Last year, self-described zillionaire Nick Hanauer wrote an article in which he warned that people would come for magnates like him with pitchforks unless inequality in the US was reduced. He has been called “America’s premier self-loathing plutocrat”.

Last week, he sat in his 28th-floor Seattle office overlooking the steely Puget Sound, with his feet, in sneakers, on a table next to a copy of The Wealth of Nations, and outlined his manifesto. “The last thing you want to do is impoverish people and concentrate ever more capital in fewer and fewer hands.”



While Seattle’s economy is on a tear, clusters of homeless people amid the downtown towers underscore its deep wealth gap. Hanauer aims to use his clout to redress such imbalances. Efforts along these lines have gained particular traction in Seattle, which has passed a minimum wage of $15, more than twice the amount mandated by the federal government, and is taking a lead on the problems of inequality and affordability.

For some, the driving force is the specter of a metropolis to the south where the median rent for a one-bedroom apartment has reached around $3,500, the highest in the nation, according to Zumper, a real estate services firm. “San Francisco gets tossed around as the bogeyman up here a lot,” said Paul Constant, a writer hired by Hanauer.

From a distance, Seattle’s success might seem unalloyed. In the early 1970s, the economy was in the doldrums. After Boeing cut thousands of jobs, two realtors put up a sign near the Seattle-Tacoma international airport: “Will the last person leaving Seattle turn out the lights.” Today the unemployment rate is low, the region is a key manufacturing centre for Boeing, and is also the base for companies including Amazon, Microsoft and Starbucks, which seems to have a branch on every other Seattle block.

Amazon has announced plans to build a new downtown hub, to include a number of skyscrapers and greenhouse-like domes. Nearby is a well-tended area called South Lake Union, which was developed thanks to the efforts of Vulcan Inc, a landowning company chaired by Microsoft co-founder Paul Allen. A streetcar, operating since 2007, winds past cafes, spiffy apartments and a Tesla showroom. Amazon is building a bicycle track and funding a new streetcar.

The plans for Amazon’s new headquarters in South Lake Union/ Photograph: NBBJ

Constant, a former books editor, gave his approval. “Even if you have a complicated relationship with Amazon, which I certainly do, I think you have to at least admire the fact that they are using the land for something,” he said. “It’s become a neighbourhood, and they willed it out of thin air, and that’s impressive.”

Still, Seattle’s growth has been uneven. Prices have climbed – a Seattle Times columnist suggested that grunge bands of the 1990s could not afford it today – while new households in the county have tended to be either rich or poor, with few in-between, the paper reported. Admittedly this is not only a conundrum for Seattle, said Clark Williams-Derry, deputy director of a Seattle sustainability think tank. There has been a broader “hollowing-out of the middle class” in the US.

Washington’s tax system, ranked as the most regressive in the country by the Institute on Taxation and Economic Policy, is not helping. The lowest-earning families in the state “pay about 17% of their income in taxes. And our top 10 percent pay about 2.7% of their income”, said Pramila Jayapal, a Democratic state senator. All income growth in Washington between 2009 and 2012 accrued to the top 1%, she added.

Seattle is the fastest growing city in the US and is struggling with rapidly rising housing costs and the gentrification. Photograph: Dan Lamont/Guardian

Enter Nick Hanauer, who had a “very conventionally middle class” upbringing in the Seattle suburb of Bellevue and attended the public University of Washington. His fortune stems from his numerous business endeavours, such as the sale of an online advertising company he co-founded to Microsoft for over $6bn. His views on inequality crystallized over several decades, he said, and now he has brought on five full-time staff to pursue his political goals. “Our job is to redefine capitalism,” said David Goldstein, a blogger and member of the team.

One of Hanauer’s targets is the minimum wage. Although it is now higher in Seattle, he wants the state of Washington to follow suit, and has mooted the idea of an unprecedented $16 an hour (the federal minimum wage is $7.25). Many business owners, he said, have an “econo-erotic fantasy”, imagining that even if they aren’t paying their employees enough to buy goods and services from other firms, those firms are. The claim “that if wages go up, employment will go down – this is as stupid as claiming that if plants grow, animals will shrink”, he said.

Michael Baumgartner, a Republican lawmaker in the eastern part of Washington, said higher pay might work in a booming place like Seattle, but it would simply drive companies from his border town to the adjacent state of Idaho, which uses the federal minimum wage. “We’re certainly not going to pass bad economic policy just because of the threats of a guilt-laden billionaire,” he said.

In liberal Seattle, Hanauer’s ideas may find a more sympathetic audience. While the word “socialist” is used as an insult against Barack Obama, Seattle has elected an actual socialist to city council. Mayor Ed Murray, meanwhile, has made affordability one of his priorities. “I grew up in West Seattle, my father worked in the steel mill, there were seven kids, and my parents could afford a house,” he said at his city hall office. “That’s simply not true for people at lower incomes today.”

Seattle mayor Ed Murray. Photograph: Joe Szilagyi/ flickr

In the wake of price hikes and the cancellation of a ride-free zone downtown, transit agencies introduced a cheaper bus fare program for lower-income residents. And Murray championed the minimum wage hike, to be implemented over several years. The effects of this move remain to be seen; a Brookings Institution researcher cautioned that some businesses, forced to raise prices, might lose customers to similar, cheaper businesses just beyond city boundaries. Franchise restaurants are challenging the law in court.

Such policies raise a question. Many states, rather than the federal government, have taken the lead on climate change, by instituting targets for the amount of energy produced by renewables. Is inequality another area that smaller political entities, like states and cities, can make a meaningful impact, sidestepping the gridlock in Congress?

Perhaps not. “On a series of issues, to use a term that comes from the 1930s, cities and states have become laboratories of democracy,” the mayor said. “Having said that, the issue of affordability, the issue of income inequality, the issue of being able to find an affordable place to live, will not be solved without a strong return on the part of the federal government to these issues.”

Murray gave the example of Seattle’s homeless. A January count in the city found that there were about 20% more people spending the night outside than last year. The city’s shelters are only “somewhat safer, somewhat drier”, like a bandage for the problem. Robust funding from the government is the solution, he said.

John Criscitello, photographed in his basement studio. Photograph: Dan Lamont/Guardian

The stratifying effects of Seattle’s boom are being particularly felt in Capitol Hill, an attractive, diverse area close to downtown. A Ferrari showroom stands opposite a homey pie shop and in the vicinity of gay bars and low-income housing units. “It’s getting glossier now and there’s more of a sheen of money,” said Michael Wells, executive director of the local chamber of commerce. “It’s a struggle for a lot of people trying to figure out how and where they fit in this new Capitol Hill.”

To protest the changes, and attacks on gays, an elaborately tattooed artist named John Criscitello began putting up posters around the neighbourhood last year. They are aimed at the people Criscitello sees as interlopers, and depict raucous, drunken girls in tiaras or a beer-swilling man complaining about “faggots”.

“It feels like they’re locusts,” Criscitello said. “They want to find an area and just destroy it.”

Standing outside his studio, at a busy intersection, he surveyed the scene. One of his posters was affixed to a utility box. It read: “We came here to get away from you.” Given the locale’s desirability and Seattle’s minted residents, this seems like an impossibility now, whatever plutocrats or officials have to say about it. Criscitello pointed down the street at an apartment complex. “That big new building,” he said, “looks like Mordor.”