Seattle’s $15 minimum-wage law has received plenty of attention from those on both sides of the issue. What has received less attention is the way in which this ordinance distinguishes between businesses — and discriminates against interstate commerce.
The ordinance separates employers into two categories, those with 500 or more employees (Schedule One) and those with fewer (Schedule Two), and mandates that the first category implement wage increases more quickly than the second. But the law creates a special rule for Seattle franchises, placing them into the first category if the total number of employees in the franchise network is 500 or more.
A group of franchise owners, led by the International Franchise Association, challenged the ordinance, to no success in the lower courts. Cato is now supporting their petition to the Supreme Court. Seattle insists that this categorization is neutral as between in-state and interstate commerce, because a franchise network could be entirely within Washington. The reality is that all Seattle franchises that are in Schedule One have either an out-of-state franchisor or are associated with out-of-state franchises of the same brand. The law thus discriminates against interstate commerce in precisely the way the Commerce Clause was intended to prevent.
When the delegates met in Philadelphia in 1787 to revise the Articles of Confederation, one of their main concerns was the protectionism the states exhibited under the Articles. As James Madison said at the time, “Most of our political evils may be traced to our commercial ones.” The Constitutional Convention debated many things between May and September 1787, but there seems to have been general agreement that the new Constitution would give Congress power to regulate — “make regular” — interstate commerce.