Reality Checks & Minimum Wage
March 7, 2014
Forty hours of pay per week, overtime pay, benefits and good prospects for wage and career growth.
Those are still hallmarks of entry-level industrial jobs in Seattle and they must be factored into Seattle’s debate over a $15 minimum wage. On Tuesday, March 11, 10am - 12pm, at a meeting in Georgetown, you will have an opportunity to make that point or any others that you might choose to regarding the minimum wage issue.
The meeting is with members of the Mayor’s task force studying the minimum wage proposal and it will be held in The Colin Education Hall at the Georgetown Campus of South Seattle Community College, 6737 Corson Ave South, Building C, Room C-122.
Any views regarding the minimum wage are welcome. For more information about the issue, or the March 11 meeting, call the Manufacturing Industrial Council (MIC) at 206-762-2470, or email MIC Executive Director Dave Gering at firstname.lastname@example.org.
To help inform the minimum wage discussion, the MIC surveyed a cross section of Seattle industrial firms with more than 1,100 employees engaged in seafood processing, metal fabricating, machining, and logistics.
All the companies pay entry-level workers more than the present minimum wage of $9.32 per hour. All provide employees with 40 hour of work per week. All provide regular opportunities to earn overtime. All provide benefits. All come with relatively low entry requirements.
All provide opportunities for higher wages as employees gain experience and learn more skills. Top pay for production workers in the survey ranged from $19 to $35 per hour, with one company providing performance pay that totals $70,000 to $100,000 per year.
And, none of the companies pay beginning workers wages as high as $15 per hour.
Their average starting wage is $11.33 per hour. Their average benefit package is worth $4.65 an hour. That adds up to an entry-level compensation package of $15.98 per hour with overtime pay coming on top of that sum. But under the one-size fits-all approach, all run afoul of the minimum wage movement, even though their compensation for beginning workers averages more than $33,000 per year.
The real life value of total compensation was illustrated – perhaps inadvertently – by a recent Seattle Weekly newspaper article about the challenges that confront an adult worker at a Seattle fast food restaurant.
He’s worked for the restaurant for eight years with no pay raises other than increases in the minimum wage. When he started at the restaurant, it was a fulltime job, but his hours are now reduced to 28 hours per week.
At $9.32 per hour, his annual pay would work out to about $13,500 per year. According to the UW School of Social Work, it costs about $22,000 per year to meet basic needs while living in Seattle for one year.
The worker makes up for the shortfall in survival income by living in subsidized public housing and by utilizing a food bank to augment the purchasing power of food stamps. A Navy veteran, he relies on the VA for medical services.
If he made $15 per hour, his annual wage would go up significantly -- to about $22,000, a jump of 60%. But he would still be stuck at the survival level defined by the UW School of Social Work. And, that assumes his employer would not cut back his hours to make up for the higher pay rate.
His career prospects might have turned out far differently had he secured an entry-level job at one of the companies in the MIC survey and many of those jobs should be within his reach. According to the article, in the Navy he received six months training in maintaining communication and navigation systems and worked for a time as a systems maintenance person aboard the U.S.S. Conquest, a minesweeper.
At 40 hours per week, at $11.33 per hour, he would have earned more than $23,500 per year in beginner pay, based on averages for the survey companies. Throw in two hours per week in overtime at time-and-a-half – not unusual – and annual pay would increase to more than $25,000. Add benefits, and the total compensation package would be worth more than $33,000.
More importantly, in terms of earnings, a first-year worker would also be on the path to higher wages. After eight years in the service sector, the worker experienced no meaningful pay growth. At the MIC survey companies, after eight years, he might have hit the top of the production scale where pay at the survey companies ranges from $43,500 to $78,260 per year, and $53,000 to $87,000 including benefits. Much higher pay is available for former production workers who work their way into sales and management positions – and some do.
Advocates say the $15 minimum is still needed to boost take home pay. But the hourly rate is only one part of that equation. Others include number of hours worked, prospects for overtime, benefits and realistic opportunities for wage progression and career advancement.
That’s why total compensation must be part of any calculations in the minimum wage discussion.
The survey also turned up reasons for caution.
Two of the companies that participated expanded their Seattle production facilities in the past 12 months. Representatives say their companies probably would not have expanded here if they knew the minimum wage might be raised to $15 for entry-level workers. Their reasoning has nothing to do with rhetoric and everything to do with costs. Seattle is already an expensive location for industrial firms, and far cheaper alternatives are available in nearby suburbs.
The costs of such relocations would not be limited to the companies. Seattle as a whole benefits from having employers who provide good career opportunities for people with a wide variety of backgrounds, aptitudes and experiences.
The value of those opportunities is vividly displayed in the survey results.
One manufacturing firm pays a starting wage of $10 per hour ($16 including benefits). But it paid $15 an hour for one new worker. The reason? He was a graduate of a fulltime four-week training program at South Seattle Community College focused on basic manufacturing skills. His total compensation package equals nearly $44,000 per year and he’s on track to eventually earn up to $69,000 at the top of the scale.
A broader success story was revealed at a local seafood processor. Processing fish is not glamorous. But 84 present employees of the company now earn more than $15 per hour after starting out as entry-level production workers. Thirty seven of them started out not speaking English as their primary language. Fourteen of them now earn more than $20 per hour, with an average additional two to three hours each week in overtime pay at time and a half.
The group includes one member of the management team who now makes nearly $40 per hour, and another who earns more than $60.
Not bad work if you can get it. In Seattle industry, people still can.
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