Mayor’s $15 plan for small businesses: tip and health care credit, 5+ year phase-in

IMG_3048Tips and health insurance would count towards a  $15 an hour minimum wage and extra time would be given to small businesses to implement it under a plan that emerged from closed door negotiations at City Hall, sources close to the process told CHS on Friday.

Speaking at a press conference on Thursday, Mayor Ed Murray said he and his minimum wage task force were committed to a set of principles on charting a path to $15 as part of a broader fight to addressing the country’s shrinking middle class, but that he still wanted more members to back an unspecified plan.

CHS has now learned details of that proposal, although sources say many parts are still in motion. On Friday morning The Stranger also reported on the proposal, which would require all employers to phase-in a $15 an hour minimum wage with no inflationary adjustment during the phase-in period.

The plan offers a two-pronged approach for both small businesses and large, 500+ employee businesses.

Small businesses that offer health insurance or have tipped employees would get to count those benefits towards a minimum wage and get seven years to phase-in all employees to at least $15 an hour. Small businesses with no health insurance or tipped workers would be given a five-year phase-in period.

Large businesses would face similar options, with a four-year phase-in for employers of tipped or insured workers, and a three-year phase-in for those without tipped or insured workers.

The negotiations also reportedly are setting the groundwork for the next phase as the City Council must pound out legislation to make the final framework a reality. The process to achieve consensus on the committee recommendations is also an effort to galvanize the business, labor and nonprofit groups involved to support the plan once it is taken up by Council later this year. The mayor will veto any legislation that significantly deviates from the final recommended plan, a source involved with the discussions but not yet authorized to speak with the media told CHS.

If the consensus holds and the plans don’t prove untenable in the political arena ahead, the majority-backed proposal’s elements appear to be major wins for the Capitol Hill food and drink-focused small business community.

Capitol Hill Chamber of Commerce director Michael Wells and and Lost Lake owner David Meinert are members of the Income Inequality Task Force. Meanwhile, a charter amendment so activists can begin the process of collecting thousands of signatures to put the issue on the ballot this fall.

Negotiations over how to implement a $15 an hour minimum wage continued into stoppage time on Friday as the mayor’s Income Inequality Advisory Committee failed to reach consensus in time for a planned Thursday announcement.

21 thoughts on “Mayor’s $15 plan for small businesses: tip and health care credit, 5+ year phase-in

  1. Honest question here… where do the number of years to phase in come from? Are these based on something or simply arbitrary time spans that would make people feel like something is happening (regardless of big or small business)?

    When the city releases proposals like this is, do they make available not just what the proposal is, but how they came to their conclusion? Basically a show your work kind of deal?

    Internet search commencing but I figured somebody wiser than I might know off the top of their head.

  2. Seven year phase-in gives Big Business & the Koch Bros enough time to get a statewide ballot campaign underway to have state minimum wage laws pre-empt local minimum wage laws. Or to outlast the current Mayor and try to get it repealed or full of more loopholes. Or some other shenanigans.

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  4. This is completely insane. Only Seattle could come up with such a complicated and convoluted set of rules for a minimum wage. And of course we all know these wonderful business owners will be raising prices immediately because of “increased costs” when in the end it will just be going directly into their pockets.

    • Not all businesses run with high profit margins. If the minimum wage rises 60%, you can absolutely expect prices for many items to rise sharply. There’s no collusion, this isn’t a ruse, businesses are going to have to bring in more money to cover payroll or they will have to shut down.

      Long term this may be the right thing to do, but this will have a big impact on a lot of small businesses.

  5. Ed Murray is such a spineless piece of crap for not standing up to that socialist pig and telling her no. Please put this to a vote, I would gladly vote against such an increase

  6. Seven years! Wonder what the state minimum wage would get up to in seven years?

    I get the tip credit but not the health benefits credit. I am an office worker, and if I was offered a job with a $50K salary plus benefits, and then found out I was actually paid $40K gross because they were counting paid health benefits as salary I’d feel like it was a bait and switch. I get the concept of total compensation packages, but health benefits aren’t wages. Last I checked, I can’t claim my groceries on my insurance, but maybe these guys know something I don’t.

    Is there a floor for these credits? Like if your health care and tip credits get you below the state minimum wage, then what happens?

  7. I think the “total compensation” just opens up all sorts of loopholes. Just raise to $15/hour straight up and be done with it. Businesses will survive. Really. Insurance, tips… all icing on the cake and should not be considered part of a persons wage. So unnecessary to make things complicated.

      • Have you ever lived in a place where tipping wait staff isn’t the norm? When I was in Switzerland the service was usually terrible, and I’m a patient guy. We’re talking hours sometimes between visits from the servers, even at cafes where I was just getting a coffee. Tipping is well worth it for the customer.

        • I always leave an extra $5 for my physician too. Can’t be too careful! I even strapped $20 to my ankle when I went in for surgery. I wasn’t being cheap – I’d already shoved $100 directly in the pocket of the anaesthesiologist earlier in the day. You know how those guys can be!

  8. Clearly Murray doesn’t think a minimum wage increase is a good idea and he’s doing what he can to strangle it at birth. Deducting tips, health benefits, a 5-7 year phase-in, and no adjustment for inflation is beyond pathetic.

    The people of Seattle are interested in setting a wage floor of $15 in today’s money that applies to everyone in a simple, predictable, low complexity way. Murray is apparently more interested in serving the interests of the tiny minority who think they benefit from low wage workers.

    If he proposes this, he’ll probably claim that this is a practical plan for a $15 minimum wage when it’s an astoundingly awful plan for something that isn’t a minimum wage and has a best possible value approaching $12.50.

    If they’re going to deduct tips, why not force people to declare all their income? If they work two jobs and one of them pays $20/hr, it totally makes sense that the other should only have to pay $10/hr right?

    Wrong.

    Tips aren’t paid by businesses, they’re paid by customers.

    Deducting tips from the minimum wage means that some business owners will continue to benefit from labor that is actually funded by acts of charity from strangers to workers.

    The focus on the few people who earn good tips is a red herring. The businesses where those employees work tend to provide expensive goods and services yet somehow can’t afford to pay their staff a basic wage. Not all low paid workers earn tips let alone earn good money from tips.

  9. The Mayor’s plan seems pretty reasonable to me….a compromise between the interests of labor and business….but I’m sure the 15Now folks will scream about it, and go ahead with their initiative for next fall’s election.

    I support the tip credit because that is in the interest of both employers and their tipped workers, who would see a decrease in their income without it. But I’m not so sure there should be a credit for health insurance premiums. If that goes through, though, there would be an upside…some employees would probably decline employer-based health insurance and go to the Obamacare exchanges instead…and this would be a step in the direction of a national, single payer system, which is what our country badly needs.

  10. There has been zero hard evidence provided by the tip credit advocates that a $15 minimum wage will result in server’s earning less in tips. There’s just been a lot of fear mongering.

    San Francisco has the nation’s highest minimum wage, a paid sick leave ordinance AND a mandatory healthcare law preceding Obamacare. And servers in SF are still tipped the 20% standard. None of those various wage & benefit laws affected tipping trends.

    • That may be true about San Francisco, but I believe their minimum wage is something like $11/hr. That’s a long ways from $15/hr. If we raise it that much, without a tip credit, it’s just common sense that some customers will either decrease their tip or stop tipping all together, and then restaurant servers will see their incomes go down.

      • I’d tip anyway, as long as the service is good. But I’ll eat out less. It’s so expensive to live here and I already cut back restaurants the past year. But, I think businesses will automate more and implement self serve models to get around increased costs.
        I think I’ll become a better cook instead. I scored a set of the canal house cookbooks for Xmas, the recipes are easy and the outcome tastey.

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  12. Correct me if I’m wrong, but a tip credit to 15$/hour would mean that most bars/restaurants would actually no longer have to pay their tipped employees an hourly wage. Why do they have to suffer for the rest?

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