Newsletter — September 28, 2023

POLICY

• L&I Proposes 4.9% increase in workers compensation rates
• $42 million recovered from fraudulent unemployment claims
• Seattle City Council passes legislation to criminalize public drug use and possession

FEDERAL ISSUES

• Survey finds nearly two-thirds of voters support credit card swipe fee reform

ECONOMY

• Back-to-school spending helps lift August retail sales
• Projected Halloween spending to reach record high of $12.2 billion

ON THE LOCAL FRONT

• Seattle business leaders shine a bright light on the City’s spending problem
• WR board chairman awarded Target promotion
• Tacoma Mall transforming into a vibrant “Lifestyle Village”
• Lowe’s Foundation grants $750,000 to boost Seattle Colleges’ Wood Technology Center

RETAIL THEFT & PUBLIC SAFETY

• Target closes two Seattle stores amid rising safety concerns
• WR sponsors crime prevention conference

TRENDS

• Artificial Intelligence — a workforce threat or solution?

SAFETY

• Is your safety bulletin board up to date?

L&I Proposes 4.9% increase in workers compensation rates

Washington’s Department of Labor and Industries (L&I) is proposing a 4.9% average increase in the hourly rate that workers and employers will pay for worker’s compensation insurance in 2024. If adopted, the new rates will take effect on January 1, 2024. The new rates will add an average of $65 per year to the cost of workers’ compensation. Employers pay about 75% of workers’ compensation premiums, and workers pay about 25% of the premium.

L&I cites that the increase does not cover all the added costs for coverage that have been driven primarily by higher-than-normal increases in the state’s average wage in recent years. The state’s average wage increased during the pandemic.

According to L&I, average rates would need to increase by about 10% to cover new claims in 2024; however, the Department is proposing to use earnings from the worker's compensation reserve accounts to assist in meeting anticipated costs and avoid larger increases in premium rates.

Finally, the proposal reflects an overall average rate increase across all sectors of business in the workers’ compensation system. Individual sector rates will vary depending on their claims experience and sector performance in recent years.

Public hearings on the proposed rates are scheduled on October 26, 27, and 31 at locations around the state, with virtual options available. The public comment period ends on October 31. For details on hearing locations and public comment options, see 23-25 (wa.gov).

$42 million recovered from fraudulent unemployment claims

An innovative legal effort has enabled Washington to recover $42 million originally paid out in fraudulent unemployment claims during the COVID-19 pandemic, state Attorney General Bob Ferguson announced Thursday.

Ferguson said 26 banks, credit unions and other financial institutions across the country cooperated with investigative efforts by his office to locate and return funds deposited by scammers who obtained state and federal unemployment benefits by fraudulent means.

“Our innovative use of the law to recover stolen funds led the nation. We delivered results for taxpayers and unemployed Washingtonians,” Ferguson said in a press statement.

Beginning in April 2020, soon after the pandemic led to business closures and laid-off workers, Washington’s unemployment insurance program was one of the first to suffer “an unprecedented and massive nationwide attack of imposter fraud,” the attorney general’s office said.

Using identity data harvested from breached sources, sophisticated fraud rings stole billions of dollars from 53 government programs that received federal pandemic unemployment benefits, according to a recent government accountability report.

“While the exact extent of the fraud is still unknown, the same report estimated losses to fraud nationally to be as much as $135 billion,” Ferguson’s office said.

Soon after the thefts, in collaboration with Washington’s Employment Security Department, the AG’s Office initiated a search for stolen monies that criminals were unable to withdraw from accounts at banks and other financial institutions, then used the state’s asset forfeiture powers to recover a portion of those taxpayer dollars.

“The Attorney General’s Office will continue to assist in federal investigations to recover stolen funds, as well as investigate any liability of banks and financial technology companies for Washington’s losses,” the press statement said.

Read the entire article here

Seattle City Council passes legislation to criminalize public drug use and possession

After narrowly rejecting a similar bill in June, the Seattle City Council approved legislation last week that criminalizes the public use and possession of illicit drugs. This legislation brings Seattle into alignment with the drug criminalization legislation passed during the State Legislature’s May special session.

Originally proposed by Councilmembers Sara Nelson and Alex Pedersen and Seattle City Attorney Ann Davison, this legislation was necessary to give the City Attorney the legal authority to prosecute drug crimes. The legislation that passed the Council included stronger provisions to ensure that diversion from prosecution to treatment is offered to drug offenders. The Mayor also pledged $27 million for added treatment services. Councilmembers Lisa Herbold and Andrew Lewis voted against the original legislation but for the revised bill, which passed by a 6-3 margin.

WR commends the Seattle City Council for passing this important legislation.

Survey finds nearly two-thirds of voters support credit card swipe fee reform

According to the Merchants Payments Coalition, nearly two-thirds of likely voters support credit card swipe fee reform, according to a new survey released last week by the Merchants Payments Coalition.

“These numbers show that bringing competition to out-of-control swipe fees is a priority for consumers, not just merchants,” MPC Executive Committee member and National Association of Convenience Stores General Counsel Doug Kantor said. “Consumers are increasingly aware that swipe fees drive up the prices of everything they buy and are going nowhere but up. They want Congress to stand up against global credit card networks and Wall Street banks and put American families first. Regardless of political affiliation or age, consumers want lawmakers to pass the Credit Card Competition Act.”

Visa and Mastercard plan to increase swipe fees for small businesses by over $500 million starting in October. That’s on top of last year’s $160.7 billion. Excessive credit card swipe fees already cost the average family over $1,000 annually in higher prices. Increasing these unfair fees will only drive prices higher.

The survey of nearly 1,000 U.S. adults was conducted by Pierpont Consulting & Analytics LLC September 5-11 and found that 65 percent of those interviewed support swipe fee reform. Decisive support was seen across party lines, including 69 percent of Democrats, 66 percent of independents, and 60 percent of Republicans, along with 67 percent of those 35 and older and 56 percent of those who are younger. Only 27% of likely voters oppose reform.

Last week, anticipation was high for a vote on the Credit Card Competition Act, a bill sponsored by Senator Dick Durbin (D-IL) and Senator Roger Marshall (R-KS). The two hoped to introduce it as an amendment to a collection of funding bills termed the “minibus.” Yet, disagreements over spending in the Senate led to a pause on the appropriations package. Consequently, with no active bill in the Senate, the opportunity to introduce the swipe fee bill as an amendment was lost.

Please take a moment to send a message to your lawmakers and tell them to support the Credit Card Competition Act now!

Back-to-school spending helps lift August retail sales

August retail sales experienced a 4.3% year-over-year increase, as reported by the U.S. Department of Commerce. E-commerce also saw growth, though it slowed to a 7.6% rise compared to July’s 11.8%, a dip that analysts attribute to the impact of Amazon Prime Day.

These numbers reveal a cautious consumer who remains willing to spend selectively. Bankrate Senior Industry Analyst Ted Rossman notes that current spending trends indicate people are more inclined to splurge on experiences like travel, dining, and concert tickets rather than physical goods, characterizing consumer spending as “solid but not spectacular” in recent times.

August proved fruitful for retailers due to purchases related to back-to-school items, fall apparel, and late-summer vacations. GlobalData’s research suggests similar boosts could occur during the upcoming Halloween and year-end holidays.

GlobalData Managing Director Neil Saunders pointed out that much of August’s spending was deliberate and focused on necessary products rather than impulsive purchases. This suggests a trend where consumers are scaling back on general browsing and impulse buying to spend a bit more on specific events.

However, consumers are showing reluctance toward significant purchases, impacting sales of home goods (down 7.6%), electronics (down 1.6%), and sporting goods (also down 1.6%). Although apparel sales rose by 3.6%, department stores saw sales decline by 2.4%. Saunders noted that apparel shoppers remain highly price-sensitive, with many purchases being influenced by discounts or value channels.

There is also uncertainty about whether the modest growth in August’s numbers can be sustained. Factors such as the resumption of student loan payments in October, diminishing pandemic-era savings, and the Supreme Court’s rejection of the Biden Administration’s student debt forgiveness plan could influence consumer spending patterns. Analysts from Wells Fargo have highlighted that households across income levels may reduce discretionary spending due to these factors, potentially impacting their capacity and willingness to spend.

Projected Halloween spending to reach record high of $12.2 billion

Halloween spending is expected to reach a record-breaking $12.2 billion this year, according to the National Retail Federation’s (NRF) annual survey. This surpasses the previous year’s record of $10.6 billion. Participation in Halloween activities is also increasing, with 73% of people planning to join in, up from 69% in 2022.

Americans are showing greater enthusiasm and financial commitment to Halloween with many starting their shopping early for decorations and other festive items. Retailers are ready to cater to the demand.

The survey highlighted popular Halloween activities. Most people plan to give out candy (68%), decorate their homes (53%), and wear costumes (50%). There’s also a resurgence in pre-pandemic traditions, with more individuals planning to host or attend parties (32%) and go trick-or-treating (28%).

On average, consumers are expected to spend $108.24 each, up from $102.74 in 2021. Costumes are gaining more popularity, with 69% planning to buy them, the highest ever recorded. The total costume expenditure is predicted to be $4.1 billion, an increase from $3.6 billion in 2022.

Decorations are another significant expense, expected to reach $3.9 billion. Candy expenditure is projected at $3.6 billion and greeting cards at $500 million. Interestingly, 45% of consumers plan to start their Halloween shopping before October, a notable rise from 33% ten years ago.

Younger shoppers, especially those aged 25-44, are enthusiastic about early shopping. Social media platforms like TikTok, Pinterest, and Instagram are becoming popular sources for costume ideas. When looking for inspiration, most people turn to online searches (37%), retail stores (28%), and advice from friends and family (20%). Discount stores are the top shopping destinations (40%), followed by specialty costume stores (39%) and online retailers (32%).

Adult costume spending is set to rise to $2 billion, and children’s costumes to $1.4 billion. Pet costumes will likely remain steady at $700 million. Popular costume choices for kids include Spiderman, princesses, and ghosts, while adults favor witches, vampires, and Batman. For pets, pumpkin and hot dog outfits are favorites.

Seattle business leaders shine a bright light on the City’s spending problem

Rachel Smith, President and CEO of the Seattle Metropolitan Chamber, and Jon Scholes, President and CEO of the Downtown Seattle Association, penned an opinion piece in The Seattle Times, in which they highlighted that the City of Seattle does not have a revenue problem – the problem is the way the City spends its revenue.

Smith and Scholes point out that between 2017 and 2023, the City’s general fund revenues grew by 3.7% a year, but city spending ballooned at an annual rate of 5.5%. And, starting in 2021, the city also added another $300 million in annual taxes. As a result, the City’s annual tax revenues have grown by 94% over the past 10 years.

Despite all of this new revenue, the City has managed to live beyond its means. Seattle is expected to have budget deficits of $221 million in 2025 and $207 million in 2026.

WR agrees with the authors that the City must rein in its expenditures by eliminating ineffective spending and prioritizing its highest priorities – especially drug use and public safety – before considering new taxes.

WR board chairman awarded Target promotion

Kent Wilson, Chairman of the WR Board, has been appointed to a pivotal position at Target as Senior Director of State and Local Government Affairs.

In his new role, Kent will spearhead the state and local government affairs team. This new position entails overseeing operations and strategies in all 50 states, ensuring that Target's interests are effectively represented and advanced at both state and local government levels.

Kent's relationship with Target has deep roots; he returned to the company in 2019 following a two-year tenure at Nestle. With a rich history of over 15 years in government affairs, Kent's expertise extends across both the retail landscape and the food and beverage production industries. This multifaceted background provides him with a distinct viewpoint, positioning him as an essential figure in his current role at Target. Additionally, his vast experience has been instrumental in guiding the WR board.

Tacoma Mall transforming into a vibrant “Lifestyle Village”

The Tacoma Mall is now embarking on an exciting journey to enhance its appeal further. The mall’s proprietors, Simon Property Group, recently submitted an application to the City of Tacoma. Their vision entails the addition of three new restaurants and retail areas on the north side of the property, heralding the mall’s transformation into a “lifestyle village.”

For Ziemer, this concept resonates deeply, particularly in the post-COVID era. “An experience-based concept? Where people can come in and see everything together instead of seeking out each individual thing, and you provide a welcoming environment? That’s the business model I’ve had to adapt to,” he observed. Despite the growth of online shopping, real estate firm Kidder Mathews reports that over 86% of retail sales in the US still originate from physical locations.

Ziemer eagerly anticipates the changes the mall will implement to attract a more diverse audience, recognizing that the mall’s success benefits all surrounding businesses. “Drawing more people in can only benefit all the stores around here, provided that they’re aware and are doing the right things to keep attracting business and getting people to stay,” he emphasized.

While specific businesses earmarked for inclusion in the Tacoma Mall’s redevelopment have not been announced, construction is slated to commence next March, promising an exciting transformation into a thriving “lifestyle village.”

Lowe’s Foundation grants $750,000 to boost Seattle colleges’ wood technology center

The Lowe’s Foundation has generously awarded a substantial $750,000 grant to the Seattle Colleges in support of their Wood Technology Center, a division of Seattle Central College. This center plays a pivotal role in providing training programs catering to novice individuals venturing into the trades and seasoned carpenters looking to advance their skills.

This significant gift from Lowe’s Foundation will pave the way for creating two vital positions within the Wood Technology Center. The first role will focus on student recruitment and retention, facilitating internships and apprenticeships within the local construction industry, and assisting those seeking additional skills to advance in their careers. The second position will entail the appointment of a dedicated site manager responsible for procurement, materials distribution, and acquiring essential tools and equipment.

This grant is the most substantial private contribution ever received by the Wood Technology Center. It’s also worth mentioning that this initiative is among the first beneficiaries of the Lowe’s Foundation Gable Grant program, which aims to support 11 community and technical colleges nationwide. Over the next five years, this program, a charitable arm of the North Carolina-based home improvement retailer Lowe’s, plans to allocate $50 million to equip 50,000 individuals with the skills necessary for successful careers in skilled trades.

The Wood Technology Center offers a diverse array of educational pathways for students. They can pursue a pre-apprenticeship construction training certificate or opt for associate degrees in carpentry or boat building. Recently, the center introduced a nine-month residential construction certificate program, further broadening its educational offerings.

Last year, the future of the Wood Technology Center was uncertain as the Seattle Community Colleges district grappled with budget challenges. However, following a groundswell of community support, the colleges reaffirmed their commitment to the center’s stability, making a series of decisions to ensure its financial well-being. This commitment was reinforced by additional support from the state Legislature, which provided staff and faculty with a cost-of-living salary adjustment implemented earlier this year.

This grant from the Lowe’s Foundation marks a significant milestone in securing the future of the Wood Technology Center. It underscores the importance of partnerships between educational institutions and community-minded organizations in advancing workforce development and skills training.

Target closes two Seattle stores amid rising safety concerns

Target announced the closure of nine stores across major U.S. cities, including two in Seattle, due to escalating concerns over crime and safety. The Seattle stores in Ballard and the U-District are set to shut their doors on October 21.

In a statement, Target expressed, “Theft and organized retail crime have threatened the safety of our team and guests, leading to unsustainable business operations.” Despite efforts to bolster safety measures, such as increasing security personnel and introducing theft-deterrent tools, the company found these measures insufficient.

The closures come against a backdrop of a 120% surge in crime incidents at Target’s nationwide stores during the first five months of 2023, as shared by Target’s CEO, Brian Cornell. Additionally, Target’s recent quarterly report showed a 5.4% decline in comparable sales and a 4.9% drop in revenue, amounting to $24.8 billion.

The National Retail Federation’s annual survey highlighted a concerning trend: U.S. retailers are adjusting operations in response to rising crime rates. Shoplifters have become more aggressive, with organized retail crime particularly rampant in cities like Los Angeles, San Francisco, and Seattle.

Renée Sunde, President of the Washington Retail Association, commented, emphasizing the need for urgent action at both state and local levels. “Retailers are now faced with the tough decision to close their doors due to growing safety concerns,” Sunde stated. She called for collaboration with local officials and cited recent policy efforts as positive steps forward but stressed the need for accelerated action to ensure the economic stability of businesses across the city and state. “The announcement today illustrates that more urgency is needed at the state and local level to reach commonsense solutions and craft laws that fulfill the promise of the government’s top priority to keep the public safe,” Sunde added.

Target’s own data paints a grim picture. Threats and assaults against its team members accounted for 55% of all security incidents in 2022. The company has been actively advocating for public policy changes, including supporting the Combating Organized Retail Crime Act, which proposes a multi-agency response to crime.

The recent closures in Seattle are not isolated incidents. Last year, Starbucks closed six Seattle stores, citing safety concerns, and Rite Aid has shut down nine Bartell stores in the area since September 2022.

As Target evaluates its next steps, the overarching message is clear: the safety of its team and guests is paramount. The company remains committed to finding solutions, but as crime rates and safety concerns rise, the future of retail in certain areas remains uncertain.

Read the Seattle Times article

WR sponsors crime prevention conference

WR presented at the 45^th Annual Washington State Crime Prevention Association conference this past week and was the primary sponsor for the event held in Olympia.

WR Senior Vice President of Policy and Government Affairs Mark Johnson spoke about business crime prevention, best practices, trends, resources for small and mid-sized businesses, and legislative solutions.  

Attendees at the well-attended event were honored to have Seattle City Attorney Ann Davison as the keynote speaker. Davison spoke about working with criminal justice community members to reduce crime, enforce our laws, and increase safety in our state. 

Other presenters included Art Hushen, President of the National Institute of Crime Prevention and founder of the Crime Prevention through Environmental Design (CPTED) movement. He discussed how businesses can protect themselves by considering environmental design, including natural surveillance, access control, territorial reinforcement, and maintenance.

Several national partners presented, including the Federal Bureau of Investigation and the Cybersecurity and Infrastructure Security Agency, about risks, vulnerabilities, and mitigation measures across our country and locally. 

WR greatly values our partnership with WSCPA and looks forward to next year’s conference in Wenatchee. For more information, please visit the WSCPA website. WSCPA is a 501(C)(3) nonprofit organization focused on partnerships, prevention, and education.

Artificial Intelligence — a workforce threat or solution?

Since the launch of ChatGPT in November 2022, artificial general intelligence (AGI) has been front-page news and a conversational topic. AI has already been widely adopted in numerous forms, including auto-correct and Roomba vacuums. Artificial general intelligence (AGI), such as ChatGPT, has the potential to multiply productivity and perform tasks that currently require advanced learning and complex thinking skills. AGI’s known and unknown aspects have sparked fear and excitement among workers, business leaders, and policymakers.

At the AWB Policy Summit in Spokane last week, Zack Kass, an AI advisor and speaker, delivered a promising future for the potential and limitations of AGI. Kass spoke of leading scientific breakthroughs to cure cancer and Alzheimer’s and amazing productivity gains that can enhance job satisfaction. The same week, Federal Reserve Board Governor Lisa Cook cast cautious optimism on AGI’s potential to turbocharge worker productivity and impact economic policies. AGI could be a timely answer to slow productivity gains and the long-term labor crisis addressed in the Wall Street Journal this week.

However, the transition to using AGI should require extraordinary care due to public perceptions of potential threats, which may prompt unnecessary limitations to AGI’s progress. Kass cautioned that progress on AGI is not only an economic issue but also a national security issue. China is proactively investing in AGI development, while the West’s efforts are collaborative among several private organizations. Policymakers at state and federal levels are beginning to respond to public perception and AGI’s potential.

In a speech before the AFL-CIO Convention in 1960, President John F. Kennedy spoke of the revolution of automation as one that “carries the dark menace of industrial dislocation, increasing unemployment, and deepening poverty. We now stand at a new historical dawn as our world faces a “hyper-quantum” leap forward. AGI is demonstrating exponential growth and opening an unforeseen future, just as Kennedy launched the space race to compete with the USSR in 1962, which delivered many collateral innovations to benefit industry and Americans’ day-to-day lives.



WR’s government affairs team is working diligently to stay informed on these topics and listening to members’ concerns to help steer a smooth transition on AGI technologies and policies.

Is your safety bulletin board up to date?

According to the Washington Administrative Code (WAC), every work location with eight or more employees must have a Safety Bulletin board with basic requirements posted. 

The safety bulletin board must be large enough to post information, including:

• Safety bulletins
• Safety newsletters
• Safety posters
• Accident statistics (OSHA 300A form)
• Other safety educational materials

Additionally, employers should post meeting notes for the 12 most recent safety meetings, a best practice for workplace safety. Every business location must also have the last 12 safety meeting notes available for review should an L&I safety inspector drop in to perform an inspection.

WR’s monthly member safety packets provide safety meeting topics and other pertinent information that can be posted on safety bulletin boards. 

Members can find past monthly issues of RS Safety Meetings archive here.

Our safety team is available to help members improve their safety program beyond compliance toward quality safety practices. Contact us at safety@waretailservices.com to learn more.

WR diversity statement

WR is committed to the principles of justice, equity, diversity, and inclusion. We strive to create a safe, welcoming environment in which these principles can thrive.

We value all people regardless of race, ethnicity, gender, religion, age, identity, sexual orientation, nationality, or disability, and that is the foundation of our commitment to those we serve.