Ownership at Dino’s expects many restaurants and bars of its size to transition to service charges (Image: Dino’s Tomato Pie)
Seattle political leaders will not push forward to extend the city’s tip credit. Now, small restaurant and bar owners are preparing new solutions to make ends meet including plans for significant service charges.
Mayor Bruce Harrell addressed the looming end of year expiration last week as the Office of Labor Standards set the new inflation-adjusted minimum wage for 2025 at $20.76 per hour, saying his administration will instead focus on “aggressively addressing many of the pressures facing small restaurants” as the credit expires.
The expiration is “the right thing for wage fairness,” Harrell said in a statement.
“I will be continuing our conversations with small businesses to identify tangible and actionable ways we can help make Seattle more affordable,” Harrell said, including “public safety to inflation, insurance, and a wide array of other cost pressures, including best practices in addressing the absence of a tip credit.”
The mayor’s position seems likely to stop any remaining motion after one of the most abrupt political u-turns of the year.
District 3 representative Joy Hollingsworth, who was closely supported by Harrell during her campaign and whose office has worked closely at the mayor’s side on policy, reversed course in a matter of days on legislation she introduced this summer that would have extended the credit put in place ten years ago to protect the city’s small businesses during Seattle’s phase-in of a higher minimum wage tied to inflation.
Hollingsworth’s proposal would have responded to the coming 2025 end of the small business tip credit with a new plan to create a credit by lowering the amount at which inflation would increase wages for small businesses.
The proposal met a quick swirl of criticism for the first-year council member including opposition from labor including groups like the MLK Labor Council whose members have spoken out against extending the credit and especially heated rebuke coming from her predecessor Kshama Sawant.
Sawant, who holds the wage victory as one of her biggest victories in a decade on the city council before deciding to step aside last year, blasted the Hollingsworth proposal as an attack on “the landmark $15/hour minimum wage law that has lifted hundreds of thousands workers out of poverty, benefiting women and people of color in particular.”
The credit was part of the political maneuverings around the 2014 passage of the new higher wage law that tied the city’s minimum wage to the rate of inflation in the Consumer Price Index for the Seattle Tacoma Bellevue area. Ten years ago, the city imposed the new higher wage law championed by then-District 3 leader Sawant which called for increasing pay rates through phases with different levels for large and small employers, and for employers who provide some other kinds of compensation for their workers.
To start 2024 as the wage reached the $20 milestone for the city’s largest employers, small employers with 500 or fewer employees that pay at least $2.72/hour toward the employee’s medical benefits and/or where the employee does not earn at least $2.72/ hour in tips had their minimum wage set at $17.25 an hour.
The end of year expiration of the credit for tips and benefits for companies with fewer than 500 employees will bring renewed financial challenges to small businesses with wages jumping nearly $3 an hour for many small restaurants and bars that can no longer implement the credit.
Brandon Pettit, who runs a group of Seattle food and drink venues including the Dino’s Capitol Hill pizza joint, told the Seattle Times he expects many restaurants and bars will implement a service charge. Seattle restaurant leader Ethan Stowell said he expects his venues to transition to a straight 20% service charge — and no tips.
Hollingsworth’s office said after pulling back on her proposal in August the council member was planning to meet “with stakeholders, including small business owners, labor unions, and our Mayor’s Office” to “find a balanced solution.”
The mayor’s statements seem to put an end to the discussion.
CHS reached out to Hollingsworth to learn more but the council member has not responded.
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lol Harrell and Hollingsworth suck so bad. All they want to do is attack wage workers and not the stupid business owners who won’t pay the piper.
Sorry – where are the stupid business owners finding the money to “pay the piper”?
Do we really need to post the long list again? Start with Dino’s, Cherry Street, etc. etc. etc. etc.
Hollingsworth actually runs/ran a business. Sawant and her followers? They read a bunch of Marx, Engels and Trotsky. They didn’t really do much otherwise except pass laws that make things worse.
Riiight…Seems car companies and airplane makers etc. can’t raise wages fast enough.
Yeah, Hollingsworth is worse. She only cares about her bottom line, not fair wages. Joy sucks.
Just because someone owns a business, doesn’t make them an expert. Nor does it make them good at business. The voters actually matter.
Ok so we’re finally done tipping right?
service charges typically go to ownership; not the staff. I’m not done tipping but will avoid spots that do the service charge
Sure if you make minimum wage $50 an hour
Maybe you are…It’s simply a new way to take money from workers.
If the tip is 20% every time, then the service better be great every time or else I’m requesting a refund.
20% is suggested. The amount is your judgement. If you tip that much every time, you’re probably overpaying.
Let us know how that plays out
This is great if true…were there “hundreds of thousands” of minimum wage workers living in poverty here? I apparently did not realize the scale of poverty here was so acute. Do we have measurement of the reduction in our poverty rate?
Please don’t confuse my questions about this claim with my support for the $20 minimum wage. I don’t have much of a quibble with that at all.
I would have thought the masses of working poor were self-evident.
back in 2008 min wage at Starbucks was 8.50 or something. Apartments buildings usually required 2.5x the rent to even make it past the application process. Like today. Most people lived out side of Seattle and had roommates. And there was not even an option to save. Bi-weekly paychecks with a minimum wage job was like $680 after taxes and 40 hours. Supervisors made like one dollar more. This was most of Seattle’s business communities approach to fair wages. And Capitol Hill was never cheap. Roommates and broke by months end was the norm.
Watch this
https://www.youtube.com/watch?v=WEnv5I8Aq4I
Words like “fair” used to get people voting in a certain direction. But if you research the fair trade agreements made with coffee producing countries and how they get shafted every time then one can see that “FAIR” only means,
“ I gave you twenty dollars last week did you spend it already?”
-Andy Warhol-
Factory Girl
Great movie.
So you want terms that benefit business owners instead? Uhhh nope
You’re just being combative!
Why is anyone quoting what Kshama Sawant says? We voted her out. Or we would have, if she hadn’t have been too scared to run. Sawant knows nothing of running a small business and less of Capitol Hill outside of her activist cabal, most of whom are bitter losers and refuse to accept the results of 2023’s election. A trait they share with Trumpers.
I’m gonna counter with there’s a lot of small business owners who do not know how to run a business.
If so they would have been out of business a looooooong time ago.
Not when they get 3 bucks an hour from every worker.
If playing on a level field isn’t working? You suck at business.
This is all pretty crazy. Not just that there is an assumption that a majority of small businesses can just come up with this kind of money, but also that this could possibly result in a net positive for minimum wage workers. In order to pay for this (most small business owners can’t just pay for this out of profits), the establishments frequented by minimum wage workers are going to need to either raise prices or implement service charges. It is an idea that is politically beneficial and economically boneheaded. If you want to address income inequality, housing costs and inflation in this town, start by addressing the fact that the top 20% of people here make an average of $442k/yr (https://www.seattletimes.com/seattle-news/the-splitting-of-seattle-and-the-eastside-too-is-accelerating/). I am a restaurant owner, and I make below the average median salary in Seattle, but the political tone in this town relentlessly treats small businesses like we are in this top 20%, and can afford to absorb this futile effort. It will cost me half of my income if I don’t rise prices in January.
Why are so many business owners acting like this cam out of nowhere? They had almost a DECADE to prepare for this. If something in this situation is “economically boneheaded” it’s…well, that.
Sorry Mort…It just ain’t so. There’s more than a few businesses that need to go. Supporting owners with welfare is not the answer.
Welfare? It is not welfare to allow the market to set the wages of workers. It is much closer to welfare, for workers, when the government comes in and mandates a minimum wage. That is government mandating a benefit be paid at a certainty level, in this case in exchange for labor. I am not against a minimum wage, but to suggest that these businesses are receiving welfare if the government mandates a lower minimum wage is ridiculous.
You understand the voters are the market right?
Trying to make them mutually exclusive is convenient. But not actual numbers.
When businesses rely on the safety net to make their employers more profitable is not “fair market”. Places like Walmart teach employees how to get on welfare. Because Walmart knows they do not pay a living wage. Fast food is the same.
Amen to that brother. I am also a restaurant owner so I completely understand. What else are we going to do? How can we be expected to not raise prices?
Then raise prices. What’s with you people?
I know how to run a business! Yet, I can’t run it like a business! Like raising prices once in a while.
Sorry, the dollar menu is dead. 40+ years flat wages is over. You are a business owner? Then run it.
I find every restaurant choosing to default to adding “service fees” to every single order instead of simply wrapping up the cost of operating their business in the prices of the items THEY sell and set prices for deeply grating. I know their perspective is that people are less likely to buy things when the number on paper (or their stupid inevitable QR code menu site) is higher, but that makes it feel even more duplicitous. I’ve started avoiding restaurants–or even walking out of them without ever ordering–when discovering that’s the direction they choose to go.
I find your lack of knowledge about business quite grating.
Feel free to explain what you mean?
He won’t Gem. Being a discerning customer is not what they want to talk about when it comes to business. “Buyer beware” is not what they want to hear.
What they want is the most convoluted set of laws and toss in meaningless traditions to confuse the issue. They have a huge advantage RE: revenue streams. Now they do not. They are on a level playfield. Now their hair is on fire.
They’ve had it too good for decades. Relying on the govt. safety net programs to keep their businesses profitable, and the workers miserably struggling to survive.
These owners will tell you “I know and you don’t” and even disparage you. But what they will never do is explain why everyone can’t simply pay the same rate and charge the same rate as everyone else? They can’t tell you why they need to be the exception. They will gloom and doom you to death. Platitudes and placate.
Times are changing and they are terrified their gravy train has come to an end.
Great job proving the point that you don’t know. Gravy train? What gravy train? Your ignorance regarding actual small businesses is enormous. That’s a great thing about Seattle. The most uninformed folks are always screaming the loudest. That’s how we got where we are.
We must never pay labor what it’s worth.It’s better invested in convincing them this is normal.
This will not be good for workers. As a small business owner (actual small business with less than 10 employees) I won’t have a choice but to do two things. Layoff a worker that I can no longer afford and raise prices to afford the raise in wage for the workers that remain. The rising prices will lead to smaller sales totals to be tipped on and everyone will likely make less or the same that they’re making now. Is that good for service workers? Layoffs? Less hours? Higher Menu Prices that force patrons to buy/spend less? None of those things are good for workers, but that’s what will be happening in January for many small businesses in Seattle. Seattle is making it clear that they only want huge businesses that can suffer the enormous tax/fee burden and complete lack of decent services from the city and still be profitable. In the next election we should throw everyone on the council and the mayor out and elect people to those positions who are interested in actually making the city work instead of the folks we have now who are there to protect and enrich only their own interests and donors. This city is bad for workers and and business owners.
Trickle down Boomer economics?
I suspect it’s going to be just fine. How does Dick’s do it and many others? Do lay someone off. Many people are hiring.
Your doom and gloom story is nothing but old economic tropes. Already proven wrong. An equal playfield is what is needed.
“How does Dick’s do it?” Are you for real? Do you know anything about economics? Bigger food businesses, esp ones with chains, can increase prices by only a small amount and make up the rest with numbers of items sold. A business with only a handful of employees can’t rely on numbers – their client base is more niche. Please stop being so Sawant contrariarian, with no larger big picture thought, on every single thing on this blog. It gets really old
Well? You still can’t answer the question. “Niche” is an excuse that means nothing. How does every other business do it then?
“How does Dick’s do it and many others?”
You chose to misquote me and propaghanise an answer.
It’s YOU who is not real. Rant all ya want. You still had to edit my words to make your argument fly.
You proved our point
Dude – knock it off. Your zeal for the issue doesn’t match your understanding. When you say “How does Dick’s do it … and many others”, you are implying that you are comparing a chain to a small business. You need to understand that there are many people in this city running businesses that are nowhere near as well off as you make it sound. I am one of those, and I know many that are in the same camp.
What I think Charles is trying to say is that the larger your business is, the easier it is to absorb costs. Think of it this way: If your profit margin is 10% (on the high side), and you sell $1,000,000 a year in product (something you could do with 7-10 employees), you get to walk away with $100,000 a year for your efforts. If you are a chain, and you have 10 restaurants, with the same single owner, you would now be selling $10,000,000 in product, and you’d walk with $1,000,000 a year in profit. However, the reality is that the larger your business is, the higher your profit margins are, so that number is even bigger than that, perhaps as high as 15%, so you’d take home $1,500,000 a year. These kinds of numbers are absurd to a small business owner. Your average small restaurant owner not only makes well below the average salary in Seattle, but often makes less and works double the hours of their employees. To us, your dismissive and hateful comments are really offensive, not just because they are so carelessly slanderous, but they are so clearly not well informed.
My restaurant is over a decade old, and I work every day alongside my employees. We sell about a million a year in revenue, and if I’m lucky I get to take home $100,000 a year. My staff all take home more than the average restaurant worker and can make almost as much as I do ($90k) if they actually work 40 hrs a week, and incidentally, most of them choose not to. This minimum wage bump will cost me half of my income if something doesn’t change. I either have to raise our prices across the board, or I can build in a separate charge. Contrary to perception, the service charge can be the most honest way to deal with it, because I can calculate the actual cost of the legislation and cover it with the charge. Unfortunately, since there are so many people with uncharitable and spiteful perspectives in Seattle (just like you), I hesitate to do it this way, and I must find more subtle ways to raise prices, perhaps ways that people won’t notice as much. This is, in a way, less honest than simply putting it out there.
If prices don’t go up, and I can’t lay out a separate charge, I have to cut hours, or ask people to do more with their time, or forego raises I would otherwise have given, or trim down portion sizes, or you name it – none of it is good for consumers, nor employees. And if you think that over a decade of weathering this kind of a living is worth me taking home less than $100k a year, you clearly don’t understand how difficult this work is.
And for the record, I know many others who are running some of your favorite restaurants on Capitol Hill who work a lot more than me and take home a lot less. Many of them are contemplating closing, because the incentives for this sort of work are vanishing quickly. Please educate yourself and be charitable before honking about things you don’t understand. If you ever come out of the shadows, I’d happily sit down with you over my books and show you that I am not lying about any of this.
I’m not saying it’s a get rich quick scheme. I’m not saying it is easy. If it was easy? Everyone would be doing it.
Seeing as how you spent the time and energy. I’ll give you an idea. Smaller portions-Smaller prices. HIgher table turnover too.
I understand it’s not easy. All I am saying is sacrificing labor for profits is not the way. Saying “Corporations are people too” does not gain a lot of support from folks like me.
I think that there’s a time when things have to be fair. Same rules of the road. There’s a reason I am not a business owner. Never wanted to be one either. Members of my extended family grew up in CA. Cupertino Santa Clara county. They all own a business of some kind.
If you are well educated. Got a well to do family. That makes it a lot easier. If you get that education for free or close to it? Even better.
It’s a combination of good fortune and friendly laws that got them started. They couldn’t do it today.
Sorry but it’s tough all over. You worry about take home pay while others go hungry and w/o a home. Live in cars and barely make it from one check to the next.
I am a believer in history. Tax rates before and after Reagan are a huge reason we are here now. If all these right wing laws were so great? Why are we struggling to survive while 3 billionaires control 50% of America’s wealth?
Now of course, that’s not you. Not the bottom 50% or the billionaire. You are in the middle. You sound more like the “falls through the cracks” category. If the safety net was bigger. It’d be less risk to start a business.
The fact someone like Trump can exist is an issue with laws and values. People trade their values for something else. There’s few people who truly live by their values. People are always making tradeoffs.
My thing is we can’t be cutting each other’s throats. When someone can’t eat or pay bills? They blame the wages. The system. That’s on businesses. So that’s just how it works man. 40 years of flat wages is a fact. The dock workers just got a 61% raise. That’s about right. Can you afford that? Well, that’s the competition.
Business is getting a bad rap because they deserve it. Saying “It’s not me” is fine. But it still doesn’t solve the problem of radical capitalism run amuck. The effect on generations of kids growing up and watching parents struggle. It all come to a head sometime. Carving out little exceptions is how we get here. Corporations are people.
Ok Riko, I’m not sure what’s going on here. Your logic is like a Rube Goldberg machine. It’s a word salad. It sounds like your minimum wage perspective is part of a whole network of unrelated ideological vignettes.
I can’t respond to this word salad, because the vast majority of it is either lacking clarity due to poor sentence construction or confusingly unrelated to the issue.
Stoked that you are a … believer in history (?) but I cannot see how Reagan’s shitty tax breaks for billionaires inform this conversation. I’d be wholly on board with putting a state income tax into effect, and I think this would set us on the most direct path toward eliminating wealth inequality and homelessness, but the WA constitution doesn’t allow it. Maybe you could help out by putting your energy toward the efforts to change this?
While I think we can agree on this point, and should probably leave it there, I don’t think I could live a minute in your head. It sounds like a confusing, frustrated place.
This makes sense. It’s the bigger houses that put in ridiculous service charges that do not care about anyone but the bottom line. While we can certainly afford a good meal in a fancy place, abusing their staff and guests will never sit well with us. It’s the small Seattle that we love. Dive bars, family type places with great food and real service. Please don’t let the last good thing in Seattle go away. Please!
“Seattle restaurant leader Ethan Stowell said he expects his venues to transition to a straight 20% service charge — and no tips.”
So new and creative ways to take money from the hands of labor.
These people are slime.
Don’t all of his businesses already do that??
Not unless it’s a large party. If you got like 6-10 people there’s a service charge. Otherwise it’s simply a tip. Meaning optional vs, baked in.
Simply charging everyone 20% over and above the actual bill is robbery. “So we don’t have to raise prices”. is the excuse. Well? They just raised the prices 20% right?
If it’s a large party. There’s a service charge and a tip for good service. 4 or less is a simple tip for service.
That’s the difference.
What they are trying to do is toss as much sand in the gears to where the actual number is muddied in weird pay regulations and traditions.
Oh I see what you are saying..>LMAO!
Uhuh…Ask any person in a govt. position. It’s all about money games. Actually providing a service becomes secondary.
lol, seriously, a service charge for what? Paying to eat in your restaurant?
There’s plenty of minimum wage workers who don’t get tips and it sucks precisely 20% more. Tipping feels like extortion when they just flip the iPad around and add 20% to the bill like why? The future sucks so hard you guys. Better grab a decent rv before it’s too late.
The actual minimum wage isn’t $20, it’s zero. Which is what these workers will get after many restaurants close.
Me? I very rarely dine out anymore. When I do, it’s either cheap value food with no tipping (think Dick’s, Domino’s, takeout tacos, etc) or fine dining. The middle tier of restaurants don’t offer a better value proposition than I can get at home.
Oh, and I would assume that tipping is over with a 20% charge on every meal. Brace yourselves, servers, because you are about to make less money.
500 seems a stretch for small…bummer for actual mom and pop places who are lumped with Ethan Stowell. There’d probably be more citizen alignment if a zero dropped off.
No need to tip anymore they make 20 an hr
I have mixed feelings about tipping. It has a shady history, and no one should rely on the impulses of customers to get by. If someone does an exceptional job, though, why not reward them?
Deeply stupid take
This is just one more nail in the coffin of small business and the quality of life in Seattle. Restaurants, bars and coffee shops will raise prices, reduce hours, and reduce staffing. More businesses will close and fewer will open. Vacant storefronts will lead to further crime and disorder and more businesses will close due to the resulting decrease in foot traffic.
Good, make them suffer. You want to own a business in Seattle? Pay the friggin’ Piper.
And then you pounded your fists on the podium and bellowed: “So this is why we must enshrine an underclass that serves and is never served, so that we may enjoy our own lives”
I have a very simple and true take on this the Capital Hill minimum wage crowd here won’t like: wage is the price of labor. When something gets more expensive, the demand for it falls.
When wage becomes higher, the demand for manual workers will fall (they will be replaced with ordering machine, dish-delivering robots, etc). And restaurants will get even more expensive, fewer people will dine out and some restaurants won’t survive, less people will be hired as cooks and waiters.
It’s absolutely fine if the region together decides this is the right thing to do… Just be mindful that this is not something that comes free and the evil business owners will pay. Everyone has to pay.