Unintended Consequences for Seattle Restaurants

2020 January 3
by bc3b

Seattle passing a $15/hour minimum wage has had a tremendous effect on the restaurant industry. Some of the city’s premier restaurants, which had been in business 25 years or more, closed.

My son worked as a waiter/bartender at Outback throughout his college days. His principal income came from tips, not salary, and restaurant employees can be creative in reporting tip income. Being wait staff or a bartender in a medium to upscale restaurant is a great source of income for students, single mothers and others without a professional/technical skill set.

But, as this article states, it is also having an effect on the low-end (drive-in) restaurants too.

When Seattle began raising its minimum wage five years ago, local burger joint Dick’s Drive-In experienced an unintended effect.

Its employees opted to work fewer hours as their wages rose, a tall order in a tight labor market.

“We thought with higher wages it would be easier to get people to take more hours, but it’s been the opposite,” said Jasmine Donovan, president of Dick’s. She added that the company has had to raise prices for the first time in its history because of the cost of labor alone, whereas in the past, food costs drove such hikes.

Seattle’s law, which gradually increases its minimum wage to $15 an hour by 2021 from just over $9 an hour in 2014, is now at the forefront of a national debate over the impacts of progressive wage increases. It comes at a time when top Democratic presidential candidates like Bernie Sanders and Joe Biden are calling for a $15 per hour federal minimum wage as they try to appeal to working-class voters. The federal minimum wage is currently $7.25 an hour and has not been increased in over a decade.

“Seattle was catalytic to the entire national movement because what the Seattle City Council did by passing the law was show the entire nation that $15 was not a ridiculous demand that people were laughing at back in 2012, but an actual key piece of policy that allowed for working people all across that city to have more money in their pockets that they spent in their local neighborhoods and then grew the economy and local business as a result,” said Mary Kay Henry, president of the Service Employees International Union, which launched the Fight for $15 and a Union campaign.

Businesses like Dick’s have seen their costs go up. Dick’s pays above minimum wage, with some locations starting workers at $17 and $18 an hour, and most workers are students in their 20s. Benefits like 401(k) plans and health insurance are also available to workers regardless of the number of hours worked. But higher minimum wages citywide pressure employers to increase pay even if they are already above that threshold, in order to compete for talent.

Hat Tip: CNBC

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9 Responses leave one →
  1. 2020 January 4 12:14 am
    [1]
    JimNorCal permalink

    My city has a mandated min-wage too, phasing in over a period of years.
    A number of fast food joints closed recently, people on our local NextDoor speculate that the restaurants are moving out past city limits to neighboring cities.

  2. 2020 January 4 3:47 am
    [2]
    JimNorCal permalink

    TWIP
    https://www.powerlineblog.com/archives/2020/01/the-week-in-pictures-fast-start-edition.php

    And don’t forget to check the Comments section later …

  3. 2020 January 4 9:17 am
    [4]
    JimNorCal permalink

    At least half the fun of Week In Pics is the posted by readers in the comments. Coming in thick now

  4. 2020 January 4 1:18 pm
    [5]
    drdog09 permalink

    3,

    Interesting but useless. If Meuller had found anything impeachable Nadler would have used it already. They want to take Trump out. They do not want to have to fight the man electorally. Meuller found no such material capable of taking Trump out. Find something worthwhile for oppo purposes, possible.

    Any sane person would realize lawyers like to lawyer. The time they are spending trying to get the material gives Trump more time to tie them up in knots when they should be using those resources elsewhere. Like say try to win an election. Lawyers do not win elections, ideas do.

    I said this once before but i will say it again. Trump is by no means a smooth operator, fact can be down right crass at times. But he is the safest bet because he is nearly incorruptible save his own ego at times. There is nothing they can offer him that he does not already have.

    PS: You know most of the men prominent in the Revolution were wealthy or high status merchants. They got tired of being F’d over by the Crown. Lesson there I think.

  5. 2020 January 4 2:01 pm
    [6]
    JimNorCal permalink

  6. 2020 January 4 4:42 pm
    [7]
    drdog09 permalink

    Back to OP

    California did a similar stupidity with modifying the definition of temp work. Pretty much put a knife thru the heart of the gig economy. I would expect that a fair chunk of contract writing for hollywood and networks will shift to places like TX, NV and NYC that don’t have similar rules on the books.

  7. 2020 January 4 4:51 pm
    [8]
    drdog09 permalink

    6,

    Ya know the world is a better place without that Iranian bastard breathing. But I have to say, since I was born all those decades ago this country has been duking it out in one shithole after another without a moments peace. Hell we have been in Afcanacrap for almost 10 years and the Taliban is nearly as strong as when we first punched them in the face. We ought to sit down and assess if continuing this path is productive or not.

  8. 2020 January 5 4:46 am
    [9]

    7 – Hollywood funny enough over the years had already largely moved out of CA for actual movie making, but your not wrong that it will hit them. I saw how this was already hitting trucking industry so hard the courts have already ruled at least for now it’s exempt. It’s literally like nobody thought any of that bill through – which is no surprise in CA.

    8 – In general… it’s not, at least not the way we’ve been going about it, the ROI is lacking to say the least.

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