How a $15 Minimum Wage in Seattle Could Leave Workers Worse Off Seattle mayor Ed Murray proposed a record-setting minimum wage hike of $15 -- a move both waiters and restaurant owners are calling shortsighted for failing to credit tips.
By Geoff Weiss
Opinions expressed by Entrepreneur contributors are their own.
Minimum-wage workers in the Emerald City are about to see a bit more green. Or are they?
In a news conference yesterday, Seattle Mayor Ed Murray proposed a minimum wage hike of $15, which, if approved by the City Council, could set a lofty national precedent for base earnings.
The proposal states that small businesses with fewer than 500 workers must raise wages to $15 within seven years, while larger companies with more than 500 employees must do so in three, reports Reuters.
However, the proposal is being met with heavy skepticism within the foodservice industry -- by business owners and employees alike.
Related: Think Seattle's Only Claim to Fame Is Starbucks? Think Again.
Servers, for instance, fear that if the law were to be enacted, customers might tip them less generously.
"People are talking about moving to a European system of tipping," Bridget Maloney, a Seattle bartender, told Bloomberg. (In Europe, tipping is not generally considered mandatory.)
Moreover, some restaurant owners have warned that, in the case of a wage hike, they might have to "force servers to share more of their tips with cooks, dishwashers, and other back-of-the-house staff," Bloomberg reports.
Related: Switzerland Mulls Setting Minimum Wage at $24.73
Seattle business owners are also pushing for legislators to amend the proposal so that wages from tips -- as well as other employee benefits that they provide, such as health care -- are taken into account.
Waiters, they argue, take home a multilayered income that includes tips on top of a smaller hourly rate, called a subminimum wage. (In Washington, the pre-tip rate is already a generous $9.32 -- though in many states it can be as low as $2.13.)
Raising servers' subminimum rates without taking the tips they receive into account would leave restaurant owners no choice but to raise menu prices, they say, ultimately resulting in shrunken profits.
Related: Gap Raises Minimum Wage as Walmart Mulls a Hike of Its Own
"If what they really want is $15 an hour -- by G-d, our waiters make $15 an hour and then some," Seattle restaurateur Tom Douglas told PBS. He noted that servers throughout his 14 upscale eateries in the Seattle area can earn as much as $30 or $40 an hour in tips. "A full-time waiter in a high-priced house could easily make $75-80 grand a year," he said.
While Washington already boasts the highest minimum wage in the country at $9.32 an hour, the Seattle proposal comes on the heels of President Obama's circumvention of Congress last January to pass a $10.10 minimum wage on all federal contracts.
However, even nonpartisan organizations like the Congressional Budget Office warn that a minimum wage hike could actually lead to joblessness if employers are forced to cut positions in order to pay higher wages.
