More vocal opposition to Seattle head tax; economic impact study shows negative effects on low-wage workers

Today brings news of more opposition to the proposed “jobs tax” in Seattle. And a new economic impact study sheds light on the negative effects of the tax.

We’ll begin with more expressions of opposition from business and organized labor. 

The Seattle Times reports,

Dozens of Seattle businesses not named Amazon are calling for the city to abandon its proposed head tax, which would raise money for affordable housing and homelessness services.

After Amazon’s high-profile “pause” last week, businesses have rolled out a coordinated barrage to make their case against the $75 million-a-year proposal, arguing that it amounts to an intentional slowdown of the city’s booming economy.

The story leads with comments by Denise Moriguchi, CEO of family owned Uwajimaya grocery. With 250 employees, the business would be among the estimated 585 businesses subject to the tax.

“The margins are way different,” said Moriguchi, whose company has 250 employees in Seattle and would be subject to the tax. “We make less than a dime on every dollar that we sell so it would definitely impact our bottom line. We would have to think twice about bonuses or other employee perks we do today.”

When Amazon halted expansion plans, 7,000 jobs were affected. The Times reports,

An economic-impact study commissioned by the Seattle Metropolitan Chamber of Commerce found that those 7,000 jobs represent $908 million in direct wages a year, hundreds of millions more in lost compensation for employees at businesses that sell to Amazon and reduced economic activity more broadly.

More from that impact study:

We find that an employment tax may disproportionately impact lower wage earners and exacerbate the root causes of homelessness…

An employment tax will increase labor costs for rms,and these costs may be disproportionately born by low-wage, low-margin jobs. Although mass layoffs from the proposed tax are unlikely, the labor costs of addingadditional employees are regularly considered by firms, large and small. At the margin, increasing the cost of employment can have implications on whether, or where,a firm will hire new employees. These effects will likely bemore evident at the low end of the wage scale, compared to high-wage jobs…

Very large firms are a major source of employment and economic activity in Seattle. According to the U.S.Census’ Business Dynamics Statistics, the largest firms inthe Seattle area (more than 10,000 employees) employed 28% of employees, but were responsible for 33% of net job creation.

The following chart from the ECONorthwest study shows the outsize impact losing 7,000 Amazon jobs.

We encourage you to read the report. 

GeekWire reports on the response of the city’s tech businesses to the proposed tax.

On Tuesday afternoon, 130 startup founders, CEOs, venture capitalists, and other business leaders issued an open letter to Mayor Jenny Durkan and the City Council opposing the so-called “head tax” and warning about its potential consequences…

“We oppose this approach, because of the message it sends to every business: if you are investing in growth, if you create too many jobs in Seattle, you will be punished,” the letter reads. “Sending this message to entrepreneurs, investors, and job creators will cause far greater damage to Seattle’s growth prospects than the direct impact on the businesses being taxed. Not all of the undersigned are directly impacted by this tax, yet we all agree it is a bad idea.”

KIRO 7 News reports on a pair of rallies with union involvement.

While [Seattle City Council Member Kshama] Sawant’s anti-Amazon rally claims to “stand in solidarity with all construction workers, and working people who need both affordable housing and decent unionized jobs,” that same community will rally against Sawant that same day. Trade union members, along with Speak Out Seattle, are organizing their own events around the council’s two special meetings Wednesday:  “Speak Out on the Head Tax” at 9:30 a.m.; and  “Support Our Labor Friends at Their Rally” at 2 p.m.

According to their Facebook event pages, iron workers and other unions “want to see data and results before any new taxes,” and point out that “Seattle is flush with money and we need to demand accountability and results we can see.

As KOMO reports, some labor unions support the tax. For more on how the tax works, see this Seattle Times explainer.