Politically liberal Seattle is again grabbing a spot in the national news, and not because of gay marriage, legal recreational pot or the election of both an openly gay, just-married mayor, Ed Murray, and a socialist City Council member, Kshama Sawant. (Whether they get high, I have no way of knowing.)
This time it’s a push by Murray, Sawant and others to boost the minimum wage from $9.32 to $15.00. That would blow past San Francisco’s $10.55, the highest among big cities, and match the tiny town of SeaTac, Wash.–yep, where the airport is–whose voters ignored tons of corporate propaganda and approved the raise in November.
Most of the raging political and economic debate about minimum wage changes focuses on whether a higher wage will cause employers to hire fewer workers and thus increase unemployment. At least in Seattle, I think that misses a larger point. Here’s what I’m trying to explore. If the level of wages in Seattle is so low that a dramatic increase in the minimum wage is in order, why do so many things seem to cost so much? Or put another way, if there’s so much underpaid help hereabouts, and the cost of stuff still isn’t cheap, who’s making the killing now?
After reflection, I suspect the culprit is government, mainly in the way it generates revenue (i.e. taxes).
Two-and-a-half years after becoming New To Seattle, I find Seattle a rather expensive place to live. I moved here from the Los Angeles area, which certainly is pricey. Yet according to BestPlaces.net, the cost of living in Seattle is about the same.
In my experience, electricity is a lot cheaper, no big surprise considering that 90% of that is generated from dirt-cheap hydro sources. I pay about 5 cents a kilowatt, compared with 22 cents in Los Angeles. Telecom and insurance also cost less here. Groceries and housing seem about even although, given their elevated costs compared to the rest of the country, that really isn’t much to brag about.
Also about equal is the average cost of taking a family of four to attend a local baseball game. However, in light of last season’s playoff appearance for the Los Angeles Dodgers, there’s no comparison whatsoever from a value standpoint with the perennially hapless Seattle Mariners, whose finish 25 games back was baseball’s sixth worst.
But all that is made up by the cost differential of so many other things. Goods I buy in stores (maybe 8% higher). Dry cleaning (easily double what I paid in L.A.). Tap water (about 25% higher). Bus fare ($2.50 at rush hour here, 67% more than the $1.50 in the City of Angels and the same tariff as in New York City). Trash pick-up fees are no bargain, either.
In my experience, the most significant price increase is for services. All kinds, ranging from medical through skilled trades like plumbing and carpentry and down to semi- or unskilled callings like yard work. This is almost purely labor.
Which gets me back to taxes.
What, you say, there’s no state income tax in Washington State so how can taxes be to blame for higher costs? In my experience, states without income taxes–like Texas, where I lived for seven years–make up for that absence with higher rates for other kinds of taxes. In Seattle, for instance, property taxes rates aren’t low and the sales tax, 9.5%, is the highest among the nation’s big cities.
Indeed, despite the absence of a state income tax, which voters rejected in 2010, Washington State has not been in even the lower third of any ranking I’ve seen of state tax burden, generally defined as the average state and local taxes paid as a percent of average personal income. This can be calculated in different ways. Most rankings put Washington State somewhere in the middle of the 50 states, although one current list ranks Washington State 13th highest, just outside the top quarter.
But Washington State raises far more money–nearly a fifth of all state dollars–than most other jurisdictions from excise taxes on various businesses, occupations and transactions. That’s largely a hidden levy–it doesn’t show up on the receipt a buyer is handed–which is passed right along as part of “the cost of doing business.” I think that accounts for much of the elevated cost-of-living here.
Moreover, largely because of the big sales tax and the absence of an income tax, Washington State also has the country’s most regressive tax structure. That means the tax burden is a lot higher on the poor than it is on, say, Bill Gates.
That’s why I think it’s government that is making the killing in the spread between the minimum wage and the high cost of living. In Seattle, an illiberal system for a liberal place.