The first phase-in of Seattle’s $15 an hour minimum wage has been in effect for a little more than 3 months and there are already signs of trouble.
The wage, to be phased in over several years, is needed, say proponents, because so many workers who have full-time jobs are on public assistance.
Many companies raised their employees’ wages beyond the $11 an hour mandated by the law, which has led to some curious results. Employees are begging their bosses to cut their hours so they can keep their food stamps, housing assistance, and other welfare benefits.
Evidence is surfacing that some workers are asking their bosses for fewer hours as their wages rise – in a bid to keep overall income down so they don’t lose public subsidies for things like food, child care and rent.
Full Life Care, a home nursing nonprofit, told KIRO-TV in Seattle that several workers want to work less.
“If they 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,” said Jason Rantz, host of the Jason Rantz show on 97.3 KIRO-FM.
The twist is just one apparent side effect of the controversial — yet trendsetting — minimum wage law in Seattle, which is being copied in several other cities despite concerns over prices rising and businesses struggling to keep up.
The notion that employees are intentionally working less to preserve their welfare has been a hot topic on talk radio. While the claims are difficult to track, state stats indeed suggest few are moving off welfare programs under the new wage.
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.
At the same time, prices appear to be going up on just about everything.
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.
Some long-time Seattle restaurants have closed altogether, though none of the owners publicly blamed the minimum wage law.
“It’s what happens when the government imposes a restriction on the labor market that normally wouldn’t be there, and marginal businesses get hit the hardest, and usually those are small, neighborhood businesses,” said Paul Guppy, of the Washington Policy Center.
You can’t blame the workers. They have been presented with a golden opportunity to game the system and have taken full advantage. With more time on their hands, many of them will almost certainly find additional work “off books” thus raising their income anyway.
Those companies who can afford to not only pay their workers the new wage, but raise prices sufficiently to help pay for the increase. will survive. Those who work in industries where profit margins are small and highly sensitive to labor costs will have trouble. One thing is certain: there will be fewer workers receiving the minimum wage and fewer companies operating to pay them.