Seattle neighborhood small biz survey shows tepid support for $15 minimum wage, strong backing for phase-in

A sea of red dominated last week's City Council hearing on raising the minimum wage (Image: CHS)

A sea of red dominated last week’s City Council hearing on raising the minimum wage. Supporters will again be rallying for the cause at Saturday’s 3/15 march. (Image: CHS)

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.

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11 thoughts on “Seattle neighborhood small biz survey shows tepid support for $15 minimum wage, strong backing for phase-in

  1. The most reasonable article I’ve read about the minimum wage hike so far. If Sawant wants to speak for the “workers”, she needs to realize that small business owners are workers, too.

  2. The federal government through the Department of Labor has imposed a minimum wage since 1938. Nearly all the state governments also impose minimum wages.

    Originally, the Fair Labor Standards Act (FLSA) covered only about 38% of the labor force, mostly in the manufacturing, mining, and transportation industries. Over the years, Congress has significantly expanded the coverage and increased the minimum wage rate. The air transport industry was added in 1947, followed by retail trade in 1961. The construction industry, public schools, farms, laundries, and nursing homes were added in 1966, and coverage was extended to state and local government employees in 1974. Currently, the FLSA covers about 85% of the labor force.

    The fact is, the programs labeled as being “for the poor,” or “for the needy,” almost always have effects exactly the opposite of those which their well-intentioned sponsors intend them to have.

    Let me give you a very simple example – take the minimum wage law. Its well-meaning sponsors – there are always in these cases two groups of sponsors – there are the well-meaning sponsors and there are the special interests, who are using the well-meaning sponsors as front men. You almost always when you have bad programs have an unholy coalition of the do-gooders on the one hand, and the special interest on the other. The minimum wage law is as clear a case as you could want. The special interests are of course the trade unions – the monopolistic trade craft unions. The do-gooders believe that by passing a law saying that nobody shall get less than $15 per hour (adjusted for today) or whatever the minimum wage is, you are helping poor people who need the money. You are doing nothing of the kind. What you are doing is to assure, that people whose skills, are not sufficient to justify that kind of a wage will be unemployed.

    The minimum wage law is most properly described as a law saying that employers must discriminate against people who have low skills. That’s what the law says. The law says that here’s a man who has a skill that would justify a wage of $9 or $10 per hour (adjusted for today), but you may not employ him, it’s illegal, because if you employ him you must pay him $15 per hour. So what’s the result? To employ him at $15 per hour is to engage in charity. There’s nothing wrong with charity. But most employers are not in the position to engage in that kind of charity. Thus, the consequences of minimum wage laws have been almost wholly bad. We have increased unemployment and increased poverty.

    Moreover, the effects have been concentrated on the groups that the do-gooders would most like to help. The people who have been hurt most by the minimum wage laws are the blacks. I have often said that the most anti-black law on the books of this land is the minimum wage law.

    There is absolutely no positive objective achieved by the minimum wage law. Its real purpose is to reduce competition for the trade unions and make it easier for them to maintain the higher wages of their privileged members.

    – Milton Friedman

    Current (February 2014) teenage (16 to 19 years) unemployment rate was 21.4% and 20 to 24 years was 11.9%

    BLACK OR AFRICAN AMERICAN Unemployment rate Both sexes, 16 to 19 years
    Not seasonally adjusted 31.5% vs. seasonally adjusted 32.4%

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  4. So when we hear talk about the “small business community” support a minimum wage increase it’s simply talk — a quick glance at these results show a good deal of those that are connected into the self-promoting advocacy side of small business don’t really believe in the usefulness of a wage increase, period. That is to say, they don’t think what they pay their workers has any impact on their lot in life. A lot of them seem to apparently think they’re being charitable for having any wage above x, anyway.

    Furthermore, the phase-in talking point is clearly one meant to stall and undermine the push to $15. That’s all it is. Look at the timeline: 3+ years that sounds reasonable, but you have to understand that, as with every other major move to secure worker wages, there will be lawsuits. I’d be surprised if many of the trade orgs and chambers of commerce weren’t already retaining legal counsel for a forthcoming challenge to _any_ increase in the minimum wage. It’s low risk to lodge a lawsuit when the initial increase is only to $11.50 or something because you can then stretch the appeals process and if there’s no injunction against further increases it’s still a win. And fundamentally speaking, 3 years of wage increases is a lifetime for any kind of political change, and that’s just the 3 years — I’m sure the average preferred phase-in period is somewhere between 7 and 10 years.

    Going forward from here, here are my predictions for the business community policy proposal and eventual reaction:
    -5-10 year phase in proposal, 3 year phase-in “compromise” position
    -An immediate lawsuit upon passage
    -Protest firings/”necessary workforce reductions”
    -“Minimum wage surcharge” on some receipts, and, as always,
    -The belief that the current wage structure is necessary and the sole thing allowing businesses to open and stay open

  5. Is it surprising that many small businesses don’t support minimum wage increases? I don’t think so. But at some point we have to stop seeking 100% consensus on this issue and leave it to good old fashion democracy.Yes, some people are going to disagree because their success relies on paying low wages to their workers, but this issue isn’t theirs alone to decide. Others are ideologically opposed to the concept of a minimum wage, but the issue isn’t theirs to decide either.

    Really the issue boils down to how impoverished do we want our neighbors, friends, and family to be. Personally I think our standards are far too low and would like to see a $15 minimum wage.

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