Compromise possible on minimum wage, but Seattle blew it

There is one thing most restaurant owners and workers can agree on: Tip compensation is complicated.

But when it comes to trying to find a way to boost wages while protecting small businesses from sharp cost increases, City Hall flat out failed.

The current brouhaha goes back to Seattle’s $15-an-hour minimum wage law passed in 2014.

For 10 years, large businesses with 501 or more employees were treated differently than small businesses that included tips or offered medical benefits. All large employers hit $15 an hour in 2018, with annual increases since then based on inflation. Tipped employees hit $15 in 2021 with predictable annual increases laid out in the 2014 law.

That difference is set to expire on Jan. 1, when the hourly rate for small businesses sharply increases so that it matches large employers.

But no one a decade ago could have foreseen the global pandemic, stay-at-home orders, supply chain bottlenecks and inflation.

Inflation drove sharp increases in hourly wages paid by large businesses — from $16.69 in 2021 to $19.97 this year.

What was intended 10 years ago to be an easy merging of two compensation structures could amount to an immediate 20% increase in hourly wages for small restaurants.

Back in July, Seattle City Councilmember Joy Hollingsworth introduced legislation that would keep the current wage structure in place, with the hourly rate for tipped employees and others rising with inflation but not jumping overnight.

Hollingsworth could have done more to prepare for the debate ahead. But the activist community swiftly rejected any notion of compromise. Former Councilmember Kshama Sawant – taking a break from doing all she can to ensure former President Donald Trump retakes the White House – and a group of like-minded folks showed up at council chambers and yelled that struggling restaurant owners did not deserve to be in business.

About a week later, Hollingsworth caved to the crowd and tabled her legislation. Mayor Bruce Harrell stepped in to announce he was convening a stakeholder group. But at the same time he made clear: Hollingsworth’s plan was DOA. “I am committed to ending this disparity in wages, as we agreed to at the time,” said Harrell in an Aug. 2 statement.

No surprise that the stakeholder process went nowhere. Harrell held one meeting before his Office of Labor Standards announced on Oct. 3: “Starting January 1, 2025, ALL businesses both large and small will pay employees $20.76 per hour.”

This led some restaurant owners to call foul.

“The reality that we’re facing today is that we have a City Council and the Mayor’s Office that is basically held hostage by a very militant wing of the labor movement,” said Charlie Anthe, owner of Moshi Moshi Sushi & Izakaya in Ballard, at a news conference.

“We need to be able to have a rational conversation because when you don’t have a conversation, that’s where democracy is failing us. Our council and our mayor promised us leadership and gave up without even listening to us.”

Hollingsworth offered a compromise and then didn’t stick with it. Harrell didn’t budge on compensation but talks about other ways to help small businesses. Meanwhile, restaurant workers must brace for pink slips or reduced hours.

The whole saga reaffirms the notion that the loudest voices often carry the day in Seattle politics. There are good policies out there. But in this political climate, they are maddeningly hard to find.