It's one of the hottest topics, particularly in Seattle: income inequality. And many of Seattle’s movers and shakers — city council members, lawyers, professors and leaders of the non-profit sector — filled a discussion room last week for a forum on inequality and public policy put together by Northeastern University's Seattle Graduate Campus.
Northeastern dean Tayloe Washburn said the aims were to identify solutions, start a regional conversation and build a coalition. The three panel members came from differing backgrounds — Carrie Cihak, chief of policy developer for King County Executive Dow Constantine; Ivar's restaurants president Bob Donegan; and labor leader David Freiboth. Cihak began the discussion with a slide show demonstrating income by race and place.
So, what did they come up with in the way of answers at a time when the region and the country are trying to deal with the growing income gaps? At least four themes emerged.
Takeaway #1: There is a 10-year difference between the local zip code with the highest life expectancy and the zip code with the lowest.
The zip codes with a lower life expectancy were located in South Seattle. A higher life expectancy was found in cities like Bellevue or Mercer Island. “These differences are systematic,” Cihak said. “They aren’t differences that are just random.”
Cihak also showed that a median income for whites was twice as much as African American’s income level. African American’s make an average of $38,700 a year in comparison to the white population that rack in an average of $74,700 a year.
“One of the key challenges for local government is the rapid suburbanization of poverty that is occurring throughout the region,” Cihak said. “The way our institutions, funding mechanisms and government systems are set up — they aren’t designed to deal with these issues.”
Takeaway #2: Education is one key for a long-term solution.
Donegan pointed out that more than 25 percent of kids in Seattle Public Schools don’t finish high school and those are the people usually assigned low-wage jobs. He discussed three programs that are working and need to be used on a larger scale.
Out of 13 public high schools and several private high schools in Seattle, he said, only one school has a shop class — Rainier Beach High School, and all 20 kids are on a high capacity trajectory for jobs. “They aren’t building shoe polish boxes, they are learning how to program CNC machines [used in computerized manufacturing and design] and we should have a shop class in every school in Seattle,” Donegan said.
Seattle’s harbor is another place Donegan said we should look to for jobs and training. The harbor catches and sells more fish than the other 49 states combined. A program created by Vigor Shipyards teaches young people skills in the shipyard like welding, plumbing, pipefitting and electrical. Another program is called Bankworks, which was created by Les Biller, the vice chairman of Wells Fargo. It teaches the homeless how to work in a bank with 160 hours of training. By the end of the program every person has a job as a teller or personal banker.
“Programs that are focused on education take people outside our system and put them on the college track and get them good-paying jobs,” Donegan said.
Cihak said that, most importantly, investments in early childhood education would help to narrow the gap.
“We need to make education attainable to everyone,” she said. “Investments in early childhood education are a game-changer. They have a return on investment of $7 for every $1 invested.”
Takeaway #3: Education isn’t the only answer — even if that’s what we hear.
Freiboth told a story about his nephew, John, who graduated as a C student a few years ago. Freiboth found John an apprenticeship and called his sister who said, “John is going to college, he is getting his education.” John lasted a year and a half in community college and joined the Army. Now he is back and getting retrained for the rest of his life.
“This isn’t K-12’s fault,” said Freiboth, executive secretary of the MLK County Labor Council. “It isn’t about the individual institutions; K-12 is responding to parental demand.” He said parents don’t want their kids in a shop class because they don’t want them to be trapped in blue-collar, low-wage jobs. They want their child to be college ready.
“This is how effective the messaging [in the media] is,” Freiboth said. “I don’t think education is the answer, I think it is one of the answers.”
So what is the answer? Freiboth said the message that vocational training is a good alternative to school has to reach the community. “How do we effect change if we can’t get the message out that there is a good life to be had in craft?”
Takeaway #4: Churn and instability don’t have to be accepted as normal for workers or companies.
Both Donegan and Freiboth agreed that business models are important in bridging the income gap. If you treat your employee well — with benefits, a 401k and higher wages — they are going to stick around.
When Donegan became president at Ivar’s, the turnover rate of employees was in excess of 500 percent per year (the typical restaurant’s turnover rate is 100 to 400 percent). He found that it cost $2,040 to hire and train an employee.
“Why not take that $2,040 and give the money back to them?” Donegan said. “Everyone who works for us has full benefits and every dollar put into the 401k is matched with 50 cents on top of it.”
This has resulted in higher quality employees and Ivar’s turnover rate is 51 percent among staff. Just last month, seven employees had anniversaries in excess of 30 years.
Freiboth said for finance guys, the turnover rate isn’t their problem because they are concerned with profit. He used the Costco model as an example: They give up potential short-term earnings to have a stable workforce and consistent profits.
