A do-gooder tells why $15 wage is bad idea
A Seattle liberal pokes his head up to challenge Seattle’s $15 minimum wage.
Seattle Times staff columnist
It would be hard to find more of a liberal do-gooder in the local business community than John Platt.
His restaurant, St. Clouds, in my own Madrona neighborhood, doubles as a sort of local relief agency. Drop by there and Platt is likely to be cooking 500 meals for the homeless. Or volunteering to be chef for public-school auctions. Or running dine-out fundraisers for everyone from environmental activists to immigrant high-schoolers trying to get to college.
So when I asked if he’s worried about getting blowback for the stance he’s now taking, he said he hadn’t considered it.
“Are they going to say John Platt doesn’t care about people?”
Because Platt is coming out hard against the cause of the year, the $15 minimum wage. The proposed wage hike is “outlandish” and “a radical step,” he told me the other day. That it seems to already have majority support among the political establishment — one City Council member told me flatly that $15 was “guaranteed” to pass — has Platt wondering whether Seattle has finally gone round the progressive bend.
“I feel like the politicians are all afraid of Kshama Sawant,” Platt said. “So they’re running with this number picked out of a hat. It doesn’t feel like it’s been given much thought.”
For a small restaurant, where waiters make minimum wage but rely mostly on tips, the math of the wage-hike proposal is brutal.
It works like this. About one-third of Platt’s costs are labor. Those costs will rise up to 60 percent if the wage is lifted from $9.32 to $15 per hour. His cost of goods also will rise, though not as sharply. The bottom line is St. Clouds’ total costs could easily go up 25 to 30 percent.
If he passes that on to his customers, then St. Clouds’ burger with green chili aioli, which sells for $13, could cost $17. The top of the menu, pan-roasted duck, could go from $32 to more than $40.
“It isn’t fear-mongering; it’s just math,” says Burke Shethar, who runs the Madrona Ale House across the street from St. Clouds. “We could be the city of the $18 hamburger.”
But economists say these new costs are so steep they can’t be passed completely along to customers, who would balk at paying them. Small businesses would be forced to eat some portion, and try to recover the rest by a combination of reducing staff hours or benefits as well as raising prices. Bigger companies, as were affected by the SeaTac wage measure, have more flexibility to absorb such “cost shocks.”
Nobody has ever tried a 60 percent wage hike before.
“You’re in uncharted territory,” said Barry Hirsch, a labor and wage economist at Georgia State University who has looked at how the minimum wage affects the restaurant industry.
Hirsch has joked he hopes Seattle passes the $15 minimum wage “because we want to come out there and study what happens.”
Platt says his love is cooking, not math or experimental economics. He has no idea how he’d deal with a 25 percent increase in costs. At first, he said he would close St. Clouds and “just do something else.” Later, when I pressed him to brainstorm, he mentioned he buys 80 percent health insurance for his full-time employees, so he could maybe cut that and send them to the Obamacare exchanges instead.
“So that’d be a terrible result. I’d be saying, ‘Hey, here’s a raise, but now you’re on your own,’ ” Platt said.
Phasing in more gradual wage hikes would be a huge relief for small businesses, Platt said. There’s also the issue that many nonprofits pay less than $15 — and most can’t raise prices to cover an increase. But advocates for the higher wage, led by new councilmember Sawant, are pushing for the full $15 by Jan. 1, on everyone, or they’ve said they’ll run an initiative.
When some Capitol Hill business owners questioned the $15 wage last month, a few were personally attacked for being too rich or for exploiting the working poor. Platt said the movement is starting to acquire a cultlike feel.
“We all seem to be following the socialist, but why?” he said. “I’m just asking Seattle to think long and hard about this. We need to have this debate.”
Well, consider it started — at least in my liberal neighborhood!
Danny Westneat’s column appears Wednesday and Sunday. Reach him at 206-464-2086 or email@example.com
About Danny Westneat
Danny Westneat takes an opinionated look at the Puget Sound region's news, people and politics. Send tips or comments to firstname.lastname@example.org. His column runs Wednesday and Sunday.
email@example.com | 206-464-2086