Change will be inevitable under $15 minimum wage
Nowhere is the push for a minimum-wage increase more ambitious than it has been in Seattle. A year ago, the city voted to raise its minimum wage incrementally, first to $11 an hour in April and to $15 for some employers later this year.
For fast-food workers, grocery shelf-stockers and all other unskilled laborers, that amounts to $30,000 a year in exchange for the standard 40 hours of labor for 50 weeks a year.
Seattle’s new minimum wage is a 61 percent increase over the Washington state minimum of $9.32 an hour. Nationwide, the federal minimum wage has been $7.25 since 2009.
Obviously, many business owners object to the size of the increase. They formed a protest group, Forward Seattle, which counterproposed a smaller, gradual increase to $12 an hour by 2017.
The alternative, Forward Seattle members say, will be businesses pulling out of Seattle — at least to the suburbs — and an immediate halt to any plans for expansion in the city.
Already, news sources in Seattle are reporting sharp increases in rent, haircuts, gym memberships, restaurant meals and that ubiquitous cup of coffee.
But there’s a surprising twist: some of the employees aren’t happy with the pay hike, either.
Some employers in Seattle have reported a backlash among their employees who fear that a higher income will jeopardize their other low-income benefits like food stamps and rent subsidies.
One of the employers, Nora Gibson, is the executive director of Full Life Care, a nonprofit agency that serves elderly people in nursing homes and other residences. Gibson is also on the board of the Seattle Housing Authority.
Gibson told television station KIRO 7 that she’s seen a swift reaction from employees when the rate went to $11 in April. She said some people told her they feared losing their subsidized housing — and the new income won’t be enough to cover rent without the subsidies.
Their solution: ask for fewer work hours to keep their income below subsidy thresholds.
That’s an unfortunate complication in what’s already a complicated balance.
Consider the Seattle entrepreneur Dan Price, founder of Gravity Payments, who took it upon himself in April to set his employees’ minimum annual wage at $70,000. At first his employees embraced the change enthusiastically. But since then, some of his senior staff members quit, saying their co-workers don’t deserve what they’re paid now, and the payroll is draining the company of its assets. Even Price’s brother says Price owes him money.
Meanwhile, there are some widely reported successes. Ivar’s Salmon House, an upscale seafood restaurant, raised its prices 21 percent and imposed a no-tip policy while instituting the $15 an hour minimum wage. Customers have accepted the new pricing, and employees have seen their income rise as much as 60 percent. The employees are happier and more productive. The restaurant is thriving.
But Ivar’s is not Burger King. Fast food restaurants face major decisions when forced to pay employees as much as those who work at sit-down establishments like Ivar’s.
It will take time for competitive markets to shake out. There will be casualties as well as successes.
Simply put, it’s too early to determine a blanket assessment of sudden, stark legislative increases in the minimum wage. But Seattle’s experience seems to amplify the reality of business anywhere: some will flourish, some will fail, and employees will experience change, including some unexpected change.
