A R E P ORT BY F R E E D OM F OU N DAT ION

SEATAC UNIONS
FAIL TO LIVE UP TO EMPLOYMENT STANDARDS
By Maxford Nelsen | 10.10.2013

Brought to you by:

MAXFORD NELSEN LABOR POLICY ANALYST

PO Box 552, Olympia, WA 98501 | 360.956.3482 [email protected] | myFreedomFoundation.com

A R E P ORT BY F R E E D OM F OU N DAT ION

SEATAC UNIONS
FAIL TO LIVE UP TO EMPLOYMENT STANDARDS
Summary
Seven local labor unions are the primary backers of SeaTacs Prop. 1. 64% of local union employees earn less than the living wage for a single adult with two children. 26% of local union employees earn less than a full time $15 an hour minimum wage. The average local union leader makes $114,851 per year, placing them in the top 10% of income earners. All of the national union CEOs are in the top 5% of income earners. Local unions are generating record revenue. Unions are promoting Prop. 1 as an organizing tool. Neither unions nor businesses should be subjected to arbitrary and burdensome employment regulations.

Introduction
An initiative on the ballot this November in the City of SeaTac proposes to raise the minimum wage from $9.19 an hour to $15 an hour for some transportation and hospitality employees. Proposition 1 would also impose a number of other requirements on local businesses, including one which would force employers to favor full-time employees over part-time. Labor unions are the key proponents of Prop. 1although they are exempt from its requirements. In addition to representing employees working for private and public employers, unions have their own staff. Federal law requires that unions representing any private sector workers report certain financial information, including staff salaries, to the Department of Labor each year. 1 These union reports, however, indicate that the same unions trying to place minimum wage and other requirements on targeted SeaTac businesses frequently fail to live up to the employment standards they advocate. While union employees struggle to get by on low pay, union CEOs receive six-figure salaries. Though the unions are capable of paying their workers $15 an hour full-time salaries, they instead spend their funds on attempting to impose Prop. 1 on targeted businesses as an organizing tool.

Compensation of Union Staff

According to reports filed with the state Public Disclosure Commission, unions have provided $619,986 in resources to pass Prop. 1, comprising 96 percent of the funds raised by the Yes! For SeaTac political committee. Most of the remaining four percent came from organizations which receive union funding, such as Puget Sound Sage. 2 Union contributions dwarf the $294,019 businesses have raised to counter the initiative. The union-funded Yes! For SeaTac campaign website states that a $15 minimum wage is necessary to help low-wage workers make ends meet.3 Yet the 2012 reports filed by the seven union locals who have supported Prop. 1 in SeaTac indicate that many low-level union employees are poorly paid in comparison.

PAGE

UNION EMPLOYEE PAY 2012

160 140 120
36%

24
15% 11% 38%

OVER $28.71 /HR. FT $15 - $28.71 /HR. FT $9.19 - $15 /HR. FT

100 73 80 60 NUMBER OF EMPLOYEES 40 20 0 20 29 16 32 22 6 5 8

2 2

BELOW $9.19 /HR. FT

52

31

20 12

5 10
3 4

11
2 6

16
2 2

The bottom two categories in the above chart represent union employees earning less than $15/hr. full-time. The wage levels used in the Union Employee Pay 2012 chart were determined as follows: (1) $28.71/hr. is the living wage for a single adult in Washington with two children, (2) $15/hr. is the minimum wage proposed by Prop. 1, and (3) $9.19/hr. is the current state minimum wage.4

All told, 64% of union staffers earn less than the living wage for a single adult with two children in Washington, and over one-quarter earn less than the proposed $15/hr. full-time minimum wage for SeaTac.

PAGE

TE 92 AM 5 ST ER S 11 7

SE IU UN 6 IT E HE TE RE AM 8 ST ER S 17 4

77 5

UF CW

SE IU

SE IU

21

The union staff earning less than a full-time salary at the state minimum wage of $9.19 an hour are likely part-time workers. The union reports do not distinguish between part-time and full-time employment. Still, it is important to note that encouraging full-time employment is one of the stated goals of Prop. 1.

The union-backed campaign website accuses businesses of gaming the system by sometimes employing part-time instead of full-time workers, though the same unions appear to have no qualms about employing their own part-time workers. 5
The reports also indicate that, in some cases, low-paid union employees had to get advances on their paychecks to make ends meet. For instance, one SEIU 775 employee who earned less than $12,000 last year was advanced $1,999. By the end of the year, the worker still owed the union $833.

While low-level union employees might struggle to get by on low wages, union CEOs are amply compensated with six-figure salaries.
At the local level, the average base salary for a union leader is $114,851enough to qualify for the top 10% of income earners. One local union CEO, David Rolf of SEIU 775, earns enough to be in the top 5% of income earners.6 At the national level, their base salaries qualify each union CEO for membership in the top 5%. These CEOs often receive substantial compensation in addition to their base salary. Teamsters CEO James Hoffa, for example, received over $60,000 in added compensationenough to place him squarely among the infamous 1%.

COULD UNIONS AFFORD A $15 MINIMUM WAGE?

Even if CEO compensation were not reduced, these seven union locals are more than able to pay all of their employees a living wage. Since the highest paid union employees make up the bulk of unions payroll costs, most unions would not see their payroll costs rise significantly were they to pay a fulltime, $15 an hour wage to every employee currently below the threshold.

PAGE

LOCAL UNION CEOS

Name David RolfSEIU 775 Tracey ThompsonTeamsters 117 David SchmitzUFCW 21 Richard Hicks Teamsters 174 Sergio SalinasSEIU 6 Erik Van RossumUnite Here 8 Karen HartSEIU 925 Compensation $158,785 $152,589 $138,897 $111,223 $84,424 $82,784 $75,256

NATIONAL UNION CEOS

Name Joseph HansenUFCW James HoffaTeamsters Donald TaylorUnite Here Mary Kay HenrySEIU Compensation $297,941 $296,639 $271,324 $256,086

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 UNION Unite Here 8 SEIU 775 SEIU 6 SEIU 925 UFCW 21 Teamsters 174 Teamsters 117

INCREASE IN PAYROLL TO = $15 /HR FT

$

PERCENTAGE INCREASE IN PAYROLL

123,086 668,171 82,562

17.3% 11.1% 8.9% 5.5% 4.6% 2.2% 1.4%

$ $

128,565 275,552 32,101

$ $

46,719

Furthermore, most unions have more than enough cash on hand to pay all of their employees a living wage.
None of the union locals performed poorly last year. Unite Here Local 8 and Teamsters Local 117 each took in record amounts in 2012, with SEIU Local 6 and UFCW Local 21 also posting solid revenue growth.

UNION Unite Here 8 SEIU 775 SEIU 6 SEIU 925 UFCW 21 Teamsters 174 Teamsters 117

2012 REVENUE
$ $

CASH ON HAND AT YEAR END

$ $

2,553,625

1,034,727
$ $

23,470,782 2,692,269 8,996,711

35,219

245,750

$ $

4,440,549 8,926,820 2,793,454 3,168,324

24,202,089
$

4,770,911

10,339,291

PAGE

WHY UNIONS CARE ABOUT SEATAC

While they have the resources to pay their employees a living wage and provide stable, full-time employment, unions choose instead to spend their funds attempting to require targeted businesses to do so.

The SeaTac initiative contains several provisions which directly benefit union leaders at the expense of workers. First, it includes a labor-retention requirement
favored by the UFCW and Unite Here. The provision requires new employers or owners of a business to give hiring preferences to previous employees instead of bringing in new workers. In SeaTac, the requirement would discourage nonunion businesses from taking over from another concessionaire at the airport. The Port of Seattle evaluatedand rejectedthe union-proposed labor retention policy when it was first introduced in 2011.7

HAVE COLLECTIVE BARGAINING THROUGH LEGISLATION. YOU CAN HAVE COLLECTIVE BARGAINING THROUGH BALLOT MEASURES. ~ TIM PAULSON ~

WE ARE GOING TO EXPAND THE IDEA OF COLLECTIVE BARGAINING. YOU CAN

Executive Director of the San Francisco AFL-CIO at the AFL-CIO Convention8

Second, unions are not only conveniently exempt from Prop. 1s requirements, but unionized businesses are specifically exempted as well. Section 7.45.080 of the initiative states that all of the provisions of this Chapter may be waived in a bona fide collective bargaining agreement. Similar exemptions for unionized businesses are common in local minimum wage/employment standards laws because of the incentive they create for non-union businesses to unionize.

If employers must choose between complying with a burdensome initiative that could potentially close their businesses or allowing employees to unionize in the hope of negotiating less-stringent requirements, the rational choice is to allow unionization.

Before Long Beach passed a similar initiative last fall, the local Chamber of Commerce correctly denounced it as an attempt by the unions to force businesses into collective bargaining.9 Sure enough, three months after the initiative passed, Unite Here Local 11 proudly announced the unionization of two large Hyatt hotels previously under a union boycott.10 Following the initiatives passage, hotel management even invited Unite Here staff to organize employees.11 Smaller hotels responded differently, reducing their rooms below the initiatives 100-room threshold and laying off dozens of staff.12 While unions berated the small hotels for going against the intent of the initiative, intentions only go so far.13 Besides, a few dozen workers losing their jobs is a small price to pay for more dues-paying union members.

PAGE

If labor supports local living wage initiatives on pragmatic grounds, why ignore the disadvantaged workers who lose their jobs as a result? Then again, if unions support a $15 minimum wage on principle, why do they refuse to pay their own employees living wages, and why allow the $15 wage to be waived by collective bargaining?

Although the unions supporting Prop. 1 are unwilling to live up to its requirements themselves, they are willing to spend hundreds of thousands of dollars to impose it on targeted businesses as a method of promoting union organizing.
According to Unite Here Local 8s 2012 report, new members of the union will pay $865 in union fees at median rates in their first year. If the initiative produces even 1,000 new union members, it could mean more than $750,000 in new annual dues, a substantial increase for a union which took in $2.5 million last year.14 Several unions have already added to their membership rolls just by rallying workers in support of the initiative. Back in March, over 1,000 airport-related workers unionized, some with SEIU Local 925 and some with Teamsters Local 117.15 It appears that the unions funding the initiative campaign in SeaTac are more concerned with signing up more dues-paying members than they are with actually benefiting workers.

Photo Credit: Working Washington

Nothing in this report is meant to suggest that the force of law should be used to require unions to only hire full-time employees and pay them all at least $15 an hour. Even minimum wage advocates like John Schmitt, Senior Economist at the left-leaning Center for Economic and Policy Research believe that a sudden, steep increase in the minimum wage would do more harm than good.16 Economist Dr. Sylvia Allegretto of U.C. Berkeley, a staunch supporter of a higher federal minimum wage, admits that a $15 minimum wage is absurd.17 It is entirely possible that unions have very good reasons for not paying all of their employees a $15 minimum wage. They are also entirely justified in choosing to employ some workers part-time as part of their business model. Likewise, many of the businesses that unions are targeting with the initiative have entirely legitimate reasons for conducting business the way they do. Just as some unions might struggle to live up to the initiatives requirements (were they required to), many SeaTac businesses have real concerns that complying with the initiative would force them to lay off employees, reduce hours or benefits, or raise pricesall of which would be harmful to workers and the local economy. Neither unions nor businesses should be made to comply with burdensome and arbitrary employment regulations of the kind contained in SeaTacs Prop. 1 initiative.

CONCLUSION

PAGE

ENDNOTES
P

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17

Union LM-2 reports to the Department of Labor can be accessed a http://www.dol.gov/olms/regs/compliance/rrlo/lmrda.htm. Union LM-2 reports to the Department of Labor indicate that Puget Sound Sage received $10,500 from SEIU Local 6 in 2012, over $30,000 from UFCW Local 21, and $27,500 from Teamsters Local 117. Each of these three unions are active proponents of Proposition 1 in SeaTac. Yes! For SeaTac, Get the Facts, accessed 9/18/13, http://yesforseatac.com/facts/ Ben Henry and Allyson Frederickson, Broken Bootstraps, Alliance for a Just Society, February 2013, http://allianceforajustsociety.org/wp-content/uploads/2013/02/2012-Job-GapReport_National_FINAL.pdf Yes! For SeaTac, Get the Facts, accessed 9/18/13, http://yesforseatac.com/facts/ The standing of union leaders among income earners was calculated using Kiplingers income calculator. Kiplinger, How Your Income Stacks Up, December, 2012, http://www.kiplinger. com/tool/taxes/T055-S001-your-tax-burden-calculator/index.php Washington Research Council, Proposition 1 and the Living Wage Movement in SeaTac: Increasing Unemployment, Decreasing Opportunity, August, 2013, http://www. researchcouncil.org/docs/PDF/WRCBusinessClimate/SeaTac2013Prop1.pdf Harold Meyerson, Labor Embraces the New America, The Washington Post, September 10, 2013, http://articles.washingtonpost.com/2013-09-10/opinions/41934888_1_collectivebargaining-labor-union-leaders Howard Fine, Long Beach Living Wage Backers File Signatures for November Ballot, Los Angeles Business Journal, May 4, 2012, http://labusinessjournal.com/news/2012/may/04/longbeach-living-wage-proponents-file-signatures-/ Leigh Shelton, Hyatt Regency Long Beach and Hyatt the Pike Long Beach Associates Vote for Representation by UNITE HERE, Unite Here! Local 11, April 8, 2013, http://unitehere11. org/press-releases/hyatt-regency-long-beach-and-hyatt-the-pike-long-beach-associates-votefor-representation-by-unite-here Tiffany Rider, Long Beach Hyatt Hotel Workers Vote to Unionize, Long Beach Business Journal, April 8, 2013, http://lbbusinessjournal.com/read-it-now-articles/1425-long-beachhyatt-hotel-workers-vote-to-unionize.html Adam Summers, Bad Time to Hike Minimum Wage, Orange County Register, January 25, 2013, http://www.ocregister.com/opinion/wage-409308-minimum-employees.html Kathy Mulady, Hotel Grinch Lays off Workers as Living Wage Law Takes Effect, Equal Voice, December 21, 2012, http://www.equalvoiceforfamilies.org/hotel-grinch-lays-off-workers-asliving-wage-law-takes-effect/ According to Puget Sound Sage, over 1,200 hotel/motel employees would be covered by Prop. 1, so 1,000 new union members for Unite Here, the hotel workers union, is not an unreasonable estimate. Nicole Keenan, Who is Covered by SeaTacs Proposition 1 (and Who is Not)?, Puget Sound Sage, September 12, 2013, http://soundprogress.wordpress.com/2013/09/12/who-iscovered-by-seatacs-proposition-1-and-who-is-not/ Thea Levkovitz, Worker Unrest Continues at SeaTac Airport, Working Washington, March 26, 2013, http://www.workingwa.org/2013/03/26/worker-unrest-continues-at-seatac-airport/ John Schmitt, Minimum Wage: Catching Up to Productivity, Center for Economic and Policy Research, June 12, 2013, http://www.cepr.net/index.php/op-eds-&-columns/op-eds-&columns/minimum-wage-catching-up-to-productivity In a podcast debate with minimum wage opponent David Neumark, the interviewer asked Allegretto, Okay, if its good to raise it [the minimum wage] to $9.00, why not raise it to $15, $20, $30?, to which Allegreto responded, Well, because thats absurd. Nobody is saying that. And nobody is putting up this idea that we want to raise the minimum wage to points where we know theyll have negative employment effects. Im the last person who wants to put lowwage workers out of work. Bloomberg, Neumark, Allegretto Debate Minimum Wage Impact, February 15, 2013, http://castroller.com/podcasts/BloombergAll/3378792

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PO Box 552, Olympia, WA 98501 | 360.956.3482 [email protected] | myFreedomFoundation.com