On January 1, the town of SeaTac, Washington, will increase their minimum wage to the highest in the nation.
SeaTac is a suburb located approximately 10 miles south of Seattle. Beginning tomorrow, the minimum wage will be $15 an hour. The current minimum wage is only $9.32 an hour. The increase means that businesses that rely on employees earning minimum wage will have to pay those individuals as much as approximately 61 percent more than they pay those employees currently.
Experts believe the minimum wage increase will affect over 1,500 workers in the town.
Minimum Wage Increase May Not be a Clear-Cut Benefit for Employees
While on the surface it appears that employees earning minimum wage would benefit from such a significant increase, that may not be the case in the end because of changes businesses will have to make to afford the increase in pay. To absorb the increased expense of paying higher wages and still remain profitable, businesses will have to make cuts in other areas.
“We’re going to be looking at making some serious cuts,” said Scott Ostrander, the General Manager of Cedarbrook Lodge in SeaTac. “We’re going to be looking at reducing employee hours, reducing benefits, and eliminating some positions.”
A local restaurant owner indicated that he would simply have to close one of his locations in SeaTac, which will mean the elimination of over 200 jobs.
Other businesses that had plans to open operations within the city limits are simply scrapping those plans. Those businesses include Hotel Concepts, a local hotel chain that was looking to add a fourth location within the city limits. With the increase in wage expenses, those plans are now on hold.
“Uncertainty is bad for business, and right now, we’re right in that area, so we’re just putting everything on hold,” said Han Kim, an operator of Hotel Concepts, which owns approximately a dozen hotels in Washington.
Opponents and Backers of Minimum Wage Increase See Clear Reasons to Hold Their Positions
Those who supported the increase plan to continue that support, noting that they do not believe the long-term impact to business will be as significant as some business owners are making them out to be.
“There may be a few jobs lost here and there, but the fact is, if we don’t fight for this, then the race to the bottom will continue,” said Kshama Sawant, a supporter of the minimum wage increase who was recently elected to the Seattle City Council. Sawant noted that she plans to introduce the $15 minimum wage to Seattle.
Opponents of the increase have estimated that employers will eliminate as much as 5 percent of minimum wage jobs. In addition, opponents expect that many employers will replace current minimum wage employees with employees with more skill, in an effort to get better productivity out of those they are being forced to pay a higher wage to.
Although the $15 minimum wage will go into effect on Wednesday, one location where it does not apply is the SeaTac Airport. Superior Court Judge Andrea Darvas ruled last week that the Port of Seattle has final say on wages paid to employees of the airport. Therefore, the minimum wage increase will not apply to the almost 5,000 employees of the airport.
Proponents of the minimum wage increase are expected to appeal the ruling.
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Mark has been a contributor to legal web sites related to bankruptcy, tax, and criminal law since 2011. He has an Accounting degree from Texas A&M University.