Seattle’s $15 minimum wage law kicks in this Wednesday. Since city lawmakers passed the unprecedented wage hike, the law’s potential impact on businesses—particularly restaurants—has garnered quite a lot of attention. Critics point to the inevitability of restaurant closures, higher menu prices and/or cuts to employees’ work hours. Proponents of the $15 minimum wage promise little-to-no impact on businesses. Yet, they cannot escape the fact that, in the end, it’s an untested citywide experiment.
Well, one iconic Seattle restaurant has decided to take its future into its own hands and conduct an experiment of its own. This Wednesday, Ivar’s will “raise the wages of about 100 employees who make less than $15 at its sit-down restaurant Ivar’s Salmon House, at the north end of Lake Union.” There is, however, a catch. The Seattle Times,
“Those servers, bussers, dishwashers and others will see an increase in their hourly pay to a flat $15. They will not, however, get any tips because the restaurant will now tell customers they do not need to tip. To make up for that, the restaurant will share its menu-price increases with the employees. Ivar’s management expects that, under the new system, its hourly staff’s annual pay will end up being the same as, or higher than, what they earned last year.”
Ivar’s plans to also set a new $11 minimum-wage for workers at its more than 50 quick-service seafood bars and stadium locations not just in Seattle. In order to offset the labor cost increase, Ivar’s will boost prices at the seafood bars by 3 percent. Additionally, prices at stadium locations will increase in order to cover product costs.
According to the Seattle Times, here’s how the Ivar’s experiment will work:
“Servers and bartenders at the Salmon House in 2014 made the state minimum wage of $9.32 an hour, along with $18 to $19 an hour in tips, on average, Donegan said, adding that the restaurant’s typical server or bartender made about $60,000 a year last year.
“On average, customers paid a 17 percent tip for each bill last year.
“Under the new system, the price for each menu item at the Salmon House will go up 21 percent. That 21 percent represents a combination of 17 percent to make up for the tips that customers will no longer be giving, and 4 percent to cover raising the minimum wage to $15 as well as increased food and operating costs.
“The 21 percent price hike will be shared among restaurant hourly staff, with 8 percent going to servers and bartenders, and 13 percent to be divided among bussers, hostesses, dishwashers and others…”
Ivar’s President Bob Donegan predicts that, by the end of the year, workers should have made as much or more than they did last year. If workers make less—which is a possibility—Donegan says Ivar’s will “figure it out.”
That’s certainly one way to deal with cost increases associated with the $15 minimum wage law. It will be interesting to see whether or not other Seattle restaurants follow Ivar’s example.
Seattle’s $15 minimum wage law kicks in this Wednesday.
More accurately, the minimum wage at an employer with 500 or more employees goes to $11/hour, and the minimum wage at an employer with less than 500 employees becomes either $11/hour, or $10/hour — the latter with a “tip credit” and possibly payments toward employee health insurance. Since our state’s minimum wage is now $9.47/hour with no credit or insurance options, this week’s increase should have almost no effect upon our small, local restaurants.
Proponents of the $15 minimum wage promise little-to-no impact on businesses. Yet, they cannot escape the fact that, in the end, it’s an untested citywide experiment.
If only there was a nearby city, which had gone to a $15/hour minimum wage over the past couple of years, then maybe we could hazard some kind of guess as to what might happen here in Seattle.
“City manager Todd Cutts says there has been no impact on sales tax or property tax, and no change in the number of business licenses issued.
“The law requires hoteliers with more than 100 rooms to pay workers $15 an hour. Scott Ostrander, former general manager of the Cedarbrook Lodge in SeaTac, said before the law was passed he would close several rooms in his hotel to avoid having to comply. However Cedarbrook Lodge is now moving forward with a 63-room expansion and recently started paying the $15 per hour minimum wage.”
‘Tis pity we know absolutely nothing about any such place, eh? Back to employees at Ivar’s:
They will not, however, get any tips because the restaurant will now tell customers they do not need to tip.
That’s up to each individual customer or party:
Customers can still tip if they want to but the restaurant will not require or encourage it.
Since no business can “require” tipping now, this changes nothing.
“If only there was a nearby city, which had gone to a $15/hour minimum wage over the past couple of years, then maybe we could hazard some kind of guess as to what might happen here in Seattle”
If a city that mainly consists of an airport, A strip of hotels and parking lots and 26,000 citizens is comparable to one of the biggest cities in the country then yes, you could hazard some kind of guess. I’ll stick with reality. You cannot escape the fact that, in the end, it’s an untested citywide experiment.
“Tis pity we know absolutely nothing about any such place, eh?”
Yes, ’tis (A) pity you’re ignoring the buyers remorse in SeaTac because of the law of unintended consequences. Sure they’re paying $15/hr. So maybe a $3-4/hr raise. Free parking? Sorry, that went away. You pay the hotel airport rates now. Free meals? Not happening anymore, bring yourself a tuna sandwich. Not much of a raise, really. But at least they’re not earning “poverty wages” anymore.
“Since no business can “require” tipping now, this changes nothing”
You should get out of your Capitol Hill cocoon more often. I regularly see signs in restaurants that say “parties of 6 or more will have an 18% gratuity automatically added to their bill”. Sounds pretty “required” to me.
If a city that mainly consists of an airport, A strip of hotels and parking lots and 26,000 citizens is comparable to one of the biggest cities in the country then yes, you could hazard some kind of guess.
If only Seattle had an airport…
King County International Airport—also known as Boeing Field—is one of the busiest primary non-hub airports in the nation. Just four miles south of downtown Seattle, it averages around 200,000 operations (takeoffs and landings) each year. In 2001, it was named by the National Air Transportation Association as one of the “100 Most Needed Airports” in the United States.
I’ll stick with reality.
No, you’ll repeat rumors as if they were facts:
… ignoring the buyers remorse in SeaTac because of the law of unintended consequences. Sure they’re paying $15/hr. So maybe a $3-4/hr raise. Free parking? Sorry, that went away. You pay the hotel airport rates now. Free meals? Not happening anymore, bring yourself a tuna sandwich. Not much of a raise, really.
You didn’t give a source for your slate of rumors, but it sounds very much like the completely anonymous garbage the Washington Policy Center started desperately shoveling after the very Seatac businesses who claimed $15/hour would cost jobs instead started hiring additional employees. Keep repeating those rumors, though, because they’ll eventually become facts. In your gullible mind, anyway.
(Also, even if the anonymous rumors you helplessly swallowed were true: $3 – $4 per hour is equivalent to a free meal? Too funny! Do lecture us some more about how well you understand economics!)
I regularly see signs in restaurants that say “parties of 6 or more will have an 18% gratuity automatically added to their bill”. Sounds pretty “required” to me.
How do they require you to dine there?
Ellen Schell says
To Lamont_Madison, From a “moron on the left”, You are clueless, buddy. I made $26,000 working for an airline in 1984! As a boomer in Portland, Oregon in 2014 I only made $32,000. I was making way less in buying power in 2014 than I was in 1984!!! Ever since Reagan (Ray-Gun they used to call him!) the unions have been going down hill and “greed is good” took over the country. What other first world country does not include the basics of healthcare with the rights of being a citizen? Only us! We are backwards, backwards, backwards. Nobody can make it here without $18.00 an hour in Portland, Oregon where the rents are $1200 for a 2 bedroom apt. and the wages are $15.00 an hour if one is lucky! Things have changed, old man. The U.S. is not on top anymore in case you haven’t noticed!!!! Life is expensive because we need car and home/renter’s insurance that is overpriced. We need health insurance that is overpriced. We need a roof over our heads which is overpriced. We have to have some kind of phone which is overpriced. We want some kind of t.v. which used to be free in the 50’s and 60’s before cable. We need food which is reasonable if you cook at home. Eating out is a luxury! The waiters make under $9 an hour. They need tips to survive. If you can’t afford to tip (and it’s always been that way because I waitressed 2 summers while going to college) don’t go out to eat you clueless dolt! Why don’t you move to Wisconsin so you can have Scott Walker for governor!
BENJAMIN FRANKLIN says
“…and the minimum wage at an employer with less than 500 employees becomes either $11/hour, or $10/hour — the latter with a “tip credit” and possibly payments toward employee health insurance. Since our state’s minimum wage is now $9.47/hour with no credit or insurance options, this week’s increase should have almost no effect upon our small, local restaurants.”
Inside your little box you seem so positive that prices will not rise when employers with less than 500 employees have to pay for health insurance. Where is the money coming from? Are they going to cut their profits? I think not! I agree raising the minimum wage will not affect business, but health insurance is expensive, so in the end there will be a give and take type of deal. I give health insurance and I will take from the consumers to pay for it.
“”City manager Todd Cutts says there has been no impact on sales tax or property tax, and no change in the number of business licenses issued.”
You are funny, watch when the Capital Gain Tax that Seattle will vote for because it will sound so good for you with the mantra of “redistribution of wealth” Pres. Obama always wanted that, but he doesn’t need to, because the blue states will comply. Here is another weight on your back because the wealthy will make you pay for it. You guys will never learn.
…when employers with less than 500 employees have to pay for health insurance.
Seattle’s minimum wage law doesn’t require such employers to pay for health insurance; it allows such businesses to take credit for any health insurance they do choose to buy.
But hey, even though you got your most basic fact wrong, you still seem to hold yourself qualified to lecture us here in Seattle on economics. Too bad your failure to get your facts right means we don’t agree.
… but health insurance is expensive, so in the end there will be a give and take type of deal. I give health insurance and I will take from the consumers to pay for it.
Rep. Jim McDermott (D-Seattle) thanks you for your support of single-payer health insurance.
BENJAMIN FRANKLIN says
I see that your facts are the truth and everyone else is just plain liars. You rather believe in what a comedian like Wayne Federman is telling you.
“Rep. Jim McDermott (D-Seattle) thanks you for your support of single-payer health insurance.”
As far as supporting a single payer you will destroy competition and choices of health insurance carriers that some could have better coverage than others. Why don’t you research the Europeans single payer and one insurance BS policy. Did you know when countries in Europe cannot afford to pay out for your medical services they cut benefits down and limit care. If the care that you are requesting is not a life threatening you will be waiting in line to see specialists or whatever.
Try the Veterans Affair and the Armed Forces with single pay system, and you too will disagree with the universal insurance BS. Since you don’t know anyone that is associated with the military– you don’t know the failures of their health insurance benefits and the waiting in line for at least a month to see a specialist and over 2 weeks to see a doctor.
Last, did you know in order for a single payer insurance to work without going bankrupt your Daddy will need to make one flat fee for all services rendered by hospitals and clinics around the USA? Since the majority are private entities they will not go for that, so the government will have to make those public hospitals/clinic. Again, ask a veteran about how well is the single payer system working.
When Big Daddy touches something it will be degraded because they are not in business to run the private sector. You will see decline in medical care standards and be treated like a number.
I know I am not Rep. Jim McDermott (D-Seattle) that he knows what is good for you, but I tell you now when you turn 60 you will be treated like dirt by those single payer system and public hospitals/clinics.
Why don’t you research the Europeans single payer and one insurance BS policy.
Here’s the World Bank’s list of countries, sorted in order from highest life expectancy at birth. From that list, these are some of the countries where a newborn has a greater life expectancy than in the United States:
Italy, Iceland, Switzerland, France, Spain, Sweden, United Kingdom, Norway, Netherlands, Austria, Ireland, Germany, Greece, Finland, Belgium, Portugal, Denmark.
Yeah, those Europeans must have really crappy health-care, to live longer than we do.
BENJAMIN FRANKLIN says
I tell you right now, Italy inflates their information so much that the only country that I believe is saying the truth is Germany. Most of the Italians head that way. I do I know this? Well, I have one advantage I can speak Italian, read and write–I do listen to their RAI TV news. So, the information that you just gave me is overinflated by their respective governments.
Your child has a better chance to survive in the United States than Italy. I did work in Italy for 7 years and lived with them, so what you have is just government inflated trash.
I tell you right now, Italy inflates their information so much that the only country that I believe is saying the truth is Germany.
Italy inflates their statistics, you claim, so you don’t believe the Brits, Irish, Norwegians, Spanish, French, and Swedes? That makes a lot of sense.
Do you know how much taxes their people pay?
How about you do some actual research, instead of giving us more unsupported accusations? Like, maybe, per-capita expenditure on health care versus life expectancy or other outcomes? You’ll find the good ol’ U.S. of A. tops in paying for health care, not so high in getting great results.
We will not have it here, unless you live in WA than it is okay to vote self inflicted taxes.
“I may be dying in agonizing pain because I can’t afford treatment, but at least my taxes are low!” Good luck winning elections with that, especially in Seattle.
BENJAMIN FRANKLIN says
What makes you think that the rest don’t inflate their stats. Who is there to say they are telling the truth? Who is actually verifying the data for accuracy? That is what I mean when I say you should question everything.
“I may be dying in agonizing pain because I can’t afford treatment, but at least my taxes are low!” Good luck winning elections with that, especially in Seattle.”
Hey, since you love the government that much and like their support, Seattle should vote for more taxes for your government health insurance so you will be treated like a heard of sheep, just like the Government Provided Health Care for the Armed Forces, and the Veterans at the VA. I explained the consequences to you, but you are still in the box and refuse to admit it that whatever your Big Daddy touches it tarnishes.
ASK A VETERAN AND THE MILITARY TROOPS HOW THEY FEEL ABOUT THE GOVERNMENT HEALTH INSURANCE, CLINICS, AND HOSPITALS OWNED BY THE GOVERNMENT. QUITE A FEW VETS SEEK OUTSIDE HELP AND SPEND THEIR OWN MONEY TO GET THEIR DUE CARE.
Perhaps, Seattle will not ask and/or believe the military folks, because a good amount are anti-military.
What makes you think that the rest don’t inflate their stats. Who is there to say they are telling the truth? Who is actually verifying the data for accuracy?
The sources were listed on the page. If you have specific problems with specific sources, please tell us what they are. (If other countries inflated their statistics, why didn’t the United States do so as well?)
That is what I mean when I say you should question everything.
Yeah, right. When Cascade Designs announced they were moving some jobs out of state due to Seattle’s new minimum wage, you took everything they said at face value, and you wrote multiple comments, hectoring supporters of Seattle’s new minimum wage that we were driving jobs from our city. Multiple commenters cast doubt upon the story, but you simply ignored all contrary information.
Perhaps, Seattle will not ask and/or believe the military folks, because a good amount are anti-military.
Patients who have suffered combat trauma are not representative of the overall population. Senator Murray has spent much of her career trying to improve health care for veterans, often without the support of politicians who have advocated wars. Therefore, I’m very suspicious of anyone citing veterans’ health care for political purposes.
(As for Seattle’s voters being “anti-military” — whatever the heck that is supposed to mean — Rep. Jim McDermott, veteran of the United States Navy, routinely gets about 75% of our votes.)
BENJAMIN FRANKLIN says
“Senator Murray has spent much of her career trying to improve health care for veterans, often without the support of politicians who have advocated wars.”
Obviously, she has not done a good job to improve health care. All goverment owned health care for military cannot be fixed because you have corruption at all levels. This will happen to the universal healthcare as well, it will be too big to maintain, you will see. Just keep doing what you are doing and you will realize later on in your life.
“As for Seattle’s voters being “anti-military” — whatever the heck that is supposed to mean”
I did not say all Seattle’s voters, but a good number are anti military.
Eastside Sanity says
The first employee benefit in the restaurant industry takes a shot across the bow. Will someone let reality in, it’s knocking on the door.
While some say there is no effect on businesses, the effect is higher payroll taxes. Even in non-benefit restuarant and retail companies, when the margins are 1%, or 2%, payroll taxes have the propensity of laying off people. Lot of restuarants operate on small margins. But, as it is, we shall see and see we will.
A 21% rise in the price of a meal at Ivars. I get that you don’t have to tip now, problem is customers will still be stunned by the price increase (compared to other restaurants) and quit going there. I know, I know, it’s a wash, but people don’t think like that. I believe there is a good chance that their business will suffer. It would be like a grocery story raising their prices and then giving people coupons to make up for it. People will still compare your store to others who did not raise their prices and start shopping at the store with lower ones. People always see just the basics, they never use their logic. I hope for the best for Ivars though, although I disagree with the pay increase. With the tips not ‘earned’ it takes away the pride the servers have in doing an exceptional job. Will they still enjoy their jobs as much? Will they work as hard? I can tell you, probably not.
… problem is customers will still be stunned by the price increase (compared to other restaurants) and quit going there.
After Ivar’s implements their new employee-compensation package, let’s give your theory a try. We’ll go to Ivar’s Salmon House on Lake Union, on a day and time when, before their new policy, the restaurant was known to be very busy. We won’t make a reservation before we arrive. If you are correct, the place will lack customers, so getting a table for just the two of us should be easy. If we are seated within a minute, I’ll pay our entire bill. If it takes any longer, you’ll pay our entire bill. Do we have a deal?
Couple of things that are not addressed by the Seattle Times (or any media) is that Ivar’s will raise their prices by 4% and add a mandatory tip of 17% to the bill (which is already done at many popular restaurants and bars), but when tips are maandatory they are taxed by the state and ‘all’ of their employees wages (including tips) will be subject to payroll taxes.
welcome to the Detroit of the west coast. Detroit is a bankrupt city. What most people don’t know that in 1960 – only 55 years ago, Detroit was the highest income per capita of any city in America. THEN THE PROGRESSIVES, A.K.A. THE DEMOCRATS, TOOK- YOUOVER AND THEIR PROGRESSIVE POLICIES TOOK ONLY 50 YEARS TO DESTROY THIS ONCE GREAT CITY. SEATTLE – YOU ARE HESDED DOWN THE SAME PATH, YOU MORONS ON THE LOEFT CHEER $15 MINIMUM WAGE FOR STUDENTA AND UNQUALIFIED PEOPLE, BUT YOU IGNORE THE WARNIGNS THAT THIAS WILL KILL BUSINESS IN SEATTLE. N IT HAS ALREADY STARTED. HOW MANY REASTAURATS HAVE ALREADY CLOSED. FOR THOSE THAT STAY OPEN, THEY WILL JUST LAY PEOPLE OFF, REDUCE HOURS, AND EXPECT THOSE LUCKY ENOUGH TO KEEP THEIR JOB TO DO MORE WORK. AND THEY WILL STILL HAVE TO RAISE PRICES TO SURVICE. OVER TIME, THESE EFFECTS WILL FILTER UPWARD, AND EVENTUALLY YOU HIGH PAID TECHIES WILL FIND SEATTLE IS NO LONGER THE CASH COW IT IS FOR YOU NOW. I WOULD LOVE TO COME BACK IN 25 YEARS AND SEE HOW MANY OF THOSE OVER PRICED HIGH RISE CONDOS HAVE BEEN FORECLSED ON!
welcome to the Detroit of the west coast. Detroit is a bankrupt city.
While Expedia’s move to Seattle will remove six percent of downtown Bellevue’s work force, putting 3,000 high-paid tech workers within easy distance of restaurants in Seattle’s Belltown, Queen Anne, and Interbay neighborhoods, Bellevue is in no danger of becoming “the Detroit of the west coast” — not yet, anyway. (They still have time to elect an immigrant Freedom Socialist to their city council, right?)
Clay Fitzgerald says
One big difference between Seattle and Bellevue… Bellevue hasn’t declared war on single occupancy vehicles and there’s a lot of free parking still available. In Seattle there is a giant gap between the wealthy and the poor, many people with middle incomes have left the city, priced and taxed out of town to suburbs with more reasonable living costs. The highly paid workers of Expedia and Amazon don’t fall into that category.
So, will restaurants in Bellevue have to take measures to tighten employee compensation, or lay off employees, as Expedia’s well-paid workers start having their lunches and happy hours in Seattle? How much negative economic impact will Bellevue experience as Seattle’s minimum wage continues to rise? Do the opponents of raising Seattle’s minimum wage have a theory to explain this?
Eastside Sanity says
$26 in 16! Let’s push the envelope to the razors edge Seattle! right? Make those damn business owners share their wealth! Nothing is going to happen! come on everybody! Let’s follow Tensor! Everybody on the Hamster Wheel!