Seattle Minimum Wage: What are Local Businesses Doing?

On April 1st, the initial stages of Seattle’s $15 minimum wage ordinance took effect. Large businesses have the next three years to implement this increase while smaller businesses have five years. Seattle businesses are already starting to test out different models in order to accommodate the increases in labor costs. What follows is a summary of some interesting ways local businesses are handling the wage increase:

Ivar’s Salmon House jumped ahead of the phase-in by instituting a flat $15 wage for all front and back-house employees. This includes servers, cooks, dishwashers, busboys, etc. Ivar’s plans to cover the increase in labor costs by going “tipless.” When customers pay their bill, there will no longer be a line for a tip; instead menu prices will be approximately 20% higher. Front-house staff will receive an 8% commission on restaurant sales, while back-house will receive a slightly higher commission at 9% of sales. Ivar’s expects employees will make the same or more than they did in previous years with this new policy, and back-house employees likely more.

Pho Cycle Café restaurants began giving employees raises. Pho Cycle’s chose to avoid an increase in prices. Instead Pho Cycle will start cutting hours and introducing more automated systems to help produce food, cutting down on the amount of human labor. Working hours will also be more stringent. Workers used to have the option of clocking in and then sitting down to eat a free meal. Employees can still have their free meal, but off the clock, in order to ensure maximum productivity during work hours.

Local restaurant giant Tom Douglas reacted quickly to the new legislation by adding a 2% “Wage Equality Surcharge” to customers’ bills. This increase was intended to be distributed to the staff in either wages or benefits. After posting this news on the company blog, he received criticism and retracted the policy. Instead, his restaurants will now compensate for increased labor costs with higher menu prices, as per the request of most blog commenters.

One caveat to the Seattle minimum wage is that public entities are exempt. This, of course, includes the University of Washington. However, since the new regulation was announced, the University has raised the minimum wage for all employees including student workers to $11, despite their exemption. This wage increase will affect approximately 2,600 employees, and is estimated to cost $400,000. The UW has yet to determine how these costs will be covered, but it most likely will come from increasing administrative support, cutting programs, or increasing the Services and Activities fee.

In the vein of rising wages significantly, Seattle CEO of Gravity Payments Dan Price made a bold move by raising his company’s minimum wage to $70,000, nearly doubling some employees’ salaries, while drastically cutting his own salary. He believes the raises will increase employee happiness and loyalty, both of which he sees as essential ingredients to company growth.

Due to the initiatives of these businesses, we are already seeing both the positive and negative effects in the workplace. While there is not yet enough data to draw any conclusions, Seattle is taking the lead in a long overdue national conversation by taking action and making higher employee wages a part of the bottom line equation.

Please feel free to share your experiences, whether as a local shop, restaurant, or small business owner or an individual affected by this wage increase.