Safeway Warns Seattle: New Employment Tax Could Turn Neighborhoods Into Food Deserts

A new employment tax proposed by the Seattle City Council would charge roughly $500 per employee based in the city. And though it would only apply to the city's largest companies, many of them are complaining to the press - some with good reason - about how the tax would discourage employment and ultimately damage the city's economy.

The tax would only apply to businesses earning $20 million in revenue within the city limits - a group that includes roughly 585 companies, about 3% of the total number operating in the city, according to CNNMoney.

Safeway

Businesses would be required to pay 26 cents per man hour per employee worked within the city limits, excluding vacation pay and sick time.

To what we imagine would be the delight of the Trump administration, Amazon would bear the brunt of the new tax. The e-commerce giant would be forced to contribute some $20 million annually on behalf of its nearly 45,000 employees in Seattle. Of course, Amazon will have a difficult time arguing that it can't afford the tax after it smashed expectations in its latest quarterly earnings report. And with the city facing an unemployment rate of 3.8%, even lower than the nationwide rate of 4.1%.

The city says it would use the money to build affordable housing and also provide emergency shelter services to at-risk and homeless individuals.

But Amazon told CNNMoney that it has a better plan to help the homeless.

Amazon, which declined to comment on the proposal, notes that it already contributes economically in many ways to Seattle. For example, it will provide a permanent location for a shelter in one of its new office buildings by 2020. It would be run by the nonprofit Mary's Place, which already had temporary use of two vacant Amazon buildings to shelter the homeless since 2016.

Starbucks did not respond to a request for comment.

Prosperous big businesses can in turn generate a lot of economic activity and revenue for their host city. And they may donate goods, services or money to critical social causes.

But the co-sponsors of the bill note that a major cause of homelessness is the higher cost of housing that results when more workers move to a city for jobs that pay more than long-time residents have been earning. And the demand to build affordable housing doesn't keep pace.

But city council members have apparently been ignoring pleas from Safeway, which operates 21 grocery stores in the city. The company said that if the tax is passed, it will be faced with a dilemma: Either raise prices or consider closing stores, according to Q13 Fox.

The tax would threaten stores that are in many cases the only resources in under-served neighborhoods - something that would turn those neighborhoods into food deserts.

It’s been billed as a tax on the rich, only levied on business with revenue of $20 million or more annually. But Safeway contends that the tax would end up hurting the city’s poorest families.

Currently, there are 19 Safeway stores and two Alberstons in the Seattle city limits. Albertsons is the parent company of Safeway.

In two communities, Rainier Beach and Othello, it is the only mainstream store in the area.

Chelle Jackson, the store director at the Safeway in Rainier Beach, told Fox that her store would likely be forced to close if the tax doesn't spare grocery stores.

"I grew up about five blocks up the street from here," said Jackson. "It’s the only store that’s survived the generations around here."

[...]

"It’s not about our company being in bad shape, it’s about losing stores in communities in Seattle who need them," said Osborne.

The problem is that while Safeway stores earn more than $20 million a year, their margins are razor-thin, so the tax would have a disproportionate impact.

On paper, Osborne confirms Safeway's Seattle stores bring more than over $20 million in revenue each year. But after expenses, Safeway says its Seattle locations end up with a small profit.

"The margins grocers operate within, they’re very, very small, almost razor thin," said Osborne.

If grocers aren’t exempted, and Safeway decides not to close stores, Osborne said the other option Safeway has is to raise prices. Jackson said that would be devastating to her customers.

"It would mean they couldn’t get all the things they want on their shopping list, or they would have to cut back, and it might mean that kids don’t get to take lunch to school," said Jackson.

Safeway has offered to let the city council review its stores' financials, but apparently the offer hasn't been accepted.

Safeway said if the council wants proof, they’ll gladly share their slim margins behind closed doors.

"We’re happy to share those numbers so the council members can see how close we are in some communities to it not being worthwhile in some communities to operate," said Osborne. "We want them to believe us."

Safeway wants to make it clear they believe building affordable housing and addressing the homeless crisis is an important cause they support, but in their opinion this tax isn’t the way to go.

"What we’re trying to point out is that we are addressing an affordability crisis, but we can’t address that by making food less affordable," said Osborne.

Of course, many alternatives to the progressive employment tax have been offered by firms who (correctly) point out that the city council's plan would do little to improve housing affordability and instead lead to a range of adverse consequences for workers and companies. Firms could be forced to cut pay or raise prices, which would hurt Seattle residents among every rung of the economic spectrum.

But then again, this is the same legislative body that crushed the poor and minority workers in particular by adopting a $15 minimum wage in the city.

Comments

bob_dole FireBrander Tue, 05/01/2018 - 00:23 Permalink

Hate to break it to you fellow goyim but all this does is hurt Amazon a tiny bit and crush the majority of the competition underneath it. Same shit WalMart pulled in the 90s to a T. Lower the prices as much as you can so no one can match you, stores go out of business, you trade the temporary financial loss to have a monopoly down the road and slowly increase the prices to a point where they are much higher then before. Trump is probably advertising for Amazon the way CNN was advertising for Trumps campaign btw, talking about a subject nonstop in a negative way is still promoting it.

In reply to by FireBrander

HedgeJunkie CheapBastard Tue, 05/01/2018 - 03:17 Permalink

Let's say a $20 million company generates 2% profit.  It's just skimming by.

$20,000,0000 x .02 = $400,000.

Most in that range have about 100 employees, give or take.

100 x $500 = $50,000.

Now the net profit is $350,000, 1.75% that's a 12.5% reduction in profit.

I can see their concerns on cash flow and sustainability.  Particularly with demands to raise wages.

In reply to by CheapBastard

strannick bigkahuna Tue, 05/01/2018 - 07:35 Permalink

"Seattle says the tax revenue will be used to build affordable housing".

-that sentance is key to the whole riduculous argument.

"tax revenue will be used to increase pay to politically alligned bureaucrats and  key constituencies..while building some over priced government delivered services that will promote a progressivist liberalist agenda , before degenerating into ghettos"

In reply to by bigkahuna

DPLETTENBERG El Vaquero Tue, 05/01/2018 - 09:41 Permalink

Yout are right about taxes to get less of something and subsidizing to get more. So Seattle taxes successful businesses to pay for homeless housing.

I wonder what the results will be.

The only reason this is a popular issue is that the homeless are currently camping out under expressways and downtown near Market Place  and they are way to visible. The city needs to make them less visible. 

In reply to by El Vaquero

JuliaS Lost in translation Tue, 05/01/2018 - 02:22 Permalink

Drive around Seattle. It's already a desert. Dead shopping malls on the outskirts. Empty parking lots. It all went downhill after 2008 and been sliding steadily. City centre is buzzing, but the rust is creeping in from every direction. At least the roads are relatively well maintained and somebody keeps hauling all the wrecks off I-5. I love driving up and down, watching skidmarks, imagining what must've taken place before I got there. There was one, where the tracks went into a concrete wall and then 8 feet straight up... kinda like the stock market.

In reply to by Lost in translation

JuliaS DaveA Tue, 05/01/2018 - 02:51 Permalink

Yes. And there is a couple of tricky bends in the road where the turning radius decreases. So what happens is if one gets into such a turn at high speed, centripetal force adds to acceleration. The driver tries to decelerate and it sends his tail swinging. If it's an SUV, it flips and bounces around like a pinball, hitting other vehicles. Some of the concrete dividers around Seattle are so banged up, they look like The Walls of Kabul. The problem is that I-5 is a popular route going into Canada, so many drivers going in either direction don't know the layout. They think it's just a run of the mill highway. It isn't.

In reply to by DaveA

Heros Gen. Ripper Tue, 05/01/2018 - 03:26 Permalink

This US coastal malaise has been building for decades.  It is a result of the deep mind control Americans have been bombarded with ever since WWI.

The problem here is Americans.  They really suck.  Sure, there is a superficial friendliness, but that is likely the result of all the legal and illegal meds. 

Scratch below the surface, and Americans are incredibly ignorant.  The vast majority of them not only believe every single one the lies they and their predecessors have been told, they actually think that anyone who doesn't believe the same bullshit is stupid or a conspiracy idiot.

The US has become infected with mass delusions and Americans can no longer discern the truth.

In reply to by Gen. Ripper

HRH of Aquitaine 2.0 Mon, 04/30/2018 - 23:41 Permalink

An employment tax of $500 per employee? Fucking socialists have ruined Seattle. Flush it. Not everyone can be a city employee. Seattle just signed it's death warrant. Buh-bye!

The city already has emergency shelters. In fact, the one I volunteered at while I was a student (twenty years ago) now has several properties, including a property where alcohol use is allowed (I know, that is a new one for me, too). Yes, of course they have a wiki page, here's the link: https://en.m.wikipedia.org/wiki/Downtown_Emergency_Service_Center

BarkingCat Herodotus Mon, 04/30/2018 - 23:57 Permalink

It won't be that because of demographics but these people in Seattle government are extremely ignorant. ....and arrogant.

Extreme arrogance is very common in Seattle.

When I was being recruited for a job here, the recruiter was telling me how awesome the city was.

He started telling me about the great universities like University of Washington and there was this really snobbish tone in his voice, ..........so I responded with "you know that I am from Massachusetts,  right? Perhaps you have heard of Harvard and MIT".

LOL... he did not bring up great universities again....and yes, people from Massachusetts can be major assholes.

In reply to by Herodotus

Quantify Mon, 04/30/2018 - 23:43 Permalink

Sounds like a great idea to me. The sooner the liberals kill off jobs in their areas the sooner people can start hunting and killing them and resorting to cannibalism. How else are they going to eat?