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National Restaurant Association - Seattle’s $15 minimum wage: Will other cities follow?

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Seattle’s $15 minimum wage: Will other cities follow?

The Seattle City Council’s decision this week to increase the city’s minimum wage to $15 caught the attention of restaurateurs and media across the country not just for the unprecedented nature of the increase, but also out of concern that other cities may attempt to copy Seattle’s move.

In this Washington Restaurant Association video, Seattle restaurant operators say the law likely will mean increased prices and fewer jobs.

"It's going to be difficult for people with no kind of experience, and young people too, to get a job of any significance, because nobody's going to want to hire somebody with no experience if they're going to be forced to pay them such a high minimum wage," Nick Musser, executive chef and general manager of the Icon Grill in Seattle, said in the video.

Angela Stowell, chief financial officer and owner of Ethan Stowell Restaurants in Seattle, said many restaurateurs could have supported the ordinance if it allowed permanent consideration of tips and benefits when calculating wages and more room for training wages. The ordinance, she said, will increase inequality within the restaurant industry, as tipped employees will benefit from the mandatory wage increases far more than back-of-the-house employees.

"I don't think anybody really knows how to react," she said. "It's really hard to make long-term plans about renewing leases or opening new restaurants. This is a grand experiment, and we literally are the model. I think there will definitely be restaurants going out of business. It's just a matter of how many or how quickly."

The law, which ultimately will give Seattle the highest minimum wage in the country, is far from a straightforward increase. It classifies businesses with more than 500 employees as “large,” those with fewer than 500 employees as “small,” and applies different rules to each. Under the ordinance:

  • Seattle businesses with fewer than 500 employees that don’t provide benefits will be required to raise their minimum wage to $11 next year and a dollar each year after until the wage reaches $15 in 2019. After that, automatic increases will take place according to inflation.
  • Businesses with fewer than 500 employees that provide health benefits may include tips and health benefits as part of wages if the employee accepts employer health benefits. Those businesses will be required to raise their minimum wage to $10 next year, and 50 cents in each subsequent year until their minimum wage reaches $15 in 2021. After the wage reaches $15, businesses will no longer be allowed to include tips and benefits as part of the wage.
  • Large businesses, those with more than 500 employees, will see a more rapid increase. Those that don’t provide health benefits will be required to raise their wages to $11 next year and $13 in 2016, reaching $15 in 2017.
  • Large businesses that provide health care that an employee accepts will be required to increase their minimum wage to $11 next year, $12.50 in 2016, $13.50 in 2017, and $15 in 2018. They’ll be allowed to include the cost of health benefits as part of their wage calculation until 2018.

The Seattle Restaurant Alliance said in a statement it was disappointed that ordinance failed to include several requests made by the restaurant industry during meetings of Mayor Ed Murray’s Income Inequality Advisory Council, including fair treatment under the ordinance for all Seattle restaurants, permanent recognition of tips and benefits in the calculation of real income, and a delay the ordinance’s implementation date to July 1, 2015, rather than the April 1 effective date.

“As progressive business owners in the Emerald City, we believe the entrepreneurial spirit and the very culture of Seattle will be impacted by this change,” the statement said.    

There’s speculation that other cities may try to implement a $15 minimum wage. New York City Mayor Bill de Blasio has called for a city minimum wage above $10, and New York City Council Speaker Melissa Mark-Viverito recently voiced support for a $15 minimum in New York City, though state law currently preempts cities and towns from paying above the state minimum wage. The Providence, R.I., City Council was scheduled to vote last week on a bill that would increase the minimum wage for hotel employees and employees of businesses—including restaurants—located within hotels to $15 an hour, but the vote was postponed. The effort is being coordinated by the Unite Here labor union. Such an increase would put hotels in Providence and restaurants located in those hotels at a severe competitive disadvantage to those not located in hotels, said Dale Venturini, CEO of the Rhode Island Hospitality Association, which is aggressively opposing the ordinance. The Rhode Island House of Representatives is considering a bill to prevent cities and towns from setting their own minimum wage.

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