Economist worried about impact of Seattle’s new minimum wage

Apr 1, 2015, 5:31 AM | Updated: 5:48 am
Seattle’s new minimum wage ordinance gives businesses the option to phase in higher wages ove...
Seattle's new minimum wage ordinance gives businesses the option to phase in higher wages over several years. Businesses with more than 500 employees nationally have three years; those providing health insurance will have four. (AP)
(AP)

A long-time economist is concerned about what effect a higher Seattle minimum wage is going to have on less-qualified workers.

Seattle’s new wage ordinance, which goes into effect today, will impact small businesses, said Peter Nickerson, owner of Nickerson & Associates, LLC and former professor at Seattle University. He said most of the workers who will be impacted are those who are currently working for low wages.

Details: Read the new rules

“The people I worry about most are the people who are really low-qualified,” Nickerson said. They are “going to be competing against people who weren’t willing to wash dishes for $10, but will do it for $15.”

The wage ordinance gives businesses the option to phase in higher wages over several years. Businesses with more than 500 employees nationally have three years; those providing health insurance will have four. According to Seattle’s roll-out schedule, employees working for these large companies will make at least $11 per hour starting Wednesday.

Smaller businesses will have seven years to phase in the higher wages, which will include consideration for tips and healthcare costs.

Related: Ivar’s president is confident early $15 minimum wage rollout will work

Small restaurants, for example, are going to have a tough time paying employees, Nickerson said.

“These small restaurants can’t just raise prices to pay their employees,” he said.

Hotels and possibly some retail stores will be impacted as well.

“Restaurants and hotels will be hit hard,” he said, adding that those businesses won’t move, but they will make layoffs.

Nickerson said he expects jobs to be cut and owners to find new ways to operate with fewer people. Businesses are profit-focused, he said, and they will work to continue to be that way.

Seattle workers can expect a change in workload, hours and who is hired.

If Seattle was increasing its minimum wage to $10, there would be no impact, Nickerson said. But increasing from paying salaries in the low $20,000s to the low- to mid- $30,000s will.

“That’s a big chunk,” he said.

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Economist worried about impact of Seattle’s new minimum wage