• Restaurants Close Doors After Seattle Hikes Minimum Wage

    Starting on April 1st, 2015, Seattle’s new minimum wage laws will commence and many local businesses are already feeling the chokehold of this new policy.

    The new law raises the minimum wage from $11 to $15, and a number of restaurants have begun to close their doors before the mandate kicks in because the added labor costs are too great.

    The Washington Policy Center notes:

    The closings have occurred across the city, from Grub in the upscale Queen Anne Hill neighborhood, to Little Uncle in gritty Pioneer Square, to the Boat Street Cafe on Western Avenue near the waterfront.

    The shut-downs have idled dozens of low-wage workers, the very people advocates say the wage law is supposed to help.  Instead of delivering the promised “living wage” of $15 an hour, economic realities created by the new law have dropped the hourly wage for these workers to zero.

    Restaurants close for many reasons, but Seattle has an added a unique factor.  Seattle Magazine reports, “…another major factor affecting restaurant futures in our city is the impending minimum wage hike to $15 per hour.”  About 36% of restaurant earnings go to paying labor costs.

    Advocates of a high minimum wage said businesses would simply pay the mandated wage out of profits, raising earnings for workers.  Restaurants operate on thin margins, though, with average profits of 4% or less, and the business is highly competitive.

    The cheerleaders of a higher minimum wage often use examples of behemoth companies like McDonald’s and Walmart to sell the idea that a higher minimum wage is justified because these companies have deep pockets. But what is never discussed is that smaller businesses, especially restaurants, operate on razor-thin profit margins, and simply cannot afford these draconian laws.

    In addition to the businesses shutting down, a spokesman for the Washington Restaurant Association said the minimum wage spike will disrupt one of Seattle’s key attractions:

    Seattle is rightly famous for great neighborhood restaurants.  That won’t change.  What will change is that fewer people will be able to afford to dine out, and as a result there will be fewer great restaurants to enjoy.  People probably won’t notice when some restaurant workers lose their jobs, but as prices rise and some neighborhood businesses close, the quality of life in urban Seattle will become a little bit poorer.

    Matt Schuck

    Staff Writer

    Matt Schuck is a staff writer for Daily Surge. He's a DC native who got his start in broadcasting doing stints at the legendary radio station DC101 and Hot 99.5, before being recruited by the Heritage Foundation to launch their first ever radio program. Matt has worked with SiriusXM, Phil Hendrie (Team America, Futurama), and as an executive producer for the John Fredericks Show.

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