Court narrowly upholds SeaTac minimum wage hike for airport workers

The state Supreme Court today issued a 5-4 ruling upholding voter-approved (narrowly) Proposition 1 in SeaTac. The measure, a bundle of labor standards including the $15 minimum wage, was adopted in November 2013. While it went into effect in the city, opponents challenged its applicability to the airport, which is operated by the Port of Seattle. In King County, the trial court held that Prop. 1 violated a state law giving the port jurisdiction over the airport. (Other issues were at play, but the port’s jurisdiction appeared to be key.)

It’s heavy reading. The majority opinion runs for 42 pages; the dissent, 13. 

The Associated Press reports

In its 5-4 ruling Thursday, the majority upheld the entirety of Proposition 1 and expanded it to airport workers, writing that there was no indication that the law would interfere with airport operations. The majority also found that federal law doesn’t pre-empt the initiatives provision protecting workers from retaliation.

The dissent disagreed, arguing that the Port of Seattle has exclusive jurisdiction of the airport.

The Puget Sound Business Journal also reports

On Thursday, the Supreme Court ruled that the city’s minimum wage law can be enforced at airport because there is no indication that it will interfere with airport operations.

The SeaTac Committee for Good Jobs said the ruling means that 4,700 people at the airport will now receive fair wages in addition to paid sick leave, which city voters also approved in 2013.

In her dissent, Justice Debra Stevens writes (dissent appears following the majority opinion at this link),

The majority’s flawed interpretation of RCW 14.08.330 foreshadows the statute’s troubled future. Under the majority opinion, whether a business operating on airport property is bound by a city’s local law will now turn on case-by-case adjudication in court about whether the city’s particular ordinance “interfere[ s ]” with “airport operations or the subject of aeronautics,” id. at 16, however that concept may be construed. Even the SeaTac Committee for Good Jobs concedes that some minimum wage ordinances will affect “airport operations” under certain circumstances-though it maintains that Proposition 1 does not do so. 

Unlike the majority, she finds no “ambiguity” in the cited statute.

In my view, there is no ambiguity in RCW 14.08.330. The statute simply provides, in relevant part, that “[ e ]very airport … controlled and operated by any municipality … shall, subject to federal and state laws, rules, and regulations, be under the exclusive jurisdiction and control of the municipality … controlling and operating it.”

In our research report, we expressed concern about the proliferation of local wage and benefit policies. 

In addition to the absolute costs of these measures, and the challenge they create in competing with other employers not subject to the same mandates, local governments’ wage and benefit regulations create compliance problems for employers operating in multiple jurisdictions. They also create difficulties as employers look to align their human resource policies among cities with different mandates.

Today’s decision adds another measure of uncertainty for airport employers whose business practices will be “turn on case-by-case adjudication,” if Justice Stevens is correct.

With respect to the impact on airport operations, we have some evidence of the effects of wage increases. The Wall Street Journal recently reported on comments by executives at Wendy’s regarding minimum wage hikes.

…CFO Todd Penegor talked about the pressure to pay higher wages and said that “we continue to look at initiatives and how we work to offset any impacts of future wage inflation through technology initiatives, whether that’s customer self-order kiosks, whether that’s automating more in the back of the house in the restaurant.”

Wendy’s CEO Emil Brolick [said] “our franchisees will likely look at the opportunity to reduce overall staff, look at the opportunity to certainly reduce hours and any other cost reduction opportunities, not just price.”

Mr. Brolick elaborated that “we believe that some of these increases will clearly end up hurting the people that they are intended to help. And we continue to believe that one of the great opportunities you have in a business like ours is that an entry-level person, in a very short period of time, can rise to become a manager in a restaurant, and have an income above the median household income in the United States of America.”

The Washington Post also has reported on the acceleration of automation in the restaurant industry.

Seattle Times business columnist Jon Talton writes today of challenges even in the hot Seattle job market. He notes, among other factors,

Automation and offshoring of jobs has hollowed out the middle ground that once provided the backbone of employment.

Possibly. Of concern to us, as well, is what happens to young or inexperienced workers just joining the job market. No denying that there are problems in the middle ground, but it’s likely than some of those problems have been created by policies thwart opportunity for people to engage in the job market at all.

Policies matter.