On 1 April 2015 the minimum wage in Seattle, WA will increase to $11/Hour. This is part of a phased plan to make every employer in Seattle pay a minimum wage of $15 by 2022. The Seattle City Council is proud of their new ordnance. They talk about winning a victory for the movement, stopping the race to the bottom. They should worry instead about winning a victory for the moving vans and stopping a race for the suburbs. Sara Jones of Seattle Magazine discovered that a lot of Seattle area restaurants are closing. She explains below.
Though none of our local departing/transitioning restaurateurs who announced their plans last month have elaborated on the issue, another major factor affecting restaurant futures in our city is the impending minimum wage hike to $15 per hour. Starting April 1, all businesses must begin to phase in the wage increase: Small employers have seven years to pay all employees at least $15 hourly; large employers (with 500 or more employees) have three.
Well aren’t these exploitative, greed-mongering Capitalist Pigs just evil? Do they not care for the less well off in our society. Of course they are not evil, of course they care about the poor. Better than 2/3 of the people who run successful restaurants got into that racket because the were the working poor. Restaurants are also one of the least capital-intensive set-ups that you can get going. Their labor costs are higher than average and their profit margins make retail chains feel lucky. Jones explains why the restaurants are immediately sensitive to labor cost increases.
Washington Restaurant Association’s Anthony Anton puts it this way: “It’s not a political problem; it’s a math problem.” He estimates that a common budget breakdown among sustaining Seattle restaurants so far has been the following: 36 percent of funds are devoted to labor, 30 percent to food costs and 30 percent go to everything else (all other operational costs). The remaining 4 percent has been the profit margin, and as a result, in a $700,000 restaurant, he estimates that the average restaurateur in Seattle has been making $28,000 a year.
Now we make the cost of labor go up 18% for large restaurants. This means labor costs are now eating almost 41% instead of 36% of the money pie. The restaurant can close at non-peak hours, it can buy poorer quality ingredients or it can close its doors. Can the working poor who used to work in these places move with the jobs? If not; than the Seattle City Council has just legislated a new minimum wage for these individuals: $0.00.
Despair not, Seattle restaurant goers. An outfit from San Francisco, Momentum Machines, has invented the automatic burger maker. They already claim the machine does everything a fast food restaurant back line can do with better precision. They need to invent one of those to cook Italian or French and call it The Sea Hawk. Snark aside, this is where things are going. If humans are too expensive, the service either gets provided by machine or doesn’t get provided. As any of the now defunct restaurateurs could tell you. ‘There is no such thing as a free lunch.”