Last Thursday, a Seattle City Council committee unanimously approved Mayor Ed Murray’s $15 minimum wage plan. Although the full council has yet to vote, the consequences of the seemingly inevitable plan are already being felt.
Small business owners have been saying over and over that Seattle’s plans to raise the minimum wage by 60% would put some of them out of business. Now the Puget Sound Business Journal writes that many business owners are now putting expansion plans on hold while they assess the negative impacts of the legislation.
A large part of the problem facing businesses in Seattle is the definition of the term “franchise.” The Mayor’s plan—soon to be approved by the City Council—defines “nearly all franchises as big businesses, giving them only three to four years to raise all workers’ wages to $15 an hour” whereas small businesses have seven years.
The Mayor’s definition—taken from the rhetoric of the $15 wage movement—reveals his incredible lack of business knowledge. The Seattle Times,
“And contrary to the rhetoric from the $15 wage movement, these businesses are not arms of corporations. Franchises have their own tax ID numbers and payroll — they are independent business units separate from the franchiser…
“If the proposal passes as is, Seattle’s definition of a franchise would put it at odds with state and federal law. It effectively discriminates against a business model — franchises — by giving non-franchises a slower phase-in…
“City Council members, and the mayor, should stop allowing themselves to be so willingly manipulated by activists, should head-off an inevitable lawsuit and should adopt some rationality. The council should strike the definition of franchises.”