Job cuts precede Seattle minimum-wage hike

by John Seiler | March 13, 2015 4:24 pm

In the past couple of years, many states and localities have been increasing minimum wages. It’s part of the American federalist system in which the 50 states are the “crucibles of democracy,” trying different things to see what happens.

Seattle’s new $15 minimum wage starts to be phased in on April 1. That’s up from[1] the $9.32 state minimum wage, which already is the highest (for a state) in the nation.

Seattle Magazine reported[2], “Small employers have seven years to pay all employees at least $15 hourly; large employers (with 500 or more employees) have three.”

The reason for the higher wage was explained [3]on Mayor Ed Murray’s website:

A growing number of cities, including Seattle, are examining the costs and benefits of implementing citywide minimum wage laws. Citywide minimum wage laws offer local governments a powerful tool for helping low-income workers and families in their communities. Such measures also have significant impact on businesses and how they operate.

According to a Seattle publication, SHIFT[4]:

Restaurants across the city are making the financial decision to close shop. The Washington Policy Center writes[5] that “closings have occurred across the city, from Grub in the upscale Queen Anne Hill neighborhood, to Little Uncle in gritty Pioneer Square, to the Boat Street Cafe on Western Avenue near the waterfront.”

Of course, restaurants close for a variety of reasons. But, according to Seattle Magazine[6], the “impending minimum wage hike to $15 per hour” is playing a “major factor.” That’s not surprising, considering “about 36 percent of restaurant earnings go to paying labor costs.”

Washington Restaurant Association’s Anthony Anton puts it this way: “It’s not a political problem; it’s a math problem.”

San Francisco and Oakland

Last November, San Francisco voters passed a similar minimum-wage hike. CNN Money reported[7]:

Under the new law, wages will rise to $11.05 on Jan. 1, then $12.25 in May before increasing every year until they reach $15 in 2018. After that, increases will be tied to inflation in the Bay Area.

At the same time, 82 percent of Oakland voters backed increasing the city minimum wage to $12.25 per hour.

The results so far have not been as dramatic as in Seattle. But the San Francisco Chronicle reported:

The 36 percent uptick that lifted Oakland’s minimum wage to $12.25 an hour this week is already transforming the city’s booming restaurant scene — but not in the way that politicians, activists and restaurateurs anticipated.

The wage increase puts more money in the pockets of most restaurant workers, but to keep pace with higher costs, some restaurants have upped menu prices by as much as 20 percent. Others have tacked on a mandatory service charge[8] to the bill and eliminated tips for servers, potentially reducing the amount they earn.

Some wonder whether the higher prices and surcharges will turn off customers and blunt Oakland’s growing reputation as a foodie haven where 300 bars, cafes and restaurants opened last year.

Meanwhile, for the state as a whole, California’s minimum wage was raised to $9 from $8 last year, and will jump again to $10 on July 1, 2016.

Source URL: https://calwatchdog.com/2015/03/13/job-cuts-precede-seattle-minimum-wage-hike/

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