Long associated with spectacular scenery, grunge rock, Microsoft and Starbucks, Seattle is also coming to be known for raising its minimum wage to $15, a move that could prove challenging to credit unions and other employers in the city.
But it's a move that isn't happening overnight. Though Seattle became one of the first major metropolitan areas in the U.S. to pass a law to raise the minimum wage to $15 per hour (more than double the current federal figure of $7.25), the wage will climb gradually. It moved to $11 per hour earlier this year and won't hit $15 until 2022.
However, raising the minimum wage remains a politically controversial topic - many employers and Republican politicians believe such an increase poses threats to the financial health of businesses. On the other side of the aisle, labor unions and Democratic lawmakers around the country endorse a higher minimum wage as a way of closing the growing income gap.
But with a strong economic engine, Seattle was ripe for this change.
"[The economy in Seattle] is in a really nice position right now," said Justin Martin, chief human resources officer and chief marketing officer at Seattle's $450-million Verity Credit Union. "With large employers such as Amazon, Boeing, and Microsoft there is some nice diversity. We are [also] seeing tech companies, such as Facebook and Google, expand their presence in Seattle to take advantage of the [well-educated] talent pool. Local companies, such as Weyerhaeuser and Expedia, are relocating their offices to Seattle to take advantage of the available real estate. There is [also] a commercial real estate boom going on right now. This has also created a lot of construction jobs, which have a positive impact on our economy."
Indeed, according to Paul Guppy, vice president for research at Washington Policy Center, a Seattle-based public policy think-tank, most of the largest employers in Seattle shrugged at the change, as they employ so few minimum-wage workers.
But what about employers, including credit unions, who do employ minimum-wage workers?
"It's extremely rare, but I've heard of some small businesses which have closed due to the minimum wage ruling," Guppy said. "Anecdotally, there have been reports of businesses cutting back on services and others seeking to relocate outside of the city limits."
Typically, at credit unions, the lowest-wage employees tend to have entry-level positions that don't necessarily require specific financial or functional area experience, said Martin of Verity.
But, overall he thinks the minimum wage law will have a "minimal impact" on his credit union.
"All of our employees already are paid well above the current minimum wage," he said. "This is due to our commitment to paying a fair wage and the overall going rate for financial industry positions in the Seattle market."
As such, they won't need to make any "adverse employee decisions" due to this law, he added.
Martin also noted that since Verity CU has less than 500 employees, they are not required to reach the $15 per hour wage level until Jan. 1, 2021.
"With the upward pressure on salaries in the Seattle market there is a good chance that we would have been at this threshold prior to this date regardless," he explained.
Pam O'Conner, vice president of total rewards at Boeing Employees Credit Union (BECU), a $13.6-billlion institution based in Tukwila, Wash., a suburb of Seattle, also projects "minimal" impact from the minimum wage law upon BECU.
"Our employees are already paid above the first [minimum wage] level [of $11 per hour] and we anticipate by the time the law is fully implemented, and we continue to provide regular increases, we will be compliant with the regulation," she said.
However, Martin indicated that in the event the credit union has to eventually hike the salaries of the lowest-paid workers, which could lead to a ripple effect where almost everyone else's salaries have to be increased correspondingly.
"We want to be cognizant that we keep a certain 'spread' based on the complexity of the job duties of a position," he said. "It won't impact our highest earners, but it could have some impact on the people in the salary tiers one or two levels above our entry-level positions."
In addition, the minimum wage law, Martin noted, will not have any impact on the credit union's benefits package.
"We are constantly looking to upgrade our benefits to stay competitive in the marketplace," he stated. "We are more impacted by the low unemployment [levels] and overall competiveness in the Seattle job market [rather than the minimum wage law]."
On a speculative basis, Martin believes that the minimum wage law would likely hurt larger credit unions more than the smaller ones, citing that smaller businesses [i.e, those with less than 500 employees] are not mandated to be at $15/hour until 2021.
"As schedule 1 employers, larger credit unions [greater than 500 employees] are required to be at this threshold by 2018," he said. "Secondly, the bigger credit unions usually have larger branch structures which traditionally have been staffed with employees that would be impacted by this change. Overall, I doubt there are many credit unions that have operations in the Seattle marketplace that are paying a significant portion of their employees at the current minimum wage."
Ironically, while the law is designed to help low-wage workers, as an unintended consequence, other people trying to enter the workforce in entry-level jobs - including the young, the low-skilled and immigrants -- may find themselves locked out of the market due to a paucity of such jobs, Guppy noted.
Guppy also said some businesses may rely upon automating certain services rather than hire a human being to perform them as a cost-saving measure.
One particularly unusual after-effect of the wage law -which has been reported widely in the local press - has been the decision by some minimum wage workers to request a reduction in their hours - so they continue to qualify for various government subsidies, including housing grants.
