kind of shoes you liked to wear,’ ” recalls Donegan. “So maybe if we spend 20 minutes together, and I got to know you better, I would be willing to compromise.” But, says Donegan, Sawant “tended to fall back on her usual rhetoric rather than go off the record and have a frank discussion.”
By March, Murray, who hadn’t been involved in the task force meetings directly, created a subcommittee of the subcommittees (there was already a progressive caucus and a business caucus within the IIAC). It was called the G-8—it had eight members, three from the progressive group, three from business, plus lefty council member Nick Licata and Solid Ground’s Gordon McHenry from the nonprofit caucus; Licata and McHenry quickly dropped off, letting labor and business duke it out. Murray himself headed up the G-8, mostly in meetings that went late into the night with his office as HQ; the business and labor trios were sequestered in empty offices on the surrounding seventh floor.
The new setup led to a major breakthrough, a compromise on the nuclear issue that had plagued both sides from the beginning, the concept of “total compensation”—a business notion that nonbase wages such as tips and health care should count as part of the minimum wage.
The compromise created a two-tiered pay concept: a guaranteed minimum wage in one column and a total compensation wage (which included things like tips) in another, with the total compensation eventually phasing out. That solved the central intellectual and partisan disagreement, and gave both sides a win.
Business bought some time to adjust (small companies would phase out tips as part of the equation after seven years). And labor now had a way to accept tip credit without actually accepting a tip credit: “You’re not able to count tips against the minimum wage,” explains IIAC member United Food and Commercial Workers policy director Sarah Cherin, “And that was critical.” (Cherin’s buy-in was also critical, and an existential win for IIAC; without financial backing from a hard-left union like Cherin’s UFCW, Sawant would no longer have anywhere to turn in her ongoing fight against a compromised plan.)
Hanauer says Rolf came up with the phase-out part of the deal and that Hanauer and his sidekick, former Bill Clinton speech writer and IIAC member Eric Liu, wrote it up in a document in early April called “Nick and Eric’s Nobody’s Happy Proposal.” Seattle Chamber CEO Maud Daudon reportedly first drew the two-tier formula on a whiteboard in one of the seventh floor conference rooms late at night during a G-8 meeting.
“The phase out tip credit was when the dam burst,” says business-side negotiator Michael Wells, CEO of the Capitol Hill chamber. “Up until that point, I just felt despondent about getting any solution. Because no one would move.”
After the savvy of Daudon’s whiteboard diagram sunk in, Rolf, Mayor Murray, and Space Needle co-owner Howard Wright headed to McCormick and Schmick’s, the seafood bar and restaurant on Fourth Ave, for a celebratory drink. “We said, ‘Okay, we’ve got the go-home concept,’ ” Rolf recalls, meaning they sensed a win.
A week later two key G-8 negotiators, King County Labor Council executive secretary David Freiboth and Ivar’s owner Bob Donegan, started a chain of squabbles that nearly derailed the deal.
Freiboth was a hard-talking labor negotiator who had earned a rep on the larger committee as “the crazy, angry guy,” according to one member, “making facial contortions and waving his arms” and “storming out.” But he and Donegan were already fire-tested friends from the contentious tunnel negotiations a few years earlier. During an April 22 session they nudged their respective parties to an agreement over the number of employees, 500 or less, that constituted a small business. (Labor had wanted 250 and business had wanted a number in the thousands.)
“We were sitting in Ed’s [Murray’s] office, and I looked over Freiboth’s shoulder, and I saw the blue globe atop the Smith Tower was lighted. And I thought, ‘Huh, the sun has gone down. And I looked at my watch and it was three minutes after midnight,” Donegan remembers. “The mayor came in and said, ‘I’m going to define a number of 250. That’s what your alternative is, it’s 250 or nothing.’ ”
Murray’s heavy hand reflected the leverage dynamics he always knew were at play. Public polling favored a $15 minimum wage. “I believed, and I believe everyone in the room knew it was going to happen,” Murray says. And because of that support, business had to play ball. “Their alternative was something far more draconian,” Hanauer adds, referring to the looming threat from Sawant. And Murray himself was threatening them with his own alternative that would lean left.
“Freiboth saw how disappointed I was,” Donegan says. “[And he] called a stop. He and I went into one of the other offices on the seventh floor and had a conversation and diagrammed it out on a whiteboard.”
They brought it back to the G-8 team and the mayor in his office and thought they were good.
When the full group showed up the next morning, April 23, however, the whole deal had unraveled. According to Rolf, they “came into the room and said, ‘We think we’ve got a deal, we have an agreement, we’re ready to pop the champagne.’ We then went through the exercise of reading aloud what we thought the agreement was, and when I got to 500 employees nationally they said, ‘No, you said local.’ Apparently, their notes said 500 local employees.”
Rolf says he doesn’t have any reason to doubt the business side’s sincerity, but adds, “The previous day all of the numbers had been national. We were talking apples to apples. [And] 500 national really only makes sense.” Meaning a local number could allow megachains like Walmart to get away with not paying the Seattle wage for years while smaller companies like Pagliacci may have to.
Freiboth, the original dealmaker from the night before, was dumbfounded. He looked across the table and told Donegan: “I’m not going to agree to that. I’m never going to agree to that.”
The disagreement led to a game of chicken. When they came back the next day, April 24, supposedly with the details finalized, business leaders like Daudon abstained even though they had personally signed off. “Because there had been such a breakdown in trust the previous day,” says Rolf, “the reaction of a couple of people in labor on the left…was to say ‘Fine, I’m not a yes vote either.’ ”
Business fled to the second floor to regroup, holing up in the conference room near city council offices. And that’s when the mayor burst in to cuss them out. His office had sent out a press release early in the day preparing the media for a 3pm announcement.
“So basically, at 3:05, we had the media waiting for us,” Rolf says. “Okay, what the fuck do we do? There’s no page in the instruction manual for what happens when you call the victory conference and the victory slips out of your hands in 25 minutes.”
Murray was forced to tell the media there was no deal yet. He had majority support, he said, but wanted a supermajority.
It took another week of fine-tuning and surreal moments like the time Nick Hanauer, probably the wealthiest capitalist on the business side, couldn’t make the meetings but called to lecture the business caucus over speakerphone from his yacht in the Caribbean about the economic plight of minimum wage workers.The main problem, though, was the inability of the business reps to get sign-off from their varied membership. That conundrum lasted right up until just before the IIAC took its April 30 vote.
Capitol Hill chamber leader Michael Wells remembers the business crew’s discombobulated six-block walk from the chamber of commerce office to city hall, on April 25, to update the mayor on their latest vote count.
“Every single one of us was on our phone,” says Wells, “either calling our boss or our board president to say, ‘Okay, I’m voting yes. Can I vote yes?’ ” The reply was typically a question about how the other members of the business faction were voting. “And then we’d have to say, ‘Yes, Meinert’s voting yes,’ or ‘Yes, the chamber’s voting yes’—or ‘No, the chamber’s abstaining,’ ” Wells says, calling the scene “comical and weird.”
Speaking of weird, as the cellphone-consulting horde approached city hall, they came across a familiar face: Murray’s former nemesis, Mike McGinn, walking his bike. According to Wells, McGinn asked what they were all doing.
“Oh, minimum wage,” Wells said, casually taunting the famously gridlock-prone former mayor.
“Well,” said McGinn, sassing right back, “it’s about time you did something.”
Five days later the IIAC formally approved the deal with 21 out of 24 members voting yes. Daudon from the chamber, unable to get consensus from her board, abstained. Conservative businessman Craig Dawson of Retail Lockbox voted no.
And Sawant, representing her 15 Now troops, voted no too.
Then she voted yes.
As the city council fast-tracked the deal during May, Sawant continued to condemn it. She spoke at a protest outside a downtown McDonald’s the very same day the mayor sent the proposal to council chambers. “There’s no room for large corporations to wait three years,” she said, condemning the deal and Mayor Murray’s “big business” cronies for the multiyear phase-in provision.
At the June 2 council meeting—when the council was scheduled to vote on the measure—the crowd, decked out in red 15 Now T-shirts, booed and hissed in solidarity as Sawant trashed the pending legislation. Sawant took the mic to push an amendment excising the “pro-corporate” tip-credit provision as a “proven cause of poverty…and sexual harassment.”
As her amendment got voted down 8 to 1, the crowd of Sawant supporters showed their contempt for a “council [that] is representing the CEOs of the businesses that exploit workers,” as Sawant put it, adding: “I think the way that the amendments have gone also shows us that we need independent working class candidates.”
Then, moments later, Sawant voted for the legislation, giving Mayor Murray’s baby a unanimous 9-0 council approval.
The mayor knew she would. In one-on-one moments behind the scenes, when Sawant wasn’t firing up the crowd or “making unbearable speeches” (as bar and restaurant owner and committee member David Meinert described her presence at the negotiating table), she changed her tone. Mayor Murray says, “Her persona in public is a little rougher than it is when I met with her. She’s very gracious. She’s very thoughtful.”
When the mayor’s team stepped into her office (with its copies of the Socialist Alternative newspaper on the front coffee table and 15 Now poster written in the same font as the Seattle Seahawks iconic 12th Man logo) and presented the final compromise and thanked her for “creating the space to make this happen,” she nodded. And, finally letting her guard down, hugged Brian Surratt, the mayor’s policy point person on the deal.
When I asked Sawant about the unscripted moment with Surratt, she recast her spontaneous show of approval for the deal, describing it academically as a conscious political act.
“It’s an interesting question you asked me,” she said, “because it gives me a chance to clarify how as a socialist, yes, I am fighting against the Democratic Party establishment and the Republican Party. But we’re doing that with a clear understanding that most ordinary people who work within the Democratic Party establishment are genuine people who want the same social justice outcomes that I want.”
Behind the scenes, say insiders, Sawant actually liked the deal. “I came down from the seventh floor” to City Grind, the coffee shop at the bottom floor of city hall, Rolf recalls, “and briefed her on the deal, and she said, ‘David this is a really good deal, and if this is the way it’s going to come to me in council I’m going to want to vote for it.’ ”
The final deal, which was hailed by the left—“The mayor’s plan raises up 100,000 low-wage workers, lifting our entire city,” a press release from labor-backed Working Washington blared—and politely applauded by business, lays out a complicated wage schedule. Two schedules, in fact. The first is for businesses with over 500 employees nationally. They have to pay a minimum wage of $15 by 2017—or by 2018 for companies that initially take credit for offering a health care benefit. Businesses with fewer than 500 employees nationally must pay at least $15 per hour in total compensation (including things like tips and medical benefits) by 2019 and must phase out the tip credit and pay a $15 minimum wage by 2021. Accounting for inflation, the wage will hit $18.13 by 2025.
To those living outside Seattle, a $15 Kumbaya between a firebrand member of the Socialist Alternative Party who won a city council election and a gay liberal Democratic mayor probably doesn’t seem that unlikely.
But the $15 legislation was a tectonic shift for Seattle. Yes, feelings were hurt (business immediately started sniping at the deal after all was said and done) and there’s likely to be an initiative from a dissident business group in town called Forward Seattle. But for a city that has a history of strangling policy with internecine, intramural squabbles (still no monorail), passing the $15 legislation was a feat.
As headline issues like climate change, education, and income inequality stall at the federal and state levels, cities like Seattle have the opportunity to become the de facto leaders on urgent national policy issues. In that context, the implications of Seattle’s $15 minimum wage legislation are huge.
While sound bite government has failed, energized cities like Seattle—having now inked a successful minimum wage agreement at the negotiating table—are poised to set the national agenda with a progressive “Metropolitan Revolution,” as Brookings Institute policy nerds have labeled the current moment.
“It can be replicated in other cities,” says Murray. “My advice to mayors is: Understand your communities, understand which community leaders can actually come to the table and negotiate and take risks. It doesn’t help you if people just come to the table and agree with you but can’t bring anybody with them.”
After the $15 legislation passed, Nick Hanauer got to write another national editorial, this one for The New York Times. After it was published on June 5, Hanauer took to Facebook to point out that the newspaper had cut off the end of his original closing line. The sentence as Hanauer originally wrote it: “It is the natural evolution of common-sense economic thinking…that’s allowing our city to kick your city’s ass.”
This article appeared in the August 2014 issue of Seattle Met magazine.