Seattle small businesses brace for minimum wage increase

Seattle businesses brace for minimum wage hike

Fewer staff, higher prices, shorter hours — this is what Seattle restauranteurs predict will come to pass once the city's minimum wage raise goes into effect.

SEATTLE - Fewer staff, higher prices, and open less hours, those aren’t fears for Seattle’s restaurant scene, they’re predictions from small business owners ahead of the minimum wage increase in the new year.

Seattle has one of the highest minimum wages in the country. Representatives with the City of Seattle say the increase is a good thing for workers and our overall economy, but one small business owner told FOX 13, this will shrink the hospitality businesses here rather than expand them.

"For me, if I kept everything the way it was, next year I’d have a $50,000 increase in wages for my employees and that’s just not something I can absorb," Charlie Anthe, Co-owner of Moshi Moshi Sushi and Izakaya in Ballard said.

He’s also the chair of the Seattle Restaurant Alliance. "The impact for restaurant owners is going to be drastic," Anthe said.

Starting on January 1, all businesses regardless of size will be required to pay their workers a minimum wage of $20.76 cents an hour. That’s up from the current minimum wage of $19. 97. For small business owners like Anthe, that’s a more than $3 hike in the minimum wage because of a tip credit.

Right now, businesses that do not offer medical benefits or are a business where employees earn at least $2.72 in tips an hour have what’s known as a tip credit, making their current minimum wage: $17.25 cents.

"If you have workers who make a significant portion of their earnings in tips than a portion of that could be counted toward the minimum wage and from our industry, we feel that model has worked really well for the last 10 years," Anthe said.

That tip credit expires at the end of the year. "What wasn’t planned for was covid and the inflationary aspects of how it affected the minimum wage, so what was supposed to be a 60-70 cent increase this year turned into a $3.50 increase," Anthe said.

He says small businesses are not equipped to handle all at once. In a statement, Mayor Bruce Harrell’s office acknowledged that concern and said, in part:

"On January 1, the temporary tip credit for small businesses will expire, as determined by the law passed in 2014. While this is the right thing for wage fairness, we recognize it will present a significant change for many small businesses who are still recovering from the impacts of the pandemic and the resulting record inflation.

"Our office convened discussions to help address the concerns of all stakeholders. As the tip credit expires, we are committed to aggressively addressing many of the pressures facing small restaurants moving forward – from public safety to inflation, insurance, and a wide array of other cost pressures, including best practices in addressing the absence of a tip credit.

"I will be continuing our conversations with small businesses to identify tangible and actionable ways we can help make Seattle more affordable. We want successful, prosperous, and vibrant small businesses and entrepreneurs in our city, and we are committed to addressing these challenges, keeping existing small businesses here in Seattle, and ensuring this is a place where anyone has the opportunity to start a small business and succeed."

Anthe told FOX 13, the impact won’t just be drastic for owners like himself, but disappointing for the customers. Something highlighted in a recent Seattle Restaurant Alliance Survey of more than 100 Seattle restaurant and bar owners.

"What we discovered is 80% of them planned to cut hours or shifts, 70% of them planned to raise menu prices and 50-60% of them planned to cut back on their operating hours," Anthe said.

On reddit, entire threads are dedicated to this very topic, with people commenting this will make them tip less, if not stop tipping all together.

At the Shikorina Bakeshop and Café, Owner Hanay Ohannes got rid of the tipping system and instead increased her menu prices so she could offer her workers $25 an hour.

"I thought it was really important that my staff had a living wage and weren’t dependent on tips," Ohannes said.