SEATTLE — When it comes to Seattle’s minimum wage, which is set to jump by as much as $1.50 an hour on Friday, Ali Ghambari, owner of Cherry Street Coffee, tries to take a philosophical view.
The 11 percent increase — from $13.50 to $15 for many small businesses like Ghambari’s (larger companies will pay more) — represents an unwelcome new expense when he’s struggling with the pandemic.
Still, the raises that 14 of his 25 workers will get starting Jan. 1 is necessary in such an expensive region, Ghambari says. And realistically, a wage hike is probably the least of his worries, given that his overall business is down more than 70 percent compared to 2019. An extra $1.50 an hour “is not going to break our back,” he says with a rueful laugh. “Our back is already broken.”
Across Seattle and the state, many employers are coming to terms with an annual ritual that has special significance in the year of COVID-19.
Under the city’s Minimum Wage Ordinance, employers with more than 500 employees must pay a minimum of $16.69 an hour starting Jan. 1, up 1.8 percent from $16.39.
Most companies of 500 or fewer employees will see their minimum wage go from $15.75 to $16.69, a 6 percent increase.
The exceptions are firms with 500 or fewer employees where workers make at least $1.69 an hour in tips or get an employer contribution of at least $1.69 an hour toward medical benefits will see their minimum go to $15, up 11 percent from $13.50.
Washington state’s minimum wage also increases Jan. 1 — from $13.50 to $13.69, a 1.4 percent rise.
Seattle’s new minimum wage law for ride-hailing drivers also goes into effect Jan. 1. In response to the law, which requires drivers to earn at least $16.69 an hour, Uber said fares could rise by as much as 50 percent by April 1.
For many workers, the wage increases are a welcome prospect in a volatile job market. That’s especially true in the hospitality sector, where workers lucky enough to have jobs may be working fewer hours and seeing smaller tips.
Jesse Appel, who works at Toulouse Petit Kitchen & Lounge in Seattle’s Lower Queen Anne neighborhood, said tips have fallen dramatically as restaurants have shifted to takeout and delivery in response to public health restrictions. “People aren’t making as much,” Appel says. “It’s definitely changed.”
“The tips aren’t that much,” added a delivery driver who was parked outside the restaurant but who declined to give his name. A higher minimum wage, he added, “would really make a huge difference.”
Employers, by contrast, seem as divided on the wage issue as they were in 2014, when the city of Seattle was debating the law that would eventually include a phased-in increase of the minimum wage to $15 and beyond.
Jessica Trimble, owner of the Enchant Vertical Dance studio in Seattle, says a higher wage is the “ethical” response for employers in a city that is increasingly unaffordable for entry-level workers. “The rent prices here alone are just ridiculous,” said Trimble; she pays her workers at least $20 an hour when her studio is open. “Workers should be fairly compensated.”
For other employers, the looming wage increases are another burden during the worst downturn in memory. Many are seeing both cratering revenues and rising costs.
Many businesses, for example, expect substantial increases in their unemployment taxes as the state seeks to cover the extra costs of paying out so much in unemployment benefits in 2020.
“We run a factory and to be competitive in our market the change [in wages] is an issue,” one member of a Seattle-based small business group wrote on Facebook. “Our business doesn’t have the margins to absorb another increase — especially w the virus.”
Other employers worry that a higher minimum wage will make it harder to hire entry-level workers. Joyce Poon, owner of an eyelash extension salon with locations in Seattle and Bellevue, said she pays minimum wage to entry-level workers until they’ve been fully trained. But Poon may shift to hiring experienced candidates because with a higher minimum wage, “paying someone while training them is not a profitable business model,” she said.
Still, for other employers, even an 11 percent increase is largely a nonevent. Thanks to the Seattle-area’s high living costs, many employers are already paying wages well in excess of the minimum simply to attract enough labor.
“If I don’t do $20, I don’t get a [response to the job listing],” said the owner of a Seattle adult care facility who didn’t want her name published because she is selling the business. That wage was necessary to persuade workers to commute into Seattle from communities in the south end of King County where they could afford to live, the owner said. “In the south, they’ll work for $16,” the owner added. But “I have to pay 20 to get them.”
