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A year from ‘the big, scary jump,’ Capitol Hill small businesses take step by step approach with Seattle’s rising minimum wage

Minimum wage workers at Seattle’s small businesses continue to see their wages rise. At Elliott Bay, that can also mean people have more money to spend on books.

(Source: Seattle Office of Labor Standards)

Contrary to popular belief, Seattle does not have a $15 per hour minimum wage. At least not for every business. But the march toward $15 continues this year, and is being met with a collective yawn from many business owners around Capitol Hill, though some are looking nervously at 2020.

The slow, step by step march to $15/hour has helped.

Tracy Taylor, of Elliott Bay Book Co. said her store is managing to keep up with the increased cost of labor. She was grateful for the gradual pace of the increases so far. Moreover, she said that the increased wages have created a virtuous cycle by giving her customers more to spend.

“It appears the minimum wage is, in theory, increasing sales and consumer demand, at least from what we’ve seen. Hopefully other small businesses are finding the same,” Taylor said.

When the city implemented the minimum wage law in 2015, it started creeping toward $15 in increments, depending on the size of the company, and whether or not the company offers its employee’s benefits and/or they receive tips.

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This year’s minimum wage for companies that have 501 or more employees (globally, not just within the city) is $16 per hour. This is the first year that, for large businesses, it does not matter whether or not the company offers benefits.

For small companies who do not offer benefits or do not have tipped employees, the minimum wage this year is $15 per hour. If a company offers benefits, or the employee receives tips, the minimum is $12 per hour. That rate assumes that the cost of the benefits or tips equals at least $3 per hour.

The results of the wage increase in Seattle have largely been positive, according to a University of Washington study of the increases. In a paper published in October 2018, UW researchers found that overall, low-wage workers (they included anyone making $19 per hour or less) saw a pay increase of about $1.54 per hour. They also saw a 30 minute per week reduction in hours worked, but it worked out to a net gain of about $12 per week. They also found that more experienced workers saw a larger benefit, averaging about $19 per week. Less experienced workers saw little to no change.

(Source: Seattle Office of Labor Standards)

Another facet of the study, published Jan. 1 of this year, found the changes had no impact on food prices at grocery stores.

For a bit of context, Washington State’s minimum wage is $12 per hour – tied with Massachusetts and California for highest in the nation. The federal minimum wage, unchanged since 2009, is $7.25 per hour. The federal wage applies in 19 states; 29 states and the District of Columbia have a higher minimum wage than the federal standard. Wyoming and Georgia have wages that are lower than the federal minimum in some cases.

Capitol Hill business owners CHS has spoken with have been generally unperturbed by the annual increases thus far.

“It’s not impacting business as usual,” said Linda Derschang, owner of Linda’s Tavern, Oddfellows, Smith, and number of other restaurants on the hill and across town. She said that she’s generally coped with the increases through standard price increases.

Ian Eisenberg, owner of Uncle Ike’s pot store and other businesses says the minimum wage hikes don’t really impact him. He already pays his employees higher wages and offers benefits. Eisenberg said he does this not only at his pot shops, but also at other businesses he owns, such as the car wash next to Uncle Ike’s on 23rd Ave.

“It doesn’t really affect us much,” he said.

In both cases, he finds that paying people higher wages and offering benefits allows him to retain employees. This ends up being better for customers who have more knowledgeable employees, and better for his businesses in not having to constantly train new people.

“I’d rather have people trained,” he said.

Eisenberg noted that he does have to price his marijuana higher than competitors in the suburbs, but in the city, he says his prices are competitive.

The issue some business owners see coming is next year’s increase. To date, the annual increases have been 50 cents each January 1st. Next year, however, the minimum will go up by $1.50, to $13.50 per hour.

“That’s the big, scary jump,” Derschang said.

In 2021, the rate will go up another $1.50 per hour, officially hitting the $15 per hour mark.

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2 thoughts on “A year from ‘the big, scary jump,’ Capitol Hill small businesses take step by step approach with Seattle’s rising minimum wage

  1. The legislation has resulted only in an increased wage (on average) of $12-$19 a week? That’s not very impressive, and makes one wonder if all this is “much ado about nothing.” And there has been some reports of a negative effect, e.g businesses closing at least partly due to this legislation.

    • P.S. Yes, with the still-pending further increases (until 2021), perhaps wage increases will be more substantial….will be interesting to see the final data in 2021. Will the ultimate increase even keep up with inflation?