Minimum Wage

In a few weeks, Seattle’s new, highest in the country, $15 per hour minimum wage will go into effect. Like many liberal policies, it was passed by City Hall with the best of intentions. The only problem is, in the end, it may do more harm than good for many.

Private businesses, unlike government entities (which, in theory, can always raise taxes or borrow), must make more than they spend in order to pay the rent, make payroll, keep the lights on, pay their business taxes, and, heaven forbid, have some left over for the owners and investors who are taking the risk and putting in the long hours.

Earlier this month, Seattle Magazine asked, Why Are So Many Seattle Restaurants Closing Lately?:

Last month—and particularly last week— Seattle foodies were downcast as the blows kept coming: Queen Anne’s Grub closed February 15. Pioneer Square’s Little Uncle shut down February 25. Shanik’s Meeru Dhalwala announced that it will close March 21. Renée Erickson’s Boat Street Café will shutter May 30 after 17 years with her at the helm…What the #*%&$* is going on? A variety of things, probably—and a good chance there is more change to come.
The magazine went on to report that one “major factor affecting restaurant futures in our city is the impending minimum wage hike.” Anthony Anton, president and CEO of Washington Restaurant Association, told the magazine, “It’s not a political problem; it’s a math problem.” He estimates that restaurants usually have a budget breakdown of about 36 percent for labor, 30 percent for food costs, and 30 percent to cover other operational costs. That leaves 4 percent for a profit margin. When labor costs shoot up to say 42 percent, something has to give.

Restaurants can take actions to adjust, such as raise their prices, acquire cheaper ingredients, and cut their operating hours and labor force. However, all those actions generate reactions from the public which can still lead to lower revenues for the restaurant and, for some, the decision to close their doors.

The Washington Policy Center explains:

When prices rise consumers seek alternatives, a behavior economists call the “substitution effect,” which results in lower demand for the higher-priced product. In the case of restaurants, consumers have access to the ultimate substitution – they can stay home.
A spokesman for the Washington Restaurant Association told the Washington Policy Center, “Every [restaurant] operator I’m talking to is in panic mode, trying to figure out what the new world will look like.”

Seattle had a foretaste of the effect of the $15 minimum wage earlier this year when Prop 1, which made a $15 minimum wage for those working in parking garages and hotels near Seattle-Tacoma International Airport, took effect. A reporter asked a cleaning woman and a part-time banquet server, who work in a hotel near SEATAC, what they thought of the new law:

The cleaning woman responded, “It sounds good, but it’s not good,”

“Why?” I asked.

“I lost my 401k, health insurance, paid holiday, and vacation,” she responded. “No more free food,” she added.

The hotel used to feed her. Now, she has to bring her own food. Also, no overtime, she said. She used to work extra hours and received overtime pay.

“What else?” I asked.

“I have to pay for parking,” she said.

I then asked the part-time waitress, who was part of the catering staff.

“Yes, I’ve got $15 an hour, but all my tips are now much less,” she said. Before the new wage law was implemented, her hourly wage was $7. But her tips added to more than $15 an hour. Yes, she used to receive free food and parking. Now, she has to bring her own food and pay for parking.

The Seattle Times reported that a Clarion Hotel recently made the decision to close its full service restaurant (laying off 15 people) and let go of a night desk clerk and a maintenance worker. It also plans to raise its rates by 10 percent to offset increased labor costs.

As the April 1 deadline approaches, the residents of Seattle will have a front row seat to the effects of the $15 per hour minimum wage, but early indicators suggest it will not be as positive as City Hall intended.

In a few weeks, Seattle’s new, highest in the country, $15 per hour minimum wage will go into effect.

Here is the reason why your argument is flawed.

You are talking about a company that has multiple locations both inside Seattle and outside Seattle. You are implying that, in order to comply with this new law inside Seattle, Walmart would have to raise the price in all stores, both inside and outside of Seattle, by .01 for all of their products.

But if you really look at the larger picture, you would see that Walmart does not supply the entire workforce of Seattle. Most people who are employed in Seattle are employed in businesses located only in Seattle. So, they will need to raise their prices for products or services by greater than .01 because they do not have outside locations to spread the cost around. They are stuck with the bill of increased labor because of where they are located.

Their only solutions are:

1) Raise prices
2) Layoff people
3) Go out of business.

Which answer would you prefer?

I don't think increasing the minimum wage is very innovative. Anyone could have thought of that.

permanent disability only pays me around $7/hour if you break it down.

I just see a college education being required to get that 15 dollar min. wage job !

You want to work at Starbucks just take this 2 year Starbucks coffee program !

(only $20,000) but you get free coffee !

I'm not trying to say whether or not an increase in minimum wage is good or bad, but I do have doubts about this article. Their main example is restaurants, but I mean, at least here in Idaho, restaurants don't follow minimum wage laws anyways. If the servers get tipped (which most of them do) then they get lower hourly wages.

A friend who works at the Cheesecake Factory here makes only $4 per hour, although our minimum wage is I think about $8 per hour. So while healthy debate is always (usually) good, I'm not really going to give a darn about this article until they have a FAR more concrete set of examples besides a handful of restaurants that don't count anyways and one (unnamed, uncredited) waitress at one airport.

As for the (unnamed, uncredited) part-time janitor, it seems strange. Maybe it's just different here (I'm not in Seattle by any means,) but in all the places I've worked, you have to be full-time to receive most of the benefits she claims to have lost. And even full-time employees of much higher standing rarely get free food at work (at least where I'm from. Even when I did work at a restaurant and made the food ourselves, we still didn't get it for free.) Again, I'm not in Seattle and I don't work at an airport, so maybe I'm being overly skeptical.

Can we just replace waiters with robots already?

Its so annoying to have to tip people cause they have feelings that can get hurt.

Tipping culture in a service industry with inconsistent quality of service is annoying.

Sweden and Japan are my favorite places because tipping isn't expected and the service is consistently good.

Anyone from Seattle can go to their downtown area and find all of the restaurants closing and going out of business, so it's not like the article in question is misrepresenting the facts.

That kind of thing happens all the time: restaurants are not stable businesses and restauranteurs are frequently bad businesspeople (because they're usually cooks). It's really dubious to point at restaurants in any of this.

Can we just replace waiters with robots already?

Its so annoying to have to tip people cause they have feelings that can get hurt.

Can we just replace waiters with robots already?

Its so annoying to have to tip people cause they have feelings that can get hurt.

Tipping culture in a service industry with inconsistent quality of service is annoying.

Sweden and Japan are my favorite places because tipping isn't expected and the service is consistently good.

Except the law hasn't gone into effect yet.

Someone in another thread made some big deal about the price of beef rising at the same time a Democrat was the governor of a major cattle ranching state. That's correlation, not causation, but it's such an easy little jibe/remark/observation to make.

Where I live, where the minimum wage is above federal minimum but well below $15/hour (and where restaurant servers who are any good at their jobs regularly make $20/hour, anyhow, so who the *** cares about them?), restaurants open and close all the time. I was up in the university district yesterday for the first time in about 2 months and saw that a major franchise burger restaurant had closed and has been replaced with a fast-service pizza restaurant. That kind of thing happens all the time: restaurants are not stable businesses and restauranteurs are frequently bad businesspeople (because they're usually cooks). It's really dubious to point at restaurants in any of this.

Tips. Otherwise known as spreading the burden of staff on customers.

Yeesh, just add a service charge. Oh wait, some places do and demand tip on top of that!

The idea that tip has anything to do with 'service' is laughable. The waitress could be *** drunk, spill everything and *** up your order and you'd still be expected to tip. It's a tax. It's expected. It has nothing to do with quality.

Except the law hasn't gone into effect yet.

Where I live, where the minimum wage is above federal minimum but well below $15/hour (and where restaurant servers who are any good at their jobs regularly make $20/hour, anyhow, so who the *** cares about them?), restaurants open and close all the time. I was up in the university district yesterday for the first time in about 2 months and saw that a major franchise burger restaurant had closed and has been replaced with a fast-service pizza restaurant. That kind of thing happens all the time: restaurants are not stable businesses and restauranteurs are frequently bad businesspeople (because they're usually cooks). It's really dubious to point at restaurants in any of this.