Category Archives: Opinion

Dissecting the Governor’s Budget Proposal

by Marilyn Watkins

Last week, while most of us were madly preparing for the holidays, Governor Inslee proposed a Washington state budget for the next two years. Adopting a budget will be the main task of our legislature when it convenes the second week of January. Inslee’s first draft devotes new resources to education and transportation, takes small steps at modernizing our outmoded and regressive tax structure, and takes a swipe at climate change. Continue reading Dissecting the Governor’s Budget Proposal

Restoring Good Karma

by Marilyn Watkins

Microsoft’s CEO Satya Nadella created a national uproar when he advised women to rely on “good karma” for a raise. He almost immediately retracted. But if Nadella had instead advised women to ask for raises and urged girls to pursue computer science degrees, that still would have been the wrong answer to the gender wage gap question.

Washington state prohibited discrimination in pay on the basis of sex way back in 1943, when Rosie the Riveters were helping win World War II. At the national level, Congress banned sex discrimination in employment over 50 years ago. Yet the gender wage gap persists in every industry and at every rung of the wage ladder.

Women who worked full-time for the full year in Washington state in 2013 took home 80 cents to every $1.00 a man made, according to the US Census Bureau. Factor in race, and the stats get worse. Nationally, where women overall made 79 cents to a man’s dollar, Black women made 66.5 cents and Latinas 56 cents compared to a White man’s dollar.

Differences in occupation help explain part of the gender pay gap. Here in King County, men held eight out of ten computer and math-related jobs in 2013 and brought home $19,000 more each year than women. Women predominate in occupations such as office administration, health technicians, and personal care services, with much smaller paychecks but still noticeable wage gaps.

While occupational differences are determined partly by employee choices, deeply embedded workplace cultures and employer practices also push women and men into different career paths.

For example, in the typical Puget Sound-area grocery store, nine in ten meat cutters are men while eight in ten meat wrappers are women. Meat cutters, it will come as no surprise, get paid a lot more. Now, those guys in the back room at Safeway aren’t wrestling bulls to the ground and slaughtering them with a hunting knife. Women can achieve the strength and skill required to cut meat and be just as good at is as men.

Even when women do get traditionally “men’s jobs,” many firms prohibit employees from discussing pay, so no one knows if others are getting paid more for similar work.

No matter how many girls take advanced math and science classes, no matter how many women enter non-traditional and higher paying careers, our economy will continue to produce lots of jobs in child care, retail, restaurants, and office administration. So we can’t solve the wage gap by focusing only on high paying careers.

We need a cultural shift to value “women’s work” both in the market economy and caring for family at home.  And cultural shifts don’t happen only through individuals changing their behavior. They also require the push of policy change.

So here is the answer I wish Nadella would now give.

First, he should commit to equal pay for equal work at Microsoft, and lift the veil of wage secrecy within his own company that enables discrimination. Then he should go a step further and pledge Microsoft backing of federal and state Paycheck Fairness acts so that all employees everywhere have the tools to identify and challenge pay discrimination.

Next, he could commit to working with women’s groups and female employees to identify ways to change Microsoft culture to encourage women to seek and stay in tech careers, rather than discouraging them. Beyond that, he could lend support for federal and state legislation that support all workers’ roles as family caregivers, including paid sick days, family and medical leave insurance, and workplace flexibility.

Finally, he could go beyond platitudes about the need for STEM education for girls and children of color, and commit to working with other corporate leaders to change the narrative of austerity that has prevailed for too long in Washington, DC and Olympia. We need ample funding for education, from preschool through university. That means raising federal tax rates on the wealthy, closing state and federal loopholes that allow corporations – including Microsoft –to avoid paying their fair share of taxes, and instituting a personal income tax here in Washington state.

If Nadella did all that, he really would create good karma.

Marilyn Watkins is policy director of the Economic Opportunity Institute, a nonpartisan policy center  focused on building and economy that works for everyone.

Featured image is a attributed to Official Lewab Photos attributed under a Creative Commons 2.0 license.

Why Washington State’s Tax System Continues to Fail Our Kids

by Marilyn Watkins

Credit: Wikiphoto

The kids are back in school – and last week the Washington Supreme Court gave the State Legislature an “F” for failing to adequately fund public schools across the state.

Meanwhile, a new analysis by Standard & Poor’s concludes that growing income inequality is causing sales tax revenues to fall. According to the highly respected global credit rating firm, the share of income for the top 1% doubled in the U.S. between 1980 and 2011, while the rate of revenue growth for the states fell by half.

The link between rising inequality and declining revenue growth was strongest in the states that depend most heavily on sales tax – including Washington, which is second only to Florida in the degree to which we rely on sales tax. States with progressive income taxes, on the other hand, have by and large been able to maintain state revenues and services as the economy has changed, according to S&P.

Standard & Poor’s report comes as no surprise to anyone who’s studied Washington’s tax system. Washington has the most regressive tax system in the country, with low and moderate income residents paying higher shares of state and local taxes while the wealthiest pay far less than in other states. Small businesses also pay higher rates than big businesses – even before all the tax breaks and (perfectly legal) tax dodging from which some corporations benefit.

For decades, Washington state’s economy, population, and total personal income have grown at much faster rates than sales tax revenue, which provides over half of the state general fund. As a result, we’re failing our kids. We haven’t been able to implement improvements in the K-12 system, we can’t provide all kids who need it with high quality early learning, and we’ve jacked up tuition and limited enrollment in higher education – even as more jobs require a college degree.

Most of us know terrific, inspirational teachers and school staff, and Washington’s school kids consistently outperform all American kids in standardized tests. Yet children of color face a big achievement gap, receive harsher discipline, and are more likely to drop out. Washington has the 4th highest number of kids per teacher among all the states. We’re only in the middle in terms of teachers’ salaries – Georgia and Wyoming pay their teachers better.

Two years ago, the state Supreme Court told the legislature it was failing to meet its constitutional obligation to amply fund K-12 education. The legislature adopted great goals to make quality education accessible to all kids, but failed to come up with a plan to fund it. Now the court has found the legislature in contempt.

While Washington ranks 16th among states in total personal income, we’re in 42nd place in our level of investment in K-12 education. All but one of the states ahead of us have an income tax.

Our current tax system worked well enough in the mid-20th century, but it’s insufficient today. As long as we continue to rely on sales tax for half our general fund revenue, we will fall behind and fail our children. The only way to make our system less regressive and require the people with the most money to pay their fair share is to lower the sales tax and adopt a progressive state income tax.

Even facing a contempt ruling from the Supreme Court, the odds of our state legislature reforming the state revenue system in 2015 are close to zero. Most legislators believe with good reason they’ll be booted out of office if they do. But maybe they could take a step in that direction by ending corporate tax breaks and adopting a capital gains tax –  which by excluding retirement savings and providing a modest exemption would fall almost exclusively on the top 5%.

To get the rest of the way to sufficient, stable funding for the long haul, the legislature could dust off and update the findings of the bipartisan Gates commission, which over a decade ago recommended restructuring the state tax system. Then in 2016, they could put some real options to fully fund a comprehensive education system before the voters.

Meanwhile, it’s up to us, the people of Washington state, to force a public conversation on what it’s really going to take to fully fund the public services we need for individual opportunity and shared prosperity. Because we’re the ones who are really failing our kids.

Marilyn Watkins is policy director of the Economic Opportunity Institute, a nonpartisan policy center  focused on building and economy that works for everyone.

An Overdue Economic Gift For Moms On Mother’s Day

by Marilyn Watkins

Most kids today grow up with their mom in the workforce. According to the U.S. Census Bureau, two-thirds of new mothers now return to paid work within a year after giving birth, usually in the first few months.

Back in the 1960s, fewer than one in five new mothers held a paying job. In those days, while the middle class was expanding rapidly, the majority of families had one breadwinner and one fulltime homemaker.

Unfortunately, we still organize our economy as if “women’s work” had little economic value and every family had a fulltime caregiver.

Women have gained tremendous new opportunities in the 50 years since Congress banned employment discrimination on the basis of race and sex. Jobs and activities once reserved exclusively for men are open. So are educational pathways. Women now make up a majority of college graduates and roughly half the workforce. Instead of earning only 60 cents to a man’s dollar, women working fulltime now earn 77 cents.

But most of that progress was made last century. Since 2000, women’s career and earnings gains have largely stalled.

Men and women still tend to pursue different careers. Here in King County, men hold eight in ten computer and math-related jobs and three-fourths of police and fire department jobs. Women make up two-thirds of health technicians and office administrators and 90% of childcare workers. The typical woman in King County makes $15,000 less each year than the typical man.

Still, up to 40% of the wage gap cannot be explained by differences in jobs, hours worked, education or experience. Too often women get paid less than men in the same job simply because employers can get away with it.

On top of that, the United States, unlike every other advanced economy, leaves working families on their own to cope with care giving. Without uniform standards in place, four in ten workers get no paid sick leave and only half of working women get paid maternity leave – usually cobbled together from saved up sick leave and vacation.

Those with the highest pay are most likely to get paid leave benefits. They are also best able to afford the high cost of quality childcare, which can exceed college tuition – even though childcare teachers earn near-poverty wages.

Because women get paid less and have limited access to paid leave, families suffer bouts of economic insecurity. Staying home with the flu, or caring for a sick child or ailing parent too often means loss of needed income. Women go back to work before they’ve fully recovered from childbirth or established breastfeeding. They accumulate less for retirement and can’t save for their children’s education.

If women received fair pay and had access to paid sick days and to paid family and medical leave, kids would be healthier and better prepared for success in school and life. Fewer seniors would live in poverty. Local businesses would have more customers. Our communities and our democracy would be stronger.

Here’s my Mothers’ Day wish list for Washington’s women:

  • Fair pay. Discussing compensation with coworkers should not be a fire-able offense. Employers should have to justify pay differences on some basis other than sex or race.
  • Paid Sick Days. We know that Seattle’s sick leave law has extended paid leave to tens of thousands, while the city’s economy has grown faster than the rest of the state. According to the latest UW study, 70% of Seattle business owners support the law. It’s time to take it statewide.
  • Family and Medical Leave Insurance. Five states already have programs. Women in these states take longer maternity leaves, suffer fewer health complications, are more likely to breastfeed and take their babies to medical checkups. They are less likely to go on public assistance and more likely to be working and earning higher wages a year after giving birth. Let’s pass Washington’s FAMLI Act  in 2015.

We won’t get these done by Mother’s Day – but if everyone passes this list on to their state legislators and candidates, we can give them to our moms and ourselves for next Valentine’s Day.

Marilyn Watkins is policy director of the Economic Opportunity Institute, a nonpartisan policy center  focused on building and economy that works for everyone.

A Pragmatic Approach To A Fair Minimum Wage

by Marilyn Watkins

People who toil away at jobs we all depend on shouldn’t live in poverty. But would a $15 minimum wage work in Seattle?

Here’s a look past the rhetoric at what the research shows.

Washington’s minimum wage of $9.32 isn’t enough to cover the basics. Affording a one-bedroom apartment in King County required working full-time at $17.54 an hour in 2013, according to a study by the Washington Low Income Housing Alliance and the Department of Commerce. But tens of thousands of local workers in fast food, restaurants, retail, childcare, hotels, and other common occupations, typically earn less than $12.50.

The average cost of a one-bedroom shot up 55% in the past 4 years within a 10 mile radius of Seattle, a period when inflation – and the state minimum wage, rose just 7.5%.

Inequality has been on the rise for three decades, and it is causing economic instability and job-killing recessions. If minimum wage had kept pace with productivity gains over that period it would now be above $16. Since the start of the recession in 2008, corporate profits have climbed steadily, but the share of our national economy going to workers wages has declined, with more of total wages going to CEOS, hedge fund managers, and software engineers – and less to everybody else.

We need to do something about low wages. But, will raising the minimum wage to $15 force businesses to cut jobs and in some cases close altogether as opponents contend?

Twenty-one states now have minimum wages above the federal level. We have lots of data to test the theory that raising the minimum wage decreases hiring.

The most recent, economically sophisticated studies that actually use all these data have concluded that all the minimum wage increases of the past 25 years had no significant impact on jobs. The increases did raise monthly incomes for low-wage workers and decrease turn over.

When workers stay in their jobs longer, employers have lower hiring and training costs, and productivity increases. This helps explain why employers can pay higher wages without cutting jobs.

Other cities have set their own minimum wages. In the fall of 2013, Washington, DC and two Maryland counties acted to raise their minimum wages in steps, to reach $11.50 by 2016 or 2017. San Francisco’s minimum wage is $10.74, and the city also requires businesses to provide paid sick days and health insurance. A study just out from UC Berkeley concludes that employers made the adjustment to higher workplace standards without cutting jobs, in some cases modestly raising prices along with enjoying the benefits of less turnover and higher productivity.

The minimum wage increases in these studies were all less than the 60% raise that jumping straight to $15 would be. We don’t actually know what would happen with a quick increase of that scale. It’s not just the corporate fat cats who are worried, but owners of some local shops and restaurants operating on small margins, and childcare centers and social service agencies who don’t have the option of raising prices.

Taking all the data into account, here are my recommendations:

  1. Move to $15 in several steps. Workers need more in their pockets immediately, but a gradual increase gives small business owners time to adjust.

  2. Keep it universal. Some have suggested a small business exemption, and the Restaurant Association is clamoring for tip credits, or worse, “total compensation” (that means counting all benefits – health insurance, sick leave, meals – toward the minimum wage). All workers deserve a living wage. Employees shouldn’t have to rely on the whims of customers’ voluntary contributions. We hear anecdotally about bartenders and waiters at trendy nightspots who earn $40,000 to $70,000 a year. Well, why shouldn’t they? Their employers are bringing in plenty, and well-heeled customers buying $13 cocktails and laying down big tips would pay higher menu prices, too. But the truth is, most tipped workers are serving customers with modest incomes, often work part-time hours and slow shifts. Allowing employers to deduct not only tips but the “cost” of benefits, including every cup of coffee and bathroom break, provides new opportunities for wage theft and could result in some people seeing their paycheck go down.

Low wage workers are all ages. Some support families, or are trying to put themselves through school in the face of skyrocketing tuition. Others are college grads forced to move back in with mom because they can’t afford rent.

Low wages do not induce businesses to hire more workers – more customers do. So let’s go ahead and give Seattle a raise.

Marilyn Watkins is policy director of the Economic Opportunity Institute, a nonpartisan policy center  focused on building and economy that works for everyone.

Getting Educated on Education

by Marilyn Watkins

As divided as Americans seem to be about the role of government, we’re pretty united around the notion that quality public education should be accessible to all. Businesses and our economy can’t operate without an educated workforce – and educated customers. Democracy itself depends on citizens who can reason and understand the issues they vote on.

Our state constitution says it is the paramount duty of state government to provide amply for the education of all children in the state. But state funding now doesn’t cover the basics of the K-12 system, let alone the early learning and higher education necessary to assure that all kids are equipped to succeed in the 21st century. Two years ago, the State Supreme Court ruled in the McCleary decision that the state was failing in its constitutional duty.

The problem is not that the average Washington resident is contributing too few tax dollars to adequately support education. It’s that the average Microsoft millionaire, his wealthy neighbors, and corporate shareholders are contributing way too little.

Washington has ambitious goals to increase student achievement, including funding full-day kindergarten, reducing class size, and increasing hours and requirements in high school. Those things all cost money. Last year, the legislature allocated an additional $1 billion to K-12 in the two-year budget . But that was after four years of recession-driven cuts, when school funding got slashed along with everything else. Now the Court has decreed we need to fund school improvements more quickly.

Of course, the real issue isn’t what the court says, it’s our kids. It’s our responsibility as the grownups to provide them with the tools for a promising future.

Governor Inslee has proposed raising more money for K-12 by closing some tax breaks, including those enjoyed by oil companies, the bottled water industry, and out-of-state residents. But closing tax breaks won’t come close to raising enough money. Funding education reform can’t come out of the rest of the state budget either, which was cut to the bone during the recession, and includes the early learning, higher education, and social services that also need to be expanded if we are serious about giving every child real opportunity.

Washington’s problems in funding education began long before the recession and McCleary. Back in 1992, we ranked 17th among the states nationally in per pupil funding. By 2012 we were down to 30th. If we measure level of school support against the personal income of state residents, we’re 44th.

Washington is falling behind because we depend on sales taxes for half our state budget. We tax most heavily the people who have to spend all their income – those who can least afford it. Rich people buy more expensive stuff, but they don’t spend most of their money. On top of that, over the last several decades, our economy has shifted away from the stuff we tax and onto services which we generally don’t tax.

Plus big corporations like Microsoft and Boeing keep demanding more tax breaks at the same time they complain the state isn’t investing enough in education and infrastructure.

Almost every other state has a state income tax that assures that rich people pay their fair share for the benefits of living in a society where they could acquire their wealth and enjoy it.

Until we start requiring the wealthiest to pay their fair share of taxes, we won’t be able to fund the education system our kids deserve.

Here’s a 3-step path to funding the education we should have by 2018:

  1. 2014 – Pass the Governor’s package of tax break closures.

  2. 2015 – Pass a capital gains tax that excludes primary residences and retirement savings (this means it will mostly be paid by the wealthiest).

  3. 2017 – Pass a progressive state income tax while lowering the sales tax, with the increased revenue devoted to education, from preschool through higher education.

Getting our fractured legislature to agree to even closing tax breaks this year will be tough. Right now most legislators believe that they can’t adequately fund education no matter what the constitution and courts say, because voters won’t support changing our state tax system.

Earlier this month, voters across the region approved a host of local school levies, agreeing again to raise their own taxes to invest more in their community schools. We do want a great education system for all our kids. It’s time to give our legislators the tools to fund it.

Marilyn Watkins is policy director of the Economic Opportunity Institute, a nonpartisan policy center  focused on building and economy that works for everyone.