McGee Air Services, which handles bags for Alaska Airlines at Sea-Tac, pays new hires just less than the minimum wage. And cargo-ramp workers employed directly by the airline earn much less than that. Both are represented by the Machinists union. What’s going on?

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The City of SeaTac’s 2013 “living wage” ordinance included what looked like a straightforward requirement: a first-in-the-nation $15 minimum wage for all. At Seattle-Tacoma International Airport, that’s not exactly the way it’s panned out.

Yes, new employees serving hamburgers at the McDonald’s on the airport concourse start at the current minimum, by now bumped up by annual cost-of-living increases to $15.64 per hour. And in a victory for organized labor, which spearheaded the drive for the ordinance, many more workers are now unionized.

Alaska Airlines, which led a long, costly and unsuccessful fight against the living-wage measure, subsequently reversed its 2005 decision to outsource its baggage handling. Last May, it took the work back from nonunion vendor Menzies Aviation and gave the contract to an Alaska subsidiary, McGee Air Services, with employees represented by the Machinists union.

$15.64 per hour

What new employees make at McDonald’s at the airport. Cost-of-living increases bumped up the wage from the $15 minimum wage law passed in 2013.

$14.94 per hour

Starting wages for employees at McGee Air Services, a subsidiary of Alaska Airlines, who haul baggage on and off passenger planes. Members of the Machinists union.

$11.74 per hour

Starting wages for ramp workers who load and unload Alaska’s fleet of freighter jets and employed by the airline. A different bargaining unit of the Machinists union.

But that’s where things get confusing.

On a recent tour of the Sea-Tac ramp, McGee baggage handler Brenden Williams, 25, said he’s happy with the change of employers and described himself and his workmates as “the backbone of the company,” performing the heavy physical work outdoors in all weathers.

Yet even though Menzies had been paying the minimum wage when it lost Alaska’s baggage-handling contract, McGee today pays Williams and the other workers that it inherited 20 cents below the current minimum wage. And it advertises new jobs starting even lower, at $14.94 per hour.

Most surprising, workers employed by Alaska Airlines who load and unload cargo jets rather than passenger planes, start at $11.74 per hour — nearly $4 below the hourly rate stipulated in the law.

What’s going on?

Counterintuitively, the reason McGee can legally pay less is that its workforce is represented by the International Association of Machinists (IAM).

The ordinance has an exemption that specifically allows a union collective-bargaining agreement to waive the law.

The Machinists union did just that in its contract with McGee.

(There’s no such provision in the city of Seattle’s $15 minimum-wage law, but it’s common in other living-wage ordinances, including those governing some other airports where Alaska operates.)

The direct jobs at Alaska Airlines that pay much lower wages than McGee are a result of another glaring exemption in the ordinance: It specifically exempts airlines, which are not required to pay direct employees the minimum wage.

Labor leader David Rolf, president of SEIU 775 and prominent in pushing the SeaTac initiative, in an interview declared himself “not a fan” of the union exemption — even though he understands that it allows flexibility in labor negotiations that can be useful.

“I’m a skeptic of collective-bargaining exemptions,” Rolf said. “They often invite game-playing.”

Rep. Adam Smith, D-Bellevue, whose congressional district includes the airport and whose father was a baggage handler for United Airlines, in an interview questioned both exemptions in the living-wage ordinance.

“It ought to apply across the board,” Smith said.

An industrious netherworld

For the traveler, Sea-Tac Airport presents a shiny front, its crowded spaces airy, light-filled and adorned with eye-catching art.

But walk through a door with an employee badge into the bowels of the operation, to the airplane side of those familiar baggage carousels, and you enter a grimy, industrious netherworld where the concrete floors and walls are scuffed and blackened.

In a dark underground space, an army of workers in neon-yellow outerwear hustles to deliver on time an endless stream of bags on the conveyor belts connected to the carousels.

Walk toward the light at one end and you reach the outdoor ramp area where airplanes park at the gates to load and unload.

In cold or heat, rain or snow, early morning or late at night, workers tend the airplanes, loading the bags onto trolleys that ferry back and forth between the jets and the conveyors.

“It’s hard work, especially in winter,” said Isaiah Syph, 26.

A McGee supervisor, Travis Berry, 27, said quite a few new hires find it tougher than anticipated. “A lot of people can’t handle it,” he said.

For those that stay, McGee offers opportunities for promotion.

Reggie Glass, 30, a particularly enterprising worker who joined Menzies in 2016, is now a supervisor with McGee earning just over $20 per hour.

That’s in addition to his second job as a ramp worker with cargo carrier FedEx at the other side of the airport, earning $16 per hour — which means a grueling double shift a couple of days a week, 1 p.m. to midnight with McGee, then 2:30 a.m. to 6:30 a.m. with FedEx.

McGee’s 800 front-line employees at Sea-Tac, plus 85 back-office staff and managers, play a vital role in the efficiency and profitability of Alaska’s operation.

The airline offers passengers a 20-minute bag-delivery guarantee. It depends on the baggage handlers to unload and load swiftly to reduce time on the ground and allow quick airplane turnarounds.

Airline workers exempted

This world was jolted by the 2013 city of SeaTac living-wage campaign. Labor unions supporting the ordinance contributed more than $1.6 million, while business interests contributed almost $673,000 in opposition, including almost $168,000 from Alaska Airlines.

After the measure won, Alaska was among several businesses that sued to block implementation of the ordinance at the airport.

In 2015, the state Supreme Court finally rejected that effort. Airport vendors that had held out and not paid the minimum wage were eventually compelled by lawsuits to pay back wages.

In a settlement last year, Menzies agreed to pay $8.2 million, with its Sea-Tac workers getting an average of about $10,000 in back pay.

Yet the ordinance contained those two important exemptions.

The first was for the airlines.

Lawyers advising the unions that pushed the initiative thought exempting direct airline employees was necessary to avoid a federal court challenge, because under the Railway Labor Act a city cannot regulate the pay of a group of employees spanning multiple sites around the U.S.

This exemption allows Alaska to pay a starting wage of $11.74 an hour to about 75 ramp workers who load and unload the airline’s small fleet of freighter jets and are directly employed by the airline.

Justifying that rock-bottom starting wage, Alaska points to its incentive bonuses and extra benefits, including a health-care plan.

Yet the items directly affecting take-home pay, including bonuses and paid time off and assuming the employee works every holiday to get the overtime pay, still would bring the wage for the first year up to only $14.34 per hour.

The second exemption from SeaTac’s wage law is for unions.

If a company’s workforce is unionized and the company negotiates a waiver, it needn’t pay the minimum wage — which is how McGee’s low starting pay is legal.

Two months after the court ruling that established airport workers were generally covered by the ordinance, Alaska Airlines reversed its outsourcing of the Sea-Tac baggage-handling.

The living-wage ordinance was a key factor.

McGee President Dean DuVall, a former manager of station operations at Alaska Airlines responsible for wrangling vendors, said with minimum-wage laws at West Coast airports setting new higher pay levels, Alaska was left “paying more for a subpar product.”

He successfully argued that bringing the work in-house would offer Alaska more control.

“The goal was to create something competitive but with a culture where Alaska didn’t have to worry about consistent performance,” DuVall said.

He launched the McGee subsidiary in March 2016, starting with Alaska contracts at Phoenix airport, followed by San Jose, Portland, then Sea-Tac and San Francisco, and now employs about 1,700 people companywide.

The IAM contract also waives the minimum-wage ordinances in San Jose and San Francisco.

When McGee took over Alaska’s baggage-handling at Sea-Tac, both union and management hailed it as a breakthrough for workers.

Yet with the IAM contract ensuring McGee is not bound by the living-wage ordinance, 10 months later, the base pay of those who formerly worked at Menzies now slightly lags the minimum wage.

Better benefits

The union leadership and McGee’s management insist the guaranteed wage increases built into the union contract mean those workers will soon catch up and then surpass the minimum wage, and that the benefits included ensure they are better off than nonworkers.

DuVall said that to hold on to workers and ensure Alaska gets consistent performance, treating his workforce better than at competitors like Menzies is an essential element of his strategy.

“I have to watch my costs. We have to compete with these other vendors,” DuVall said. “But the pay is competitive and the benefits are good.”

“I’m proud of what we’ve done,” he added. “I feel we’re at the front line of a social issue that puts us in a good place.”

For the union, waiving the ordinance allows flexibility in contract talks — for instance, giving up a little in base pay in return for better health-care coverage.

James Carlson, the IAM’s assistant airline coordinator, ticked off the benefits in his union’s contract.

These include $80 a month paid for their airport parking, double time paid for working holidays, incentive bonuses for good performance, a cost of living increase based on a higher index than the one used for the minimum-wage ordinance — plus, a much better air-travel benefit than Menzies offered, providing essentially free flights on Alaska routes.

The union says that after one year at McGee, an employee’s pay — the base amount, plus holiday pay, paid parking, and cost of living increases, with subtraction of monthly union dues of $28 — is equivalent to an hourly rate of $16.51.

That doesn’t include potential incentive bonuses and the value of the health-care plan.

“The increases going forward will eclipse the minimum wage,” Carlson said.

Will all boats rise?

Despite the low base starting pay, it appears that the SeaTac ordinance has elevated the position of the McGee workforce. On a tour of the operation, supervisor Reggie Glass said the lag in starting compensation isn’t so important.

“If I get as much as everyone else after a year and I get all these benefits and I’m given an opportunity to move up, I’m game,” he said. “Where do I sign?”

Jennifer Brown, 32, hired in November and earning only the starting rate of $14.94 per hour, said the low base pay is “a little frustrating.”

“It would be nice to get a little more,” she said. “But we get a lot of benefits the rest of the airport doesn’t get.”

“The flight benefits alone are worth it,” she added, mentioning trips she’s already taken with flights to L.A. and Denver.

In contrast, the SeaTac ordinance has so far had zero impact on the wages of the cargo-ramp staff employed by Alaska Airlines, also represented by the Machinists union.

However, it may soon do so.

The current low-pay IAM contract for the Alaska ramp workers was ratified in 2014. A new contract is due and the sharp increase in the prevailing wage at other businesses at the airport is a factor in the labor talks.

To hire workers, Alaska will have to keep up with McDonald’s.

“We are currently in negotiations,” Carlson said. “We are looking to raise the wages substantially.”