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Seattle’s minimum wage law kicks into high gear with 2016 bump

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To celebrate the new wage law going into effect earlier this year, City Council member Kshama Sawant joined labor leaders and activists to pass out informational flyers and balloons to workers inside the neighborhood’s chain businesses. (Image: CHS)

Screen Shot 2015-12-04 at 3.43.51 PMMinimum wage earners in Seattle are getting another raise to kick off the new year. Starting in January, minimum wage workers at companies with more than 500 employees, which includes most fast food workers, will get a an 18% bump in pay from $11 to $13 an hour. Small business employees will have a $12 guaranteed minimum, an increase of $1, and those that are tipped will get a $.50 base-pay raise bringing their minimum hourly wage to $10.50.

2016’s scheduled increase is a big ramp up for Seattle’s phased-in $15 an hour ordinance, which was passed in 2014. The law went into effect this April, bringing all minimum wages to $11 an hour except for tipped workers, who went to $10 an hour.

Business owners on Capitol Hill have taken various strategies towards meeting the new requirements. Some businesses, like Molly Moon’s Ice Cream, had already brought workers to $15 an hour even though they likely wouldn’t be required to do so until 2021. While there’s been little evidence that the new minimum wage has effected business openings or closings, some Capitol Hill business owners told CHS they would have to continue to make changes to roll with the scheduled increases.

At 15th Ave’s Coastal Kitchen, menu prices will rise around 4% due to next year’s increase, according to owner Jeremy Hardy. He said the restaurant has made other changes to soften the blow to customers, changes that would continue as the ramp-up to $15 moves ahead.

“We have re-engineered our scheduling in the back of house (kitchen-typically the most difficult area to adjust as this is the power plant) as well as the front of house,” he said. “The real increases start in the following years when the increases will require a more potent elixir of adjustments to be determined.”

Retrofit Home owner Jon Milazzo said the starting wage for her employees has been $12 an hour for years, so the new minimum wouldn’t have any immediate effects. However, Retrofit will make hiring changes as scheduled increases continue past 2016.

“We wont offer part time jobs for students or entry level into our industry, you will only be able to work here coming in with a complete skill set. So that sucks all around,” she said.

HkE92YNSeattle’s Office of Labor Standards sent notifications to every licensed business in the city reminding them of the change. Business owners can also access the new minimum wage poster here.

“We will continue to educate both the business and worker communities about the minimum wage increase throughout the month, and after it takes effect on January 1,” said OLS director Dylan Orr. “OLS will also continue to offer businesses technical assistance on how the law applies to their businesses.”

OLS was created as part of the minimum wage law to help enforce Seattle’s labor ordinances, which also includes paid sick leave. Currently, OLS has 108 open investigations into 78 employers on allegations of wage theft, including seven separate investigations into allegations that employers retaliated against workers asserting their rights under the ordinance. The OLS violations dashboard hasn’t been updated since July (CHS got the most recent numbers from the office directly), but Orr said it would be updated soon.

“In short, we are busy,” he said.

The office closed its first investigation in August against Homegrown sandwich shop, which has several locations in the city including one inside Capitol Hill’s Melrose Market. According to Homegrown co-owner Ben Friedman, the investigation was opened in May after Homegrown was found to be miscalculating their tip credit at all their Seattle locations. Friedman said workers were immediately given back pay plus interest.

Meanwhile, a report from labor group Restaurant Opportunities Center showed wage theft, paid sick law violations are commonplace for Seattle restaurant workers.

The next few weeks are the most crucial of the year for many independent retailers including Elliot Bay Books, and manager Tracy Taylor said sales are looking strong enough to cover next year’s wage increase.

“The real question is going to be long term over the next few years, but no one knows the answer,” Taylor said. “Yesterday, I spent an hour on the phone with three bookstore owners from San Francisco and St. Louis discussing the minimum wage issues in their cities. It was fascinating to hear what they’ve done and where they are.”

Taylor said she also wished City Hall had done more to promote the importance of keeping local dollars local since the minimum wage increase only affects Seattle.

The wage bump will have no direct effect on Central Seattle’s fastest growing segment of businesses: independent contractors for rideshare services. Last week, CHS reported that 9% of all new business licenses in Seattle were for a category largely made up of drivers who work for services like Uber and Lyft.

Since drivers work as independent contractors, they are responsible for their own wages despite the fact that many drivers, including some interviewed by CHS, rely on driving as their primary source of income. The situation has sparked a closely watched movement in Seattle to allow so-called “transportation network company” drivers to collectively bargain with the owners of the app-based companies.

Some Capitol Hill businesses are also preparing for the changing wage structure by leaping ahead with service charges and eliminating tipping. Renee Erickson told CHS she has been busy meeting with other restaurant owners interested in how she has transitioned all of her venues including the newly opened Bar Melusine, Bateau, and General Porpoise to the no-tip, service charge future. Jerry Traunfeld has taken a similar tack at Lionhead. Meanwhile, newly opened Optimism Brewing is another example that has taken a different path to changing the way food and drink business is done with a fully cashless operation and no tips.

Capitol Hill served as the backdrop to some of the most important events on the march to $15, from an early walkout at the Madison McDonald’s to Mayor Ed Murray enacting the minimum wage law. In between, there were symposiumsforumsstudies, and countless speeches.

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19 thoughts on “Seattle’s minimum wage law kicks into high gear with 2016 bump

  1. My coffee was recently $5.75 at Vivace. They have had a large exodus of employees in the past few months. According to several employees their tips have dropped off. At Renee Erickson’s silly donut shop the bill was $24.00 for 2 donuts and 2 lattes + a hot chocolate. A 20% tip was charged on our bill and it was stand in line counter service. We are now being expected to tip no matter what the service. There will be consequences because while we are now a very wealthy city, people will have the limits to spending on coffee, food, etc.

    • Nice anecdata. “This is a failure because of two data points I vaguely allude to.”

      My own anecdata: I’d never pay $24 for 2 donuts and 2 lattes, still buy lots of stuff from Vivace, is unaware of a “large exodus” of employees because the few I know are still working there and they have regular churn, and I still tip the same as I’ve always tipped.

      So my own anecdata offsets your anecdata, so everything’s fine!

      • Vivace is one of the last decent places to patronize on the Hill (or in the Cascade neighborhood). Their employees are awesome and they tend not to suffer fools. I have gone there daily for many years and have never seen them understaffed. Quite a few months back they raised their base charge for a double shot esspresso from $2.75 to $3.00, not out of line with most standard coffee shops, especially considering the high quality of their product.

    • If you want a cheap doughnut, go to QFC. If you go to premium shops like Vivace and General Porpoise, you should expect to pay premium prices.

      • my rent, bills, and premiums have gone up. i make french press coffee and meals at home, budget is too tight to go out to eat/drink. I can afford to buy less expensive beans, by adding a tiny pinch of salt to the grind, it cuts the bitterness and improve the coffee flavor. Boil the water, wait 5 minutes to cool down, then pour into press with med-fine grind and pinch of salt, and wait another 5-6 minutes. It makes a perfect french press.

  2. It’s interesting that owner Jeremy Hardy of Coastal Kitchen is raising menu prices 4% to fund the increase in wages. So, it seems reasonable that customers should reduce their tip by 4%, since servers and others will be making more money in wages.

    To increase prices like this and still expect the same level of tipping seems unfair to me. A better approach is what’s happening in other places, i.e. to institute a service charge and eliminate tipping. Or, as at Lionhead, to eliminate tipping and cover the increased wages via the menu prices.

    • Many waiters/waitresses/bartenders get most of their income as tips, which go largely unreported. Imagine if everyone who lives largely off unreported tip income started paying taxes on ALL of it. A huge part of the “under the table” economy.

      • These days most people use cards and cash for a restaurant bill is rare. Tips paid by card are automatically reported so you can’t blame waiters for tax evasion.

      • Oh how I love reading all of your thoughts on how the tipped economy works now.

        Tip me 4% less? Hahaha, what an a**h***! Minimum wage for tipped workers is only going up .50 cents an hour. That does not equate to you tipping 4% less for services. As well, that 4% increase referenced in the article (Jeremey @ Coastal Kitchen) has to go to maintaining wage increases for EVERY STAFF MEMBER in the restaurant. Not just servers who are tipped.

        Do you also realize that servers tip out anywhere from 4%-7% of their tips to other staff members for support? The host needs tipped. The bussers need tipped. The bartender gets a share. The kitchen staff also get a percentage. So if you leave me $21 or $22 bucks on your $135 bill, I tip out about 6.5%, or $8.77, of the bill to support staff, so I only receive about $12.23. If you left me 4% less of a tip, I’d get even less, but I still have to tip out a percentage to the support staff no matter what.

        The reality is, while I make tips, I don’t actually get another “paycheck” from an hourly wage because every cent of the money I make via the actual hourly wage goes to cover, you guessed it, MY TAXES. Because employers report tips on payroll and I pay taxes from the $10.50 hourly wage. Because that’s how it’s done.

        Here’s the thing, cash is nearly non-existent in today’s economy. I’ve been in the restaurant biz since the mid-90’s, and yes, while there was a time it was fairly easy to under-report your tips, that’s just not the case any longer and hasn’t been for years. With all money done via credit cards, there’s complete transparency. Even more so, if you do find a way to underreport somehow, or if your employer is for some reason not on the up and up, the employer is still on the hook as well as you if anyone gets audited. I’ve worked at 5 different restaurants since 2004 and there’s not a single one who doesn’t report tips 100% on my paycheck. It’s illegal to not claim, and it’s just not something that really even happens, at least that I know of based on where I and most everyone I know works in this city. In the restaurant business, there is no longer an ‘under the table’ economy.

        I also think you all have this delusion that servers are rolling around in $100 bills or something. Or that we’re making over $100k a year. It’s just not true. I just did a pole of 6 of my friends and we’re all in nearly the same annual earnings range, and it’s under $60k a year. With FULL TIP REPORTING COMPLIANCE and taxation at all the restaurants we work at (6 different ones).

        Serving has it’s perks of course, mostly in the amount of flexibility in scheduling. But it’s also got a lot of shit that we deal with, both on the guest side of things and logistic side of things. No insurance (I pay over $300 a month out of pocket for health insurance coverage), no 401k, no retirement options, no vacation pay, if you’re sick-you don’t get paid the tips you lose, you just don’t make any money.

        I realize this won’t change some minds, but the assumptions that fly around about tipped workers just aren’t true 99% of the time.

      • Some of what you say is just not true. Yes, the guy not wanting to tip more is an asshole. Sort of. Many people are struggling in Seattle’s new tech economy, and a 4% increase in food prices, on top of the other adjustments for inflation this year, is not a small deal. No, all tips are not on credit cards, nor are all sales. Maybe 80%, maybe 50%, of sales are on cards, depending on the restaurant. Some are still all cash. And many tips are left in cash even when the bill is paid with a card.

        At a decent Seattle restaurant, you are correct that servers may average $60,000 per year. Some make more. Many make less. Almost none work more than 4, 8 hour shifts per week. With tips, many make $25 – $50 per hour, and don’t have to pay taxes on all of it.

        End of the day most of the raise in minimum wage will probably lower some servers incomes, raise back of house, raise prices, and not effect the owners’ incomes. Most customers won’t know because the ones that would notice the increase in prices are moving out of the city because it’s too expensive to live here.

        PS – there are several restaurants in Seattle that offer health, paid vacation, and retirement, as well as some that offer education credits as well.

      • I’m not sure where you work, but in the restaurant that I’ve worked at for over 2 years I can tell you with 99% accuracy that at least 97%-98% of all transactions are done via credit card. I have had one table pay in cash in the last 2 months. And no, not many tips are left in cash at all, I’ve had only 1 table leave a cash tip, versus a tip on the credit card, in that same 2 month time period. No one carries cash anymore. Even I don’t, because I don’t make it. In my previous restaurant it was much the same.

        The very, very few restaurants that do offer insurance and a few other benefits, require you work full-time (32 hours or more) to qualify. An average servers shift is 6 hours, and you’re right, most servers work 4 days a week. That’s 24 hours. Sorry, don’t qualify. Even if you worked 5 days a week, you’re barely making 32 hours a week, and factor in a call-off, a shift cover, slow season versus busy season, etc. and you’re under the minimum needed. So again, no benefits for servers.

        And I’d love to know, specifically where paid vacation, retirement and these educational credits are being offered. Because I’d love to get a job there.

    • Using your logic, you should be tipping based on the prices from the first restaurant you ever visited, since any corresponding increase in food prices should require a drop in tip percentage. Inflation? Screw that! I get regular cost of living increases? Screw the person who’s had a fixed hourly wage without regular increases for, what, multiple years? Yeah!

      Or to put it more simply, are you saying we should all be tipping 0%, because food costs have gone up more than 20% over the last few decades. Because you’re associating costs with tips, which only seems reasonable if your own income isn’t changing.

      • As a teacher, I’m finding this comment section a little economically horrifying. “At a decent Seattle restaurant” a server average 20k more a year than I do, while working less hours. And I spent more than 20k to get a Master in Teaching degree and often buy resources for my classroom. Sure I get unpaid vacation time, but during the school year I average 50-55 hours a week and am paid for 40.

        Don’t get me wrong, I knew I wasn’t going to make bank as a teacher and I know being a server is hard work. I also assume that the people who make that kind of money are career servers, not the ones who work their way through college by serving at Cheesecake Factory. But, I am still a little shocked by the salaries of those complaining that they will have to adjust how they disperse their tip money.

        Currently, I am a very generous tipper, but I’m going to start cutting back. Once the $15 goes into effect, I think I will adopt a more European style of tipping.

  3. Amazing you have so many stats. You sure you’re a server and not one of those well minded activists, or both? Sounds like you work at a perfectly “typical” place, which doesn’t exist. One place I’ve worked at recently is all cash. One had about 50% cards, another 80%. Seems like the amount of cash versus credit cards used to pay tips is all over the place. I know I get to pocket a lot of cash I don’t pay tax on, often more than I pay tax on.

    As for benefits – when I worked at Anthony’s they were great – https://www.anthonys.com/contact-us/employment/benefits
    and no, not everyone requires you to be “full time” to get them. I’ve heard Tom Douglass restaurants also ofter decent benefits.

  4. Here’s a tip-(No pun intended) tipping behavior is different in different places. Bartenders get tipped in cash more, as a general rule, and upper end restaurants, primarily cards.

    But here’s my attitude. The difference between a 15% tip and a 20% tip on a $100 tab is $5. If I’ve got $115 for dinner, I pretty much have $120. For a $5 difference, I can brighten the evening of a hardworking person who performed a fairly personal service for me. I’m happy with it, and I make jack. I’m a grad student. But when I budget to go out, I budget to tip 20% at least. It makes me feel good to tip. A slight increase in menu prices isn’t going to mean I suddenly stop eating out once in a while or stop tipping well. Maybe I skip the appetizer, or whatever, but this truly isn’t that big of a deal.

  5. My favorite part of the comments today was a tipped worker complaining that they have to pay taxes on their wages. What a bummer, bro.

  6. Did people not think there would not be a cost to us consumers when we all wanted $15 minimum wage?

    I was hoping this would begin the end of the tipping economy and posted prices would adjust. I dislike these hidden charges (restaurant imposed service charges as well).

    You tip for service above and beyond what you expect.

    And I would expect carry-out to cost the same as table service. And I order carry-out a lot.

    • Do you tip the retailer at the Gap because he helps you find what you want? That’s apart of the job. Being served food is part of eating out.

      I hope this model will change soon.