Can ‘total compensation’ help Capitol Hill indie businesses weather $15 minimum wage?

As the debate over a $15 an hour minimum wage in Seattle moves forward, independent business owners on Capitol Hill are trying to sort out how small, local businesses can be part of a smooth transition to higher wages in the city. At Retrofit Home it could mean the loss of bonuses and commissions for seven Capitol Hill workers, according to co-owner Jon Milazzo.

“The first thing I have to do is all commissions are done,” she said. “That means people who work the hardest make the same as someone who’s just coming in.”

Entry-level workers would also be impossible to hire, said Milazzo who recently helped open the neighborhood market Cone and Steiner. In December we talked to several neighborhood business owners about a $15 an hour wage, including Poppy owner Jerry Traunfeld who said he might be forced to reduce staff or raise his prices.

Milazzo told CHS that she supports a hike to the minimum wage, but the new wage needs to allow for a total compensation — possibly including elements like healthcare, travel and training — to count towards a new minimum. Instead of “$15 now,” Milazzo’s message is “raise it right.”

“Monday morning should we raise to $11 an hour, sure … but this $15 now thing is ignorant and short sighted,” she said.

City Council member Kshama Sawant says an immediate 60% increase to the city’s minimum wage is gaining momentum. Multi-year phase ins, total compensation calculations, tip credits, and small business exemptions have all been floated as possible alternatives routes to a $15 destination. But those spearheading the $15 an hour push oppose such wage “penalties.”

Philip Locker, an organizer with the Sawant-founded $15 Now campaign, called it a “red herring” to argue that most workers already make $15 an hour in total compensation.

“If you listen to that storyline, you would think there’s hardly anyone making less than $15, but if that’s the case why has there been such a outpouring of support?” he said. “For once working people have an upper hand in the debate.” And most of Capitol Hill voters are on his side, with recent polling showing that 71% of Capitol Hill-area voters support a $15/hour minimum.

Locker said those in his camp are eager to work with “genuine” small businesses on raising the minimum wage. Having large corporations subsidize tax breaks to smaller businesses is one idea, he said.

“$15 Now and raising wages for low wage workers are not what’s crushing small business. It’s big business like Starbucks, like Target, like Amazon,” he said.

Nevertheless some indie business owners have said they feel vilified for not jumping on board with an immediate hike. Dave Meinert, owner of the Comet and Lost Lake Cafe, recently called the tactics of the pro-$15 camp “dogmatic” and “inflexible” during a Twitter exchange with Good Jobs Seattle. The exchange, by the way, is relatively civil and worth reading. There are more signs of compromise. Tim Keck, publisher of Capitol Hill-based the Stranger which has been Sawant’s biggest media cheerleader and champion of her $15 Now cause, wrote this week that Seattle can “raise the minimum wage and keep our independent business alive.”

“It would be a huge loss to the city if we lost local, independently owned businesses that can’t absorb a 60 percent wage hike the way that chain businesses can,” Keck wrote.

If $15 an hour were to come to pass this year, there wouldn’t be much of a shake-up at Molly Moon’s Ice Cream. After recently raising the wages of all her non-tipped staff to $15 an hour, Molly Moon Neitzel said she supports the city getting to $15 as soon as possible, but she’s open to a multi-year phase-in.

“We operate in a consumer driven ecomony, and when they have more money in their pockets, they’re going to spend it,” she said. “Once you get over that $30,000 threshold, you can really lighten your pocketbook.”

Andres Mantilla at CBE Strategic has been working with small business groups like the Capitol Hill Chamber of Commerce to help channel the message of indie owners more effectively to the public and into City Hall.

“It’s not business versus workers, businesses are complex. A lot of these small businesses have a lot invested in their employees,” Mantilla said.

February has seen as slew of activity surrounding the minimum wage issue, from ‘McPoverty’ boycotts to Sen. Patty Murray coming to Capitol Hill to promote an increase to the national minimum wage.

Mayor Ed Murray’s minimum wage task force continues to hammer out details on recommendations he has promised by April. Many business owners and others involved have told CHS they’re waiting to see what comes out to start a more concrete policy discussion. Those owners — and Murray — will hear from the public starting next week with an income inequality forum at First Hill’s Town Hall. “This will be the first official public forum for Seattleites to share their thoughts on the concept of raising the city’s minimum wage,” the city’s announcement says. Some Capitol Hill business owners plan to speak. Many others will surely be listening.

28 thoughts on “Can ‘total compensation’ help Capitol Hill indie businesses weather $15 minimum wage?

  1. If there’s not a tip credit, you can kiss small neighborhood bars, especially those that aren’t part of a larger company, good bye. Our employees already make well over $15/hour when you include tips. There is no way we can raise the base wage to $15/hour without significantly raising prices. Our margin is already laughably low – some months running a business like this is a public service. Be a shame to see it close, but I just don’t see how this can work without a tip credit.

        • Look out Chris. Now that you’ve identified yourself, Some envious jerkoff is going to look up your address and see how much King County thinks your house is worth, then post it on this blog and call you a greedy capitalist. That’s the Sawant world we live in today.

          • Funny – I didn’t realize there were replies to my comment until today. And I actually didn’t identify myself – whoever Nador is did. But if someone wants to be envious of my 980 SF house that doesn’t even have a dishwaster, have at it.

    • Should the societal habit of tipping even be continued after $15 an hour is passed? I’d prefer fair pricing up front that guarantees people a living wage, rather than giving a percentage on the back end based on my subjective perception of quality and my feeling of generosity that day. Seems like a much fairer way to do things.

      • It’s a fair question to be sure, but it’s worth noting– in many places that I have been in Europe, where tips are built-in, the service is not as good. In many places, it’s indifferent at best. (Paris especially comes to mind). If the waiter/waitress/bartender knows they’ll get a tip anyway, they often don’t try as hard. I almost think I’d rather have lower prices and tip according to service quality.

        • Paris and other big cities in France are known for poor service, and probably would be regardless of the tipping culture. OTOH, I’ve had excellent service in all levels of restaurants in Germany (where tipping is minimal) and Belgium (where it is non-existent). I’ve had downright excellent service in Barcelona despite not speaking a word of Catalan and a custom of much lower tips.

          I saw that a sushi restaurant in NYC puts the following at the bottom of their menu “Following the custom in Japan, Sushi Yasuda’s service staff are fully compensated by their salary. Therefore gratuities are not accepted. Thank you.”

          It also seems a little weird to me that front-of-house employees at a fancier restaurant will probably be taking in around $30/hr including tips but most kitchen employees will probably be at the $15 minimum wage.

  2. Minimum wage workers who get tips should we weary of a “tip credit” to get to 15$/hr — you may end up making less. Additionally, you can forget entry level hospitality jobs, business won’t be able to afford to hire and train employees with no experience at 15$/hr.

    I’m not saying we shouldn’t do this, but I think it’s important that we all understand the outcome.

  3. BLS stats for Seattle/Bellevue/Everett metro area say average wage for waiters & waitresses (including tips) is $28K a year:

    http://www.bls.gov/oes/current/oes_42644.htm

    They may very well undercount tips in their stats, but I haven’t seen any other figures, so let’s start the conversation from a realistic figure at least. Reality is that most tipped employees are not making anything like the numbers that people seem to throw around.

    (Full disclosure, I work for Working Washington on the $15 campaign.)

    • BLS doesn’t count the tips. And I’ll guarantee you that in Seattle average tips per hour is about $15, on top of the wages. Many servers also get benefits.

      But it seems like a moot point. Guarantee everyone has a minimum income of $15. Doesn’t matter what’s counted, that depends on the business model. The full service restaurant model includes tips in what the staff is paid. The quickserve restaurant model doesn’t. The important thing is that everyone gets at least $15 per hour in earnings, guaranteed.

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  5. I understand the need for higher wages, and that standard counter arguments reek of the pre-civil war south’s economic arguments for slavery, but nailing this business community with that kind of change immediately is emotional and ridiculous.

    Smart business owners will be able to handle the raise in wages, if something like raising the wage $1/yr until we reach $15 happened. Let small business work with their yearly metrics and projections in a reasonable way – over a longer period of time, and everybody wins. Let’s all grow up and be a little pragmatic here.

  6. In addition to the likely negative effects on small, local businesses (having to pay for the increased wages by laying people off and/or reducing their hours; eliminating health insurance for employees; increasing prices…and resulting decreased business; or….worst case….closing the business), I am really concerned about the effects on nonprofits. In a Seattle Times column recently by Danny Westneat, the head of Downtown Emergency Services Center, Bill Hobson, said his payroll costs would increase by $1.25 million/year, and that he did not have the money to absorb that…..so services would likely have to be cut and/or taxes increased. And what about child care centers?….most of those workers earn much less than $15/hr, and if the managers had to pay them more many of these centers would close. I do some volunteer work at Senior Services, and that wonderful nonprofit would face serious budgetary problems if this goes through, and most likely would also cut services.

    It’s easy for Seattleites to say they are for an immediate increase in the minimum wage to $15/hr, but the real world consequences of doing this should give us all pause.

    • Thank you for bringing the non-profit issue up. I run a non-profit on Capitol Hill and if the wage increase occurs, without counting the very healthy benefit package we supply, I can guarantee that I will have to shut down 3 group homes. This translates into 30 employees and 85 disabled persons heading to homelessness. I would happily pay a $15 base wage if the state/fed were able to pay us more. Currently, we receive only $42.00 dollars a day to take care of a human being….just about what it costs to board your dog….pretty sad.

  7. How many non tipped employees does molly moons have? Most small business owners are afraid to say any against this 15$ an hr folly. They are afraid of blow back! And the mayor and his cohorts are debating in complete secrecy! WTF

  8. Almost every good argument for avoiding raising the minimum wage in 2014 dollars to $15/hr is a good argument for lowering it from what it is now. Lowering the minimum wage would make it easier for businesses to turn a profit. Lowering the minimum wage would mean retail prices of things created and sold with the use of minimum wage labor could be lower than they likely need to be at the higher rate.

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