Some Thoughts Should be Aborted Rather than Spoken…$15 Now is One of Those Thoughts.

Seattle Restaurant Life will changeSeattle Mayor Ed Murray and the City Council is pushing a plan to change the King County minimum wage from Washington’s minimum wage of $9.32 to $15.00! Washington already has the highest minimum wage of any state in the country, but they want a 61% increase, and they want it now!

From what I can see, Ed Murray has zero business experience and is utterly unqualified to make business decisions for Seattle’s  businesses. He clearly has no concept of the impact that a 61% increase in the cost of labor will have upon all the businesses in Seattle. Is the Seattle city council really so “business illiterate” that they don’t understand what a 61% cost increase means? Apparently they have no clue.

And one of the staunchest supporters of $15Now is…wait for it…an socialist activist! City councilwoman Kshama Sawant is an immigrant from India who actively supports the socialist agenda, is involved in this process to raise wages to $15, and calls small businesses liars when they say this change will hurt them.

I heard the Tom & Curley radio show today and John Curley said that of all the city council members who are involved in this decision-making process for King County, only one of them has experience in the private sector. All the rest have spent their careers in the public service sector, being paid by us the taxpayers. They are good at taking other people’s money and redistributing it as they see fit. They have no idea how to run a business, and are utterly unqualified for deciding what is best for the businesses of Seattle.

John Curley used a vivid example (7:26 into the segment) to describe the type of participation which local government officials have offered to Seattle businesses as they work through this process:

“To me it’s like the private sector (businesses) are brought to the table and the city council is basically saying, “OK, which finger do you want to have cut off?  Do you want us to cut your thumb off, pinky off, middle finger, index finger…’cause we’re going to cut one of them off, we just need to know which one you’d be ok with losing. Because it’s coming, but at least we’re letting you sit at the table.”

Remember also that part of Ed Murray’s platform when running for Seattle Mayor was the $15 minimum wage concept. Again, this is a man who has no business background! He is blind to the ramifications, unable to see past his hand redistributing cash.

To be fair, a 60% increase in labor cost is not the same as an overall 60% increase in total operating expenses. But it is akin to a 60% increase in your mortgage payment. Or alternately, would you have a problem with Ed Murray declaring that he was raising your property taxes by 60%? That’s what he is doing to businesses.

Here are my predictions of what will happen if the minimum-wage goes to $15 an hour in Seattle:

  • Approximately 102,000 people who currently earn less than $15/hr in King County will temporarily experience some relief to their cost of living in Seattle…the remaining 1,942,000 people will experience a tightening of the belt as everything begins to cost more.
  • Low-wage jobs will be greatly reduced as small businesses try to eliminate low-wage workers
  • Entry level jobs for teens and unskilled workers will evaporate
  • Job descriptions will change so that more experienced workers will take on the duties of previously lower paid positions
    • busboys will be eliminated and servers will pick up that task
    • prep cooks will be eliminated and cooks will take up that task
    • grocery baggers will be eliminated
  • The cost of almost everything in Seattle will increase by 10% to 20%
  • Employers will cut healthcare coverage, vacation time, and other employee benefits to cover this new cost
  • Many small businesses will go out of business because they cannot afford the change
  • Economic growth in Seattle will decrease as new businesses avoid Seattle and choose outlying areas because of the high cost of labor in Seattle. Walmart has already declared they would do this in SeaTac.
  • Businesses will lose volume and sales revenue as customers go outside Seattle, or choose not to even come into Seattle, in order to save money. Likewise, tourists will spend less or choose outlying areas to go because their dollar will go 10% to 20% further outside Seattle.
  • After tips, servers at good restaurants will earn somewhere between $35-$50 an hour! This will cause more competition among servers, but will also cause more cooks to leave the kitchen for the better cash of the FOH, resulting in more difficulty hiring qualified cooks.
  • Restaurants will be very hard hit by this change as their profit margins are typically only somewhere between 3% to 8%, which allows very little room for additional expenses…certainly no room for a 61% increase in labor costs! Restaurants will close, prices will escalate.
  • Low-wage and unskilled workers will be very happy…experienced workers will not. The guy who was making $15 an hour had a six dollar difference between him and the inexperienced worker… now suddenly they’re both making the same wage even though the more experienced worker has the harder job which requires more skill,  more responsibility, more stress, and so on.
  • Businesses in the border counties at the edge of King County will see an increase of business as people travel “across the border” for cheaper restaurants, coffee, groceries, almost everything.
  • 5 years after everyone is forced to pay the higher wage and prices for services & goods have adjusted, the cost of living (as a percentage of wages) in Seattle will be equal or higher to what it is today. This is the definition of a failed idea.
  • For me personally, I’ll have a very hard time adding a 15-20% tip to a restaurant meal. The whole premise of tipping is that its a way to off-set the (supposed) lower wage of servers. But if they are suddenly getting paid the same as the previously higher-paid cooks then why should we tip them for doing their job? Servers work hard…but they do not deserve to earn significantly more than the cooks who prepare the food.

The ‘$15 Now’ measure promotes a sense of underachievement and lack of ambition. The purpose of “starting positions” is to provide work for both unskilled workers and “new to the work-force” workers, who will eventually learn new skills, become more valuable employees, and move up the chain. Giving them a $5.68 instantaneous raise “cheats” the people who have worked to earn a higher wage. Minimum wage assumes that people will take the initiative to make themselves more valuable through education (at work or via formal schooling) and personal ambition.
For instance, a busboy’s incentive to earn more money is to learn new skills and move up in the business. But if a busboy is suddenly earning the same amount as a line cook why would he want to change? Busing requires a small amount of physical ability, has very low stress, and requires minimal skill and training compared to other positions in the restaurant. “$15 Now” promotes a mentality of low-wage unskilled workers in Seattle (however, those jobs will disappear).

I could see the implementation of a two wage system, where there are “Starting Wage Positions” and “Minimum Wage” positions. The Minimum Wage positions would earn $15/hour and would be defined perhaps as “a position which the average person enters into and continues in for 5 or more years” (not necessarily in the same work-place, but in the same job description). Cooks would certainly fit into this category, but bussers, baristas, grocery baggers, and dishwashers would not as those tend to be more transitory positions which people more on from.

“Starting Wage Positions” could perhaps be defined as “a typically entry level position which the average person transitions out of within 2-3 years as they pursue a career”. In my opinion, these might include fast food workers, baristas, dishwashers, bussers, grocery baggers, prep cooks, movie theater workers, Walmart greeters (seriously, even though this company makes money doesn’t mean that the position of saying, “Hello, welcome to Walmart” is worth $15).

Final comment: “$15 Now” needs to take a trip to Planned Parenthood in order to save the families, and businesses, of Seattle.

Posted In:Hospitality Industry