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to Section One | to Arts & Entertainment
posted Friday, May 6, 2016 - Volume 44 Issue 19
SCOTUS will not block Seattle minimum wage law
Section One
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SCOTUS will not block Seattle minimum wage law

by Mike Andrew - SGN Staff Writer

The U.S. Supreme Court has declined to hear an appeal challenging Seattle's $15 per hour minimum wage ordinance.

The high court did not issue an explanation of its May 2 decision to deny a hearing to the International Franchise Association (IFA), a business group that sued the City of Seattle to prevent the $15 minimum wage from going into effect.

The decision means that regular pay raises will continue for Seattle workers as provided by the law, which took effect in April 2015.

'Today's decision by the Supreme Court reaffirms that Seattle workers' hard-fought raises in hourly pay will remain in effect,' said Mayor Ed Murray.

'This is a great day for workers in Seattle as we look to continue to fully implement our $15 minimum wage for our largest employers by 2017, and 2021 for our smallest businesses. Our phased-in approach to raising wages, developed by labor and business working together, minimizes disruptions - especially to our small businesses, which are the backbone of Seattle's vibrant economy. I am proud that Seattle's groundbreaking approach to addressing income inequality will continue to move forward.'

'I am pleased that the U.S. Supreme Court let the 9th Circuit's ruling stand and that we have prevailed at every stage of this lawsuit,' City Attorney Pete Holmes added.

The minimum wage ordinance requires that employers give their lowest-paid workers regular raises until they reach the $15 per hour minimum wage threshold. Small businesses have until 2021 to reach the goal, but larger companies must reach $15 per hour by next year.

The IFA challenged one of the key provisions of Seattle's ordinance - the part treating local franchises as subsidiaries of their parent companies. Under that rule, local McDonalds or Subways would have to pay their employees at least $15 per hour by 2017.

Seattle officials and unions that backed the wage hike said franchises are not small businesses even if an individual franchisee only operates one or two locations, because franchising offers financial advantages, such as access to loans, national advertising, and bulk purchasing.

U.S. District Judge Richard A. Jones ruled in March 2015 that the Seattle law was constitutional and should be implemented. His decision was later upheld by the 9th U.S. Circuit Court of Appeals.

Seattle was the first major U.S. city to adopt a $15 per hour minimum wage. The move has since been followed San Francisco and Los Angeles, as well as by state lawmakers in California and New York.

Prices stable after wage hike Meanwhile a study by the Evans School of Public Policy at the University of Washington shows that in spite of claims by business groups that a higher minimum wage would trigger huge price hikes, prices have remained stable in the first year of the ordinance.

'Overall, we found that prices in Seattle are fairly stable and they haven't gone up very much, if at all, since the minimum wage went up starting in April of last year,' UW Professor Jacob Vigdor reported.

'The exception would be in the restaurant sector, where we found price increases on the order of seven or eight percent.'

Researchers found that restaurant prices also rose outside of Seattle, however, meaning that the price increases might not be associated with higher minimum wages.

'So we don't have quite as much confidence in saying that seven or eight percent is purely a Seattle thing or whether it's a broader economic phenomenon that could be reflecting rising rents or bigger ingredient prices that could be affecting the entire metro area,' Vigdor said.

Around the time the minimum wage increase took effect last spring, the UW researchers started surveying 567 Seattle businesses where some workers made less than $15 an hour. They also tracked 55 workers making less than $15 an hour.

Over the last year, they also examined price data by looking online and visiting grocery stores, restaurants, and other retail locations.

'By and large, across most retail sectors, we have found little or no evidence of price increases in Seattle relative to the surrounding area,' the researchers said in their report.

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