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Seattle faces an economic time bomb with minimum wage, rising cost of living

Washington state is one of the most reliable Democratic states in the nation. Having gone blue for the last 30 years, there is little risk of this state flipping anytime soon. But the state is divided for the most part into eastern and western halves — the western part being more populous and more liberal than the relatively conservative east.

At the heart of the liberal stronghold of Western Washington is Seattle. Long a beacon for progressive thought and ideals, The Emerald City has been a center for tech and industry for more than a century. Boeing in particular was tied to the fortunes of the city, for better or worse, as evidenced by the economic downturn Seattle took following the Vietnam War as demand for war machines went down.

Since then, the economy has diversified quite a bit, with major companies such as Starbucks, Capital One, Safeco and tons of tech companies like Amazon, Zillow, and Microsoft holding headquarters in or around the area. This has led the metro area to being one of the most prosperous and thriving in the nation, with growth leaving the city bursting at the seams.

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Amazon Tower

All of this growth has led to a housing and cost of living crisis in the city. Poorer people are being forced out, and homelessness is on the rise. One of the proposed solutions was to raise the minimum wage in the city to $15 — after all, if people have more income than they can afford more of life’s necessities, right?

Unfortunately, economics doesn’t work that way. In fact, it has had the exact opposite effect as average wages in the city have actually gone down since the wage increase. Businesses unready for the increase in the cost of doing business had to pass the expenses on or go out of business. This has led to an increase in prices for many goods and services, lower hiring rates, and people with wages of $19/hour and less having hours cut.

The worst part is that most of these cuts are occurring before the incremental increases are even completed. The state’s increase to $13.50 isn’t scheduled to be finalized until 2020, and Seattle’s is currently below that at $13, scheduled to go to $15 by the end of the decade as well. In the meantime, jobs have been lost, businesses shuttered, and the cost of goods, services, and housing have all continued to rise.

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The view of the Space Needle and Mount Rainier

All of this points to a possible economic time bomb in Seattle. While the incredibly diverse economy may help keep the city from going the way of Detroit, bankrupt and empty, it may still lead to a major employment and homelessness crisis the likes of which haven’t been seen since the Boeing Bust of the 1970s. During this time, unemployment was nearly 15 percent in the city, and housing vacancy ballooned to 17 percent.

While that may seem impossible right now — Seattle’s housing market has been the hottest in the nation for eight straight months at the time of this writing — all it takes is one big hit for the dominos to start falling. The minimum wage law appears to have been the first shove toward this collapse, but a major tech downturn could be devastating.

The upcoming mayoral race promises to bring the debate back to the fore, as current mayor Ed Murray is adamant about standing behind the increases. He believes that the effects are overstated and that the market will adjust to the new reality, even if it means a few bumps along the way.

Other issues that appear poised to make the race one to watch are centered around homelessness and drug use. Washington was one of the first two states to legalize marijuana statewide, and opioid abuse among the homeless is also becoming a hot button topic.

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Seattle at dusk

Marijuana hasn’t quite led to the economic boom times in Washington as it has in Colorado — partially due to the much more diverse tech sector here and partially due to heavy regulation on it — but it has certainly helped boost jobs and business in the state. It has been met mostly with positive feedback, but a sizable enough portion of the population is still afraid of reefer madness.

The opioid crisis is a much different animal, however. Dirty needles and overdoses are costing dozens of lives and millions of dollars as addiction is still treated as a weakness in character rather than a disease. Proposals to create addiction centers and needle exchanges are starting to become less of a fringe option and more of a viable alternative for many — including mayoral candidate Jason Roberts who lost his brother to a heroin overdose.

In the meantime, most Seattleites are simply trying to keep afloat with the exponentially rising cost of living. One way or another, something will have to change in the Emerald City or else the ticking economic time bomb will explode, leaving tens of thousands of people out of work, homeless, or worse.

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