Thursday, June 05, 2014
Surprise! Leftist minimum wage policy backfires in Seattle suburb
The Emerald City may witness the economic dangers of hiking the minimum wage to $15/hour sooner rather than later. SeaTac, a suburb of Seattle, hiked the minimum wage for certain service industry employees to $15 at the beginning of the year, and there are already signs that the sudden increase is having a negative impact.
Earlier this month, Seattle voted to raise its minimum wage gradually to $15 by the year 2020. Unlike the SeaTac wage hike, Seattle’s hike will apply to all businesses.
But 15 minutes south near the Seattle-Tacoma International Airport, employees are already seeing the negative effects of such a hike. A February report from the Seattle Times revealed:
At the Clarion Hotel off International Boulevard, a sit-down restaurant has been shuttered, though it might soon be replaced by a less-labor-intensive cafe…
Other businesses have adjusted in ways that run the gamut from putting more work in the hands of managers, to instituting a small “living-wage surcharge” for a daily parking space near the airport.
That’s not all. According to Assunta Ng, publisher of the Northwest Asian Weekly, some employees are feeling the pinch as employers cut benefits. She recalls a conversation she had with two hotel employees who have been affected by the wage hike:
“Are you happy with the $15 wage?” I asked the full-time cleaning lady.
“It sounds good, but it’s not good,” the woman said.
“Why?” I asked.
“I lost my 401k, health insurance, paid holiday, and vacation,” she responded. “No more free food,” she added.
The hotel used to feed her. Now, she has to bring her own food. Also, no overtime, she said. She used to work extra hours and received overtime pay.
What else? I asked.
“I have to pay for parking,” she said.
I then asked the part-time waitress, who was part of the catering staff.
“Yes, I’ve got $15 an hour, but all my tips are now much less,” she said. Before the new wage law was implemented, her hourly wage was $7. But her tips added to more than $15 an hour. Yes, she used to receive free food and parking. Now, she has to bring her own food and pay for parking.
The Washington Policy Center, a free market think tank, said the passed-but-not-yet-implemented wage hike is already affecting small businesses in Seattle:
After decades in Seattle, Northwest Caster and Equipment recently made the difficult decision to move the business to unincorporated Lynnwood, according to a report by KOMO news. The owner of the family business blames Seattle’s increasingly difficult business climate for the move: “It just seems like increasingly the city’s become a more difficult place to do business.”
The city’s proposed $15 minimum wage was tops on the list of complaints. “If I’m going to bring someone in on an entry level, I’d prefer to start them out where I’d like to start them out, rather than having that dictated to me.”
A commercial property landlord echoes those concerns about the $15 minimum wage, noting several tenants have signaled they may not renew their leases if it becomes law: “It’s just too expensive to operate in the city.”
And in a story today, KUOW reports that small businesses throughout the city are panicking over the super high minimum wage. Multiple small business owners told KUOW they are holding off on opening new business or expanding their current business in Seattle, while others said they are delaying plans to hire new workers.
Posted by John J. Ray (M.A.; Ph.D.).