2021-02-16 07:03:10 UTC
When Seattle began raising its minimum wage five years ago,
local burger joint Dicks Drive-In experienced an unintended
Its employees opted to work fewer hours as their wages rose, a
tall order in a tight labor market.
We thought with higher wages it would be easier to get people
to take more hours, but its been the opposite, said Jasmine
Donovan, president of Dicks. She added that the company has had
to raise prices for the first time in its history because of the
cost of labor alone, whereas in the past, food costs drove such
Seattles law, which gradually increases its minimum wage to $15
an hour by 2021 from just over $9 an hour in 2014, is now at the
forefront of a national debate over the impacts of progressive
wage increases. It comes at a time when top Democratic
presidential candidates like Bernie Sanders and Joe Biden are
calling for a $15 per hour federal minimum wage as they try to
appeal to working-class voters. The federal minimum wage is
currently $7.25 an hour and has not been increased in over a
Seattle was catalytic to the entire national movement because
what the Seattle City Council did by passing the law was show
the entire nation that $15 was not a ridiculous demand that
people were laughing at back in 2012, but an actual key piece of
policy that allowed for working people all across that city to
have more money in their pockets that they spent in their local
neighborhoods and then grew the economy and local business as a
result, said Mary Kay Henry, president of the Service Employees
International Union, which launched the Fight for $15 and a
Businesses like Dicks have seen their costs go up. Dicks pays
above minimum wage, with some locations starting workers at $17
and $18 an hour, and most workers are students in their 20s.
Benefits like 401(k) plans and health insurance are also
available to workers regardless of the number of hours worked.
But higher minimum wages citywide pressure employers to increase
pay even if they are already above that threshold, in order to
compete for talent.
Meanwhile, the Seattle law has been life changing for workers
like Martin Johnson, who lobbied for higher pay with the
advocacy group Working Washington. He works three minimum wage
jobs as a temporary cook on game days at the citys stadiums,
as a janitor at Costco on the overnight shift and as a handyman
in his own small business. The raise brought with it more
dignity for workers and boosted morale, he said.
Instead of being paid $9 an hour, youre getting $15 an hour to
do the same work. You feel better about yourself you feel
appreciated, Johnson, 54, said.
Overall, implications for businesses and workers alike have been
nuanced. While there are benefits for workers who saw higher
pay, others may have seen fewer hours. Some businesses
flourished, while others struggled in the face of greater
regulation and intense competition in the citys hot economy.
No consensus among economists
Studies of the effects of the Seattle wage hike have had
different findings: A 2017 University of Washington study found
that while wages went up, hours worked declined, resulting in
less pay for low-wage workers. But in a follow-up published last
year, the authors noted that this wasnt the case for everyone,
and experienced workers in low-wage jobs saw their earnings rise.
Another from researchers at the University of California,
Berkeley released in 2018 found that the wage hikes increased
pay and have not led to job losses. The Berkeley and Washington
studies measured different groups of workers, with varying
The conflicting studies highlight a broader debate about what a
$15 federal minimum wage might do for businesses and workers
nationwide. Federal Reserve Chairman Jerome Powell even touched
on the issue during his testimony before the House of
Representatives this summer saying. there is no consensus among
economists economists are all over the place on this.
One of the challenges of measuring Seattles experience with the
minimum wage hike is that the citys economy is in a period of
robust growth. Since the wage increase began in 2015,
Seattle/Tacomas job growth has slightly outpaced the state of
Washington as a whole, at 12.9%. The citys population has
increased some 13% over 2015, according to the Washington state
Office of Financial Management. Average hourly earnings were
$39.38 in October, an increase of 14.5% from the same month in
That prompts a question: Are higher wages necessary due to the
hot economy, or has the economy continued to grow due to higher
Mixed results for businesses
When the minimum wage increase in Seattle passed, Chad Mackay,
CEO of Fire & Vine Hospitality, a Pacific Northwest hospitality
group, he decided to reevaluate his business model.
When we projected out the minimum wage increases, and the loss
of a tip credit [which allows employers to count tips toward
minimum wage], we realized we would be functionally bankrupt if
you were to fast forward seven years in the future. We decided
the business model was broken, and its time for us to change,
Fire & Vine has long paid above minimum wage in the front and
back of house due to demand for talent in the market and the
companys beliefs on professional pay. The company moved to a
commission-based model, with a 20% service charge for diners.
Servers are paid out an hourly wage and a 15% commission and can
make $70 or more per hour in the Seattle market, up from some
$45 an hour earlier. Guests can also leave extra tips for
servers if desired. Those in the back of the house like
dishwashers begin between $17 and $20 an hour some 40% over
where they were prior.
The wage increases havent hurt his business: Hes nearly
doubled in size, with some 600 workers today with 12 locations
under management, during a time when other restaurants have
closed their doors.
Once we went to that model, I have never worried about minimum
wage. And Im not sure theres a restaurateur in Washington
state or in California or New York, that can say, We left
behind minimum wage as an issue for our company, Mackay said.
But while some businesses have thrived, others have faced
challenges in the face of Seattles changing economy.
Matthew Dillon, owner of Sitka & Spruce, says that he believes
the minimum wage should be much higher than $15 an hour, which
is why he also pays workers above that threshold. But when his
lease came up, the James Beard Award-winning chef decided it was
time to close his doors after more than a decade in business,
serving the restaurants last dinner on New Years Eve. Passing
off costs to consumers in an environment where his rent was
$16,000 per month including taxes and fees, and where both food
and labor costs are also on the rise, felt unsustainable. He has
other businesses that are still up and running in the area.
Wages are going up, the price of food is going up, [and] my
property taxes that I have to pay the landlord are going up. My
rent is going up for my staff, or staff that was here feels
like, Well I cant be in the city anymore, so you have to find
someone to replace me, he said. Thats really hard. The cost
of that, just working through that as a business owner, is going
Its an issue Eric Tanaka is also contending with. The partner
at Tom Douglas Seattle Kitchen says the group also decided not
to renew a lease for a building that houses three of its
restaurants TanakaSan, Assembly Hall and Home Remedy. Moving
forward, Tanaka says he may consider less labor-intensive
models, as well as concept and menu tweaks, within the groups
different businesses as costs have gone up and talent can be
tough to find in the city. The company pays above minimum wage
and offers benefits for those working more than 25 hours a week.
It recently settled a class-action suit with its employees over
service fee charges.
I think as we start to look at future planning, we are
definitely looking at restaurant models that take less labor,
That could be tough given that his restaurants make things from
scratch. Its hard to be handmade without the hands. But we are
looking at different ways to leverage those hands, Tanaka said.
Its a challenge every day because there are less and less
people who want to get into our industry.
In other words, it did more fucking harm than good!
Democrats are stupid.