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Brunt and benefit New wage boosts low-income salaries, burdens local businesses

By LUKE WHITTAKER

lwhittaker@crbizjournal.com

Published on February 15, 2017 8:29AM


PENSINULA — With the passage of Initiative 1433 in November, Washington’s minimum wage rose to $11 per hour, making it among the highest in the nation. Six weeks after the Jan. 1 raise, businesses are feeling the change.

“The effect is going to be very real because you’re talking about a huge jump,” said Chris Summerer, co-owner of Castaway’s Seafood Grille, Columbia River Roadhouse, Stormin Norman’s and Beachcombers. Summerer and his business partner Russell Maize employ more than 35 people on the Peninsula, a number that swells to nearly 80 in the summer.

“Nobody likes the thought of having to pay more for anything, but the problem is you can’t have your cake and eat it, too,” Summerer said.

“This is going to have a huge impact on the price of a meal in a restaurant.”


Increasing labor costs


The raise gives full-time workers a $61 increase in weekly pay. That’s a $3,182 jump in yearly income for those previously making $9.47 an hour and working 40 hours per week before taxes. The raise — a 16 percent in increase — is the second biggest leap in minimum wage history in Washington. That number has been steadily climbing since 1961 when it was $1.15 an hour (equivalent to $9.23 today, according to the Bureau of Labor Statistics). The biggest jump in wages occurred on Jan. 1, 1989, when Washington wages rose 67 percent to $3.85 after 13 years at $2.30.

Washington minimum wages are set to increase during the next four years. The first round took effect on Jan. 1, when minimum wages were bumped from $9.47 to $11 overnight. The new wage applies to all jobs, including those in agriculture. Workers will earn an hourly wage of at least $11 in 2017, $11.50 in 2018, $12 in 2019, and $13.50 in 2020.

Nationwide 19 states saw minimum wage increases in 2017. Washington and Massachusetts share the country’s second highest hourly rate of $11 per hour. Washington D.C. is the highest at $11.50.


Businesses on the brink


Gas stations, restaurants, grocery stores, child daycare services, hotels and retailers — businesses that historically have a higher percentage of minimum wage employees — have been the hardest hit, according to Scott Bailey, a regional labor economist for the state Employment Security Department.

“Businesses will see an increase in payroll to a certain extent,” Bailey said.

“They’ll have to figure out a way to manage that and it can be a challenge.” Bailey believes the impact will be more pronounced in rural areas because there tends to be a higher percentage of lower-wage jobs. In Pacific County, 3.9 percent of workers make minimum wage, nearly double the state average of 2.1 percent. Meanwhile, the continued clamming closures and unseasonable weather have resulted in fewer tourists and exacerbated the situation on the Peninsula. Some seasonal jobs have been eliminated before they started. Others are seeing hours trimmed as businesses scramble to recoup increased labor costs. Several seasonal and summer jobs set to start later this year are in limbo.

“People are being let off from jobs that haven’t even started yet — that’s how some employers, mainly in restaurants, are dealing with this. They’re cutting back,” Maize said. “Food costs have been increasing, and now labor has shot up.”


More productivity for more pay


Colleen Smith, owner of Adelaide’s Coffee and Books and Full Circle Café in Ocean Park, asked her minimum-wage staff to become more productive so she could justify keeping them.

“It has to be made into an income-producing thing or I can’t do it,” Smith said.

“When it’s slow, wash walls: Make yourself valuable.”

Smith expects to raise menu prices to help offset the increase in labor costs. She worries it could affect customers on a fixed income.

“I have people who come in with little baggies of change — they save up to get a baby scoop of ice cream or a little treat,” Smith said.



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