Why the $15 minimum wage has been a success for this Seattle restaurant

Why the $15 minimum wage has been a success for this Seattle restaurant

http://www.presstelegram.com/apps/pb...h=400&maxw=667In this photo taken Monday, July 27, 2015, workers prepare to bring food orders to customers at an Ivar's restaurant in Seattle. After Seattle's new minimum wage law took effect last April 1, Ivarís Seafood Restaurants announced that it was jacking up its prices by about 21 percent, eliminating tipping as a routine procedure, and immediately paying all its hourly workers a $15 per hour. They began the new pay rate three years earlier than the law required. (AP Photo/Elaine Thompson)

By GENE JOHNSON, Associated Press
POSTED: 07/31/15, 8:23 AM PDT | UPDATED: 57 SECS AGO

http://www.presstelegram.com/apps/pb...h=400&maxw=667In this photo taken Monday, July 27, 2015, server Ling Powers smiles as she talks with customers at an Ivar's restaurant in Seattle. After Seattle's new minimum wage law took effect last April 1, Ivarís Seafood Restaurants announced that it was jacking up its prices by about 21 percent, eliminating tipping as a routine procedure, and immediately paying all its hourly workers a $15 per hour. They began the new pay rate three years earlier than the law required. (AP Photo/Elaine Thompson)

SEATTLE — 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.

For some of the restaurant’s lesser-paid workers — including bussers and dishwashers — that’s meant as much as 60 percent more.

Revenue has soared, supportive customers are leaving additional tips even though they don’t need to, and servers and bartenders are on pace to increase their annual pay by thousands, with wages for a few of the best compensated approaching $80,000 a year.

“It’s been a surprise,” Donegan said. “The customers seem to like it, the employees seem to like it, and it seems to be working, at least in this location.”

Rochelle Hann, 25, is a second-generation worker at Ivar’s. Like her mom, she has performed a variety of roles, including serving, bookkeeping and even dressing up as a giant clam. If she keeps working 30 hours a week, her annual pay will jump about $12,000 — money she’s socking away for accounting classes at a community college.

“Before, I felt like it was maybe not quite paycheck-to-paycheck, but now I don’t even have to worry about it,” she said. “I just went away for the weekend, and it was an easy expense.”

Brett Richards, a 50-year-old singer and guitarist, has worked 25 years in food service, including the past eight at Ivar’s.

Before, he made minimum wage, plus tips. Now, he gets $15 an hour, plus a share of the 21 percent menu price increase, plus any additional tips customers leave. He expects to make almost $7,000 more this year, money that’s helping him with his increased rent and with taking his kids out to eat a little more often.

Other industries with minimum wage employees could have a tougher time as worker pay climbs.

“What we expect to observe is this is not going to be a policy that’s universally good for everybody or bad for everybody,” said Jacob Vigdor, a University of Washington professor who is leading a study of Seattle’s minimum wage law. The study includes recurring surveys of 700 Seattle businesses and ongoing interviews with about 50 low-wage workers and their families.

Downtown Emergency Services Center, which relies heavily on government contracts to provide housing and other services for chronically homeless residents, might need to cut those services unless the city boosts its funding.

“The economic justice that would be happening for our employees would be borne by our clients, who are extremely vulnerable people,” executive director Daniel Malone said.

In the restaurant industry, where many low-wage workers are employed, adapting could mean pooling tips among all workers, cutting shifts or relying on technology — such as cellphone applications that let customers pay electronically, rather than having someone dedicated to running the cash register.

“This last jump wasn’t that far out of market, so it didn’t require a lot of reworking of the financials,” says Anthony Anton, president of the Washington Restaurant Association.

“Those second and third jumps will be much bigger jumps.

Everyone is talking about what to do.”

At Ivar’s Salmon House, decorated with century-old, hand-carved canoes and tribal art, Donegan attributes at least some of his pay policy’s success to Seattle’s white-hot economy.

Looking out the broad windows of the dining room across Lake Union, diners can take in pleasure boats and kayaks cruising by, seaplanes landing, the Space Needle — and across the water, the ever-growing Amazon campus that has brought tens of thousands of workers to the city in the past few years.

The restaurant’s revenue is up 20 percent, said Donegan, who served on the mayoral committee that drafted the minimum wage law.

A few other table-service restaurants have started following suit, and Donegan said he gets inquiries every day from owners wondering how Ivar’s policy is working. But the approach is unlikely to be replicated among fast food restaurants or others where servers make less in tips — even though New York City is making $15 an hour the minimum wage for fast food chains.

Even Ivar’s isn’t expanding its new policy to its quick-service seafood stands.

http://www.presstelegram.com/busines...tle-restaurant

Seattle’s $15 Minimum Wage Law Just Came Back To Bite Them In A Totally Unexpected Way


Early indicators suggest that the $15 minimum wage is a "lose, lose" proposition for employers and employees.
Randy DeSoto July 24, 2015 at 10:42am

As the push continues in various locations around the country to raise the minimum wage to $15 per hour, the real world consequences of such a move have begun to surface.

Seattle became the first city in the nation to implement the $15 per hour minimum wage this past spring. Fox News reports that one unintended effect is that workers who are earning the higher wage are asking for fewer hours, so they can remain eligible for low income government benefits like childcare and tax credits.

Full Life Care, a home nursing nonprofit, told KIRO-TV in Seattle that several workers want to work less.
Local radio talk show host Jason Rantz on KIRO-FM noted the irony: “If [employees] cut down their hours to stay on those subsidies because the $15 per hour minimum wage didn’t actually help get them out of poverty, all you’ve done is put a burden on the business and given false hope to a lot of people.”
“Despite a booming economy throughout western Washington, the state’s welfare caseload has dropped very little since the higher wage phase began in Seattle in April. In March 130,851 people were enrolled in the Basic Food program. In April, the caseload dropped to 130,376,” according to Fox News.

As reported by Western Journalism, private businesses, unlike government entities (which, in theory, can always raise taxes or borrow), must make more than they spend in order to pay the rent, make payroll, keep the lights on, pay their business taxes, and, heaven forbid, have some left over for the owners and investors who are taking the risk and putting in the long hours.

“Some restaurants have tacked on a 15 percent surcharge to cover the higher wages. And some managers are no longer encouraging customers to tip, leading to a redistribution of income. Workers in the back of the kitchen, such as dishwashers and cooks, are getting paid more, but servers who rely on tips are seeing a pay cut,” Fox News reported.

Earlier this year, as the implementation of the minimum wage law loomed, Seattle Magazine noted that something appeared to be afoot affecting the restaurant industry in the city, asking: “Why Are So Many Seattle Restaurants Closing Lately? “Seattle foodies [are] downcast,” the magazine reported, “as the blows kept coming: Queen Anne’s Grub closed February 15. Pioneer Square’s Little Uncle shut down February 25. Shanik’s Meeru Dhalwala announced that it will close March 21. Renée Erickson’s Boat Street Café will shutter May 30 after 17 years with her at the helm…What the #*%&$* is going on? A variety of things, probably—and a good chance there is more change to come.”

The magazine went on to report that one “major factor affecting restaurant futures in our city is the impending minimum wage hike.” Anthony Anton, president and CEO of the Washington Restaurant Association, told the magazine: “It’s not a political problem; it’s a math problem.” He estimates that restaurants usually have a budget breakdown of about 36 percent for labor, 30 percent for food costs, and 30 percent to cover other operational costs. That leaves 4 percent for a profit margin. When labor costs shoot up to, say 42 percent, something has to give.

Shah Burnham is just one Seattle restaurant owner who believes that keeping her doors open is no longer worth it. She owns a popular Z Pizza restaurant location and says that even though her one store only has 12 employees, she’s considered part of the Z Pizza franchise — a large business. So she has to give raises within the next two years. “Small businesses in the city have up to six more years to phase in the new $15 an hour minimum wage,” according to Seattle’s Fox News 13.

“I know that I would have stayed here if I had 7 years, just like everyone else, if I had an even playing field,” she says. “The discrimination I’m feeling right now against my small business makes me not want to stay and do anything in Seattle.”

“It’s what happens when the government imposes a restriction on the labor market that normally wouldn’t be there”…usually the “small, neighborhood businesses” get hit the hardest, said Paul Guppy of the Washington Policy Center.

San Francisco and Los Angeles have already embraced the $15 per hour benchmark being pushed by some Democrat politicians and labor unions, while New York regulators announced their recommendation to the state’s governor this week to raise the rate for fast food workers to the same level.
The Heritage Foundation notes the minimum wage is usually for new workers, with a low percentage of Americans receiving it. The organization also points out

some other interesting statistics:

• Over half of minimum-wage earners are between the ages of 16 and 24.
• Two-thirds of minimum-wage workers earn raises within a year—without the government’s help.
• Only 2.9 percent of wage earners earn the federal minimum wage.
• Most minimum-wage earners are teenagers or young adults, not heads of families.
• Two-thirds work part time (defined as less than 35 hours a week).
• Two-thirds of minimum-wage workers live in families with incomes above 150 percent of the poverty line.
• Just 4 percent of minimum-wage workers are single parents working full time, compared to 5.6 percent of all U.S. workers.
• Studies find raising the minimum wage does not reduce poverty.

Heritage recommends that if government leaders want to reduce poverty, they should focus on growing the economy through better tax policies and restructuring the welfare state to remove the current disincentives to work more hours, or work at all.
Early indicators suggest that the $15 minimum wage is a lose, lose proposition for employers and employees alike.

http://www.westernjournalism.com/sea...nexpected-way/

Dave Jamieson

Ikea's Minimum Wage Hike Was So Successful, It's Raising Wages Again

Posted: 06/24/2015 12:01 am EDT Updated: 06/24/2015 4:59 pm EDT

http://i.huffpost.com/gen/3109564/im...A-large570.jpg

WASHINGTON -- A year after it first announced a major minimum wage hike in its U.S. stores, Ikea said Wednesday that it plans to implement another nationwide raise to its wage floor next year, bringing the average store's starting pay to nearly $12 per hour.

Under the system that the ready-to-assemble furniture maker first established in January, the starting wage for any given store in the U.S. reflects the cost of living in that particular area as determined by the MIT Living Wage Calculator, which takes into account the local cost of rent, food, transportation and the like. After the second round of raises, which is slated for this coming January, all of the company's U.S. stores will be paying at least $10 per hour, and the average minimum wage across all locations will be $11.87 -- a 10.3 percent increase over the previous year, according to the company.

Rob Olson, chief financial officer for Ikea U.S., told The Huffington Post that the company is already reaping dividends from its decision to hike the wage floor and to factor in the local cost of living in doing so.

"We're very pleased so far," Olson said.

So what types of benefits has Ikea seen?

For one, less turnover. Although it's only been six months since the raises went into effect, Olson said Ikea is on pace to reduce turnover by 5 percent or better this fiscal year. Holding onto employees longer means the company is spending less on recruiting and training new replacements.

Ikea is also attracting more qualified job seekers to work at its stores, according to Olson. Pay for retail sales workers in the U.S. is generally very low, with an average industry wage of just $12.38 per hour, according to the Bureau of Labor Statistics.

But Ikea's average store wage is heading north of $15. After its living wage announcement last year, the company opened two new locations -- one in Merriam, Kansas, and another in Miami -- and the higher wages (and attendant publicity) likely helped the company lure more candidates.

"At both of those stores, the applicant pool was fantastic," Olson said.

Ikea is just one of a number of major retailers, including Gap and Walmart, that have moved to boost their minimum wages in the past two years.

But Ikea may have implemented its raises in the most unique manner, thanks to its reliance on the MIT Living Wage Calculator. For comparison, at the College Park, Maryland, store, in the Washington, D.C., suburbs, the minimum wage will be $14.54 next year, while at the store in Pittsburgh, it will be $10.

The recent raises implemented by retailers aren't all about benevolence. Although these decisions are partly a response to calls for higher wages for the working poor -- particularly due to the success of the Fight for $15 labor movement -- they're also calculated business decisions made in an improving labor market. As the economy recovers and unemployment falls, retailers have to compete to attract talent in a way they didn't need to during the recession and sluggish recovery.

Quoting the company's stated vision, Olson said the wage raises are meant to "create a better everyday life for the many people" -- the many people, in this case, being Ikea's employees.

But at the same time, he noted, "it makes strong business sense."

http://www.huffingtonpost.com/2015/0...n_7648804.html

I have no problem with an individual company raising their wage. My problem is comes when burger flippers, pizza bakers, and chicken fryers are demanding $15.00 an hour nationally. Since when is flipping burgers and bagging fries worth $15 an hour?

Also while some of these companies do just fine raising their own minimum wages including in major cities what about all those products they use. Such as a restaurant and poultry processing. Pay those workers on the bottom that make all the stuff the business consumes heavily on a daily basis then the prices must go up once again. What happens when every business that is needed to run another business that employs mostly minimum wage workers all of a sudden have a huge federally mandated wage boost? Not only does the main business costs go up from their own workers getting paid more but all the costs of goods which are usually from rural areas also goes up. Lets see these restaurants survive when costs go up 40% instead of just 21%. Plus they use as an example a nicer restaurant which is a seafood place where people expect bigger bills due to seafood prices. Lets see how it does at the coffee shops, fast food places, and normal diner's that focus on lower price simpler food. But those same places I mention are the ones already struggling with just their own labor costs going up before even thinking of labor costs associated with every single US made product they use.