Seattle’s plan to dramatically increase the minimum wage is going to be unsustainable in the long term and is already costing jobs and raising prices, business owners say.
Seattle businessmen lead by Forward Seattle, a non-partisan organization representing independent businesses, collected about 19,500 signatures to put a referendum on the city’s minimum wage ordinance on this November’s ballot. Several of the petitioners have said their businesses cannot withstand the ordinance’s schedule for increasing the minimum hourly wage, which will boost it from $9.25 to $15 in as few as three years for the largest employers.
Some petitioners had tried unsuccessfully to oppose the ordinance when it was passed June 3. They attended meetings, lobbied, and tried to file an amendment to the city’s charter, which they discovered wasn’t possible this year. “We hit a brick wall every single time,” Kathrina Tugadi, co-chair of Forward Seattle and owner of El Norte Lounge, told National Review Online.
As a final recourse, Forward Seattle organized the petition to gather signatures for a referendum, giving voters the opportunity to repeal the ordinance in November. They argue that the passage of the regulation was rushed. “We thought it was interesting that everyone wanted to push this through so quickly,” Angela Cough, co-chair of Forward Seattle, told NRO.
If the ordinance isn’t repealed, business owners will have to respond, they say, and some already have.
Tugadi no longer hires musicians for her restaurant. With the wage increase still looming, she said she can’t justify expenses that don’t directly “add to the bottom line.” She’s also removed labor-intensive menu items and adjusted prices in preparation for the hike. And, she says, hours will have to be cut: At the end of the summer, El Norte Lounge will stop serving lunch and will only serve dinner.
“I am concerned about my business and others in the community, but it isn’t just about any one business. It’s about how the entire economic community will be affected,” she said. El Norte may be unable to remain open once the ordinance is fully in effect, she said.
Some companies may simply leave the city. Well-known pizzeria Pagliacci Pizza, a Seattle-area pizza chain, is already moving its call center and some of its production facilities outside the city, Cough said. “That’s a lot of jobs,” she notes.
Cough explained that supporters of the referendum are not against a minimum-wage increase per se, but just oppose the rapidity of the ordinance’s implementation. Their own counter-proposal includes an increase in hourly minimum wage to $12.50 in five years. As the ordinance was passed, the hourly wage is set to increase to $11 in three years for the smallest employers and $15 for the largest, with regular raises scheduled through 2024.
When considering the counter-proposal, Forward Seattle studied businesses and nonprofits of different sizes and types. “Fundamentally, $15 was not the number,” Cough said. “We didn’t feel that the smallest of businesses or nonprofits could weather that increase.”
Mayor Ed Murray required a committee to commission two studies, one from the University of Washington and one from University of California, Berkeley, to determine optimal numbers for raising the minimum wage. Cough said that Forward Seattle drew its conclusion from the same studies, deciding the $12.50 number was the right way to balance business interests and the needs of workers.
— Celina Durgin is a Franklin Center intern at National Review Online.