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The new Seattle requirement is ruffling
feathers and gaining national media attention
as business owners – especially those of national
brands – threaten leaving the municipal
boundaries. For those that stay, the payroll
changes aren’t pretty.
On June 22, 2014, The Seattle Times highlighted
the impact as described by various
business owners ranging from those in the hotel
industry, a well-established restaurant and
a scrap metal yard. The highlights are telling:
At the Holiday Inn Express in North Seattle,
there are 102 rooms and 28 employees. The
hotel was built in November 2001 and it took
owners Ron Oh, the son of a North Korean refuge,
four years to make the venture profitable.
That Oh said may soon come to an end if wage
increases under the Seattle ordinance are implemented.
Because his employees do not receive
health insurance from their employment,
the new Seattle law requires him to begin paying
$11 per hour in April 2015. The bulk of his
employees currently earn $10.25. The 75 cent
payroll increase will cost him an estimated
$80,000 per year. When minimum wage increases
to $15 an hour, Oh estimates his payroll
expenses to increase by at least $250,000
per year. That’s a pretty significant dent in the
$600,000 profit the hotel made in 2013 with an
annual revenue of $2.9 million.
He’s one of several local business owners in
a lawsuit filed on June 11, 2014, in U.S. District
Court in Seattle spearheaded by the International
Franchise Association asking the court
to strike down the municipal ordinance on
grounds that it is discriminatory and unconstitutional.
Oh testified to the Seattle City Council that
the only way he can make $15 an hour work at
his hotel is to raise room rates and reduce the
hours his employees work.
At Glant Pacific Companies located just
south of downtown Seattle, some employees
are already making $15 an hour. Owner Ryan
Glant wonders what will happen when less
senior, less trained employees begin earning
$15 an hour minimum wage. Will he have to
increase pay rates for the more senior, more
skilled workers at the family-owned scrap
yard that shreds pounds and pounds of aluminum
for use in the city’s famous aerospace
industry?
The uncertainty of payroll increases has to
be balanced against the fluctuations in the
price his firm is paid per pound for the various
metals processed through the family-owned
scrap yard, Glant told The Seattle Times. He
currently has 160 employees on his payroll,
but they aren’t all working within the Seattle
city limits. Some are in the nearby
bedroom communities of Bellevue,
Bremerton and in Everett, a navy
town north of Seattle. Will they all
expect the same pay raise as is mandated
in the Emerald City, Glant
questions?
For one of Seattle’s top chefs, the
$15 mandatory minimum wage is
as bad as rotten fish.
Tom Douglas owns and operates
a variety of the city’s best eating establishments
including Serious Pie
Westlake in a neighborhood bordering
Lake Union. His cookbook
Seattle Kitchen was named Best
American Cookbook in 2001 by the
James Beard Foundation and Kitchen
Aid. He’s appeared on the Food
Network’s Iron Chef America cooking
show competition.
When he writes an open letter to
the Seattle community regarding
how municipal regulations will affect
local eateries as he did when
the city council was debating the
measure this past spring, people
put down their forks and pay attention.
He’s a supporter of increasing
minimum wages – he’s long been
known for paying kitchen workers
in his restaurants wages well above
the competition. Yet he criticized a
payroll hike to $15 an hour across
the board as a $5 million price hike
or approximately 20 percent on
menu prices for diners.
“It’s not hard to imagine them
staying home instead,” Douglas
said of diners.
One group that may well benefit
from the increased minimum wage
is city workers. The UW study
found that 55 percent of workers
within Seattle that currently earn
less than $15 an hour are on the city
payroll.
For now, the wage situation in Seattle
plays against the national debate
to increase the current $7.25 to
$10.10. Some watching the situation
in Seattle say the courts and voters
may gauge whether or not $15 an
hour is too much based on what
happens in Congress.
THE SUIT MAGAZINE - JULY 2014