A survey of small businesses from 18 Seattle neighborhood commerce groups and the Greater Seattle Business Association showed that the majority of the city’s entrepreneurs who responded have little faith that raising the minimum wage will address income inequality — but the business owners would prefer at least a three-year phase-in of the wage and consideration of an employee’s total compensation if it’s going to happen.
“Should the minimum wage be increased, 60% prefer a phase-in of three years or longer,” reads the GSBA’s report on responses from what the organization called an “informal group” of businesses from across the city. The “Neighborhood Chamber Alliance” report says 11% of responding owners answered that they rejected any implementation of a higher minimum wage. “Only 9% support an immediate implementation of a $15 minimum wage,” the report concluded.
Only 251 members of the participating neighborhood business groups including the Capitol Hill Chamber of Commerce and the 15th Avenue East Merchants Association responded to the survey. The two Capitol Hill organizations boast around 350 members alone. GSBA says it represents more than 1,000 “business, professional, nonprofit and civic leaders.” 86% of the survey respondents have 10 or fewer employees with more than half employing fewer than five people. Restaurants and bars, “professional services,” and healthcare made up the bulk of respondents.
Despite, strong criticism of the concept by the most ardent $15 Now supporters, the survey respondents were very supportive of the “total compensation” concept in which tips and/or healthcare and other benefits could be factored in as part of the minimum wage.
“Regarding a potential policy on the minimum wage, 83% of small businesses employers agree that total compensation should be taken into account,” the report states. Responding businesses said healthcare (59%), bonus (55%), tips and commissions (41%) and retirement benefits (28%) were the most common “additional compensation and benefits that employees receive.”
The positive showing for the three-year phase-in and total compensation echo answers provided by respondents in a survey of Capitol Hill business owners and CHS readers.
The Seattle small business survey also asked business owners whether they considered income inequality to be a problem in Seattle. While more than 70% said they believe inequality is an issue, only 27% agreed that raising the minimum wage will reduce income inequality. “Respondents generally agreed that there were other avenues to consider when addressing the issue of income inequality, namely access to affordable housing (60%), child care assistance (49%) and healthcare assistance (49%),” according to the report.
Seattle ranked 31st amongst the nation’s cities in this measure of economic inequality from the Brookings Institute — Atlanta and San Francisco topped the unfortunate list, by the way. Meanwhile, this study showed that raising the wage to $13 would cause “no measurable effect on employment.”
The 251 survey respondents also shared their forecasts for changes to costs should a $15 minimum wage be adopted. 59% of the small business respondents estimated an increase in operational costs greater than 6%, with 25% estimating an increase greater than 20%.
Participating business groups included the Aurora Merchants Association, Ballard Chamber of Commerce, Capitol Hill Chamber of Commerce, Chinatown-International District Business Improvement Area, Columbia City Business Association, Fremont Chamber of Commerce, Greater Seattle Business Association (GSBA), Green Lake Chamber of Commerce, Madison Valley Merchants Association, North Seattle Chamber of Commerce, Queen Anne Chamber of Commerce, Phinney Neighborhood Association, Rainier Chamber, South Lake Union Chamber of Commerce, U District Partnership, Wallingford Chamber, West Seattle Chamber, West Seattle Junction Association, and the 15th Avenue East Merchants Association.
Despite the analytical approach, the GSBA’s report also shares some of the less data-based fears of the business community:
Employers expressed concerns that, for $15/hour, they would have to favor more experienced and self-sufficient job candidates and would no longer be able to spend as much time training inexperienced workers just entering the workforce while at the same time not being able to maintain their current level of staffing. The increase in costs would, in many cases, necessarily be passed on to the consumers.
The result — at least according to the report — would be cut benefits and, despite the continued wave of new bars and restaurants planning locations on Capitol Hill, few new businesses in Seattle:
A higher base wage could make the provision of benefits such as healthcare too expensive for some employers, forcing the employees to purchase their own healthcare and potentially resulting in a decrease in purchasing power even with the higher wage. Many employers commented that they would be less likely to expand their business in Seattle as opposed to another city, less likely to start a new business in Seattle, and more likely to close a Seattle location.
Expect more surveys, reports and studies later this month at the city’s Income Inequality Summit at Seattle U.