$15 Minimum Wage A Surprising Success For Seattle Restaurant

[Purveyor]

SEATTLE (AP) - Menu prices are up 21 percent and you don't have to tip at Ivar's Salmon House on Seattle's Lake Union after the restaurant decided to institute the city's $15-an-hour minimum wage two years ahead of schedule.

It is staff, not diners, who feel the real difference, with wages as much as 60 percent higher than before. One waitress is saving for accounting classes and finding it easier to take weekend vacations, while another server is using the added pay to cover increased rent.

Seattle's law, adopted last year after a strong push from labor and grass-roots activists, bumped the city's minimum wage to $11 an hour beginning April 1, above Washington state's highest-in-the-nation $9.47. Scheduled increases that depend on business size and benefits will bring the minimum to $15 within four years for large businesses and seven years for smaller ones.

There's little data yet on how the law is working.

"To the extent that we can look at macro patterns, we're not seeing a problem," Seattle Mayor Ed Murray said.

As Washington, D.C., and other cities consider following Seattle, San Francisco and Los Angeles in phasing in a $15-an-hour minimum wage, Ivar's approach, adopted in April, offers lessons in how some businesses might adapt. Ivar's Seafood Restaurants President Bob Donegan decided to raise prices, tell customers that they don't need to tip and parcel the added revenue among the hourly staff.

more...

http://www.komonews.com/news/local/15-minimum-wage-a-surprising-success-for-Seattle-restaurant-320277931.html

[Marie Marie]

1. Since we always try to tip between 18-20% this would be a wash for us and a boon for the staff.

Sounds like a win-win to me. And from what I am hearing lately, in places like San Francisco, $15.00/hr is still barely a living wage but at least it is a start.

[Hoyt]

2. This is great. There was a thread here today showing a study that $15/hour would increase

a typical fast food meal by 30 cents or so, less than 5%. That's not much.

[JayhawkSD]

4. Slightly more than that, but not much

$15 would be a 40% increase in labor, which is typically 26% of cost.
On a $5.11 Whopper, labor would go from $1.33 to $1.86 for an additional $0.53.
With profit, that would add about $0.70 to the price of the burger, or about 14%.

[Hoyt]

5. I think it depends on current wage mix and other factors. Here's the article I saw,

http://www.marketwatch.com/story/raising-fast-food-hourly-wages-to-15-would-raise-prices-by-4-study-finds-2015-07-28

A number of factors could cause the difference. But the key point is that most of us would still be able to afford food with the increase, not to mention those who get the increase.

[JayhawkSD]

7. Well, that's a very strange chart.

It shows "Wages and benefits per FTE" with the amount $28,150 circled in red, and then shows "Total payroll and benefits" at $253,352. Apparently that means per employee and there are 9 employees, but the cost per employee is irrelevant when all of the other numbers are total cost.

The $253,352 which they show as total payroll and benefits, moreover, is 41% of the $613,133 which they show for total cost and expense. If you take their figure of a $15 wage being an 107% increase in labor cost, that represents a 43% overall cost increase and requires a heck of a lot more than a 4.3% price increase to offset it.

In the body of the article they make the unadorned statement that a 107% increase in wages results in a 4.3% price increase, but the numbers do not come even close to bearing that out.

[Hoyt]

8. Didn't really waste my time trying to figure it out. I think it really comes down to FTEs per burger

and order of fries and how many they can do an hour. I do think at $15 an hour, management and customers can expect to not get home and find cheese on your burger when you specifically said NO CHEESE (I hate cheese).

The point is, most of the folks opposed to a substantial increase in minimum wage, can probably afford the relatively small impact. Some companies might close or have to cut things to the bone in short-term, but others will pick up the slack over time.

[JayhawkSD]

11. I'm not really arguing with you

and I'm not opposed to raising the minimum wage. But decisions should be made on facts, not crap thrown out by "think tanks" who have a political agenda. I know it was the wrong side that siad it, but it is still good policy to "trust but verify."

I have to say that your "I didn't waste my time trying to figure it out" kind of disturbs me. All too commonly we see an article that agrees with our position and accept it uncritically, and then cite it as authority without knowing whether or not it is truth. Talk about degrading the political discourse.

And how do we ever receive new ideas with that policy? A closed mind never learns new things.

[Hoyt]

13. Whether it's 4.3% or 15% doesn't change my opinion of the need to increase Mwage.

So why should I open a spreadsheet, take a sample of fast food restaurants, find cost accounting date on each, FTEs, burgers per FTE, etc., to see if the authors got it precise.

Besides, I do junk sort of like that for a living, and for my purposes of supporting an increase in the minimum wage, it's clear to me that they are close enough to the actual amount to form my opinion that a substantial minimum wage increase won't tank the economy.

[JayhawkSD]

14. Heh. I've made up my mind and don't need any facts.

It took me less than a minute to spot the flawed reasoning in that article. I didn't need a spreadsheet, all I needed was an open mind.

And I still supoort raising the minimum wage. I don't know how people keep missing that in what I'm saying.

[JayhawkSD]

3. That works where "we tell customers not to tip."

If you raise prices and eliminate tipping you are not effectively raising prices. You are merely moving offbooks revenue onto the books. So it's easy to call this a success. Business has not diminished because eating in this restaraunt is no more expensive than it was before.

But for other venues where tipping is not part of the picture, there will be actual price increases. Landscaping maintenance, for instance, and fast food may suffer when prices go up, because they are things that people do not have to buy but are optional budget items. So we still need to wait and see how that works out for those businesses. Hopefully it will be okay and people will continue to get their lawns mowed and eat hamburgers at higher prices. But only time will tell.

[Fearless]

6. I call BS on that meme

Minimum wage has increased many times since it's inception at 0.25 an hour. Small business has not disappeared because of it. Why? Because people with good paying jobs have more money to spend, and they do spend it. Likewise every first world country with a higher minimum wage than us still have small business many frankly stronger than ours.

[JayhawkSD]

9. I did not say what you seem to think I said.

I did not say that the increase in minimum wage will hurt businesses, and I am not suggesting that it will. I am actually in favor of raising the minimum wage, have said so in this forum, and have never spoken against it. So I am calling BS on your rant, because you are accusing me of something that I did not say. I said two things.

First I said that the claim made that yhr restaurant's experience after raising prices cannot be held up as proof that the $15 wage is harmless, because when they raised their prices they eliminated tipping and so there is no effective increase in cost to their customers. That statement was confirmed by their customers in the article, when customers themselves said, "It doesn't cost me more, so I can continue to eat out," or words to that effect.

The second thing I said was that other businesses would have to raise prices, and that some people might need to cut back on optional services as a result. I did not predict that it would actually happen, and I did not say it would drive those small companies out of business or significantly harm them if it did happen. I said we would have to wait and see what the impact of the $15 wage would actually be.

So take your "calling BS" on whatever memes you think you are seeing and keep them in your pocket.

[Fearless]

10. And as I said, evidence worldwide shows this to be bunk

[JayhawkSD]

12. So, what part of that is bunk?

Please actually read to what I just wrote in post 9 and tell me what part of it is bunk. Quote one sentence and tell me that it is bunk and why.

[oldandhappy]

15. I try to tip 20% so this works for me.

Good job Ivar's.