Seattle’s minimum wage burns restaurant jobs

Aug 12, 2015, 12:41 PM | Updated: Aug 13, 2015, 5:35 am
Seattle’s restaurants are seeing the largest decline in jobs since the recession, University ...
Seattle's restaurants are seeing the largest decline in jobs since the recession, University of Michigan's Mark Perry told KIRO Radio's Dori Monson. (AP)
(AP)

Seattle’s minimum wage law may have fried its restaurant workers.

Between January and June, about 1,300 jobs have been cut in the industry in the city, University of Michigan’s Mark Perry told KIRO Radio’s Dori Monson.

It’s one of the worst job losses in the industry since the recession.

Related: ‘It’s just easy to blame minimum wage’ when Seattle businesses close

“There have been some negative effects on jobs in the restaurant industry,” Perry, a professor of finance and business economics, explained.

Employment in Seattle, overall, has increased by about 1.2 percent since January. Outside of Seattle, food service jobs have increased by 3.2 percent in the state, he said.

“This is some initial evidence that what is happening is due to the minimum wage ordinance,” Perry said.

Seattle’ minimum wage law went into effect April 1 at $11 an hour. The law calls for a gradual increase. Businesses have several years to implement the full $15 an hour; smaller businesses have more time than those with 500 or more employees.

Not only are jobs in the food industry increasing elsewhere in the state and country, but they were increasing by about 4 percent per year in Seattle until the wage law took effect, Perry pointed out. Owning a restaurant is “very competitive,” he explained. Restaurants run on thin margins, so when owners face increased labor costs, something is bound to suffer. In Seattle’s case, it’s the jobs themselves.

“That’s a huge burden that will translate into fewer jobs and restaurants,” Perry said.

It’s not a coincidence that there’s been job loss after labor costs were “artificially” increased through government mandate, Perry added.

“The laws of economics are not optional, just like the laws of gravity or thermodynamics,” Perry said. “Politicians can pretend they can circumvent [the laws], ignore them or suspend them, but the reality is they can’t suspend the laws of economics any more than they can the laws of gravity or thermodynamics.”

Perry makes a compelling argument, however, not everyone is likely to agree with him.

Dori Monson on KIRO Radio 97.3 FM
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Seattle’s minimum wage burns restaurant jobs