Early Job Loss Results From Seattle

We have been actively following the minimum wage hike in Seattle very closely at OpsAnalitica.  We have written four blogs about it this year. We found this article from the American Enterprise Institutes that discusses restaurant job losses in Seattle since the beginning of 2015, it is only 3 paragraphs so I encourage you to read the whole article.  To keep politics to a minimum the American Enterprise Institue is a center right leaning organization according to wikipedia.  Here are the points that I found most interesting in there article:

  • Seattle city council passed a $15 minimum wage law to be phased in over time, with the first increase to $11 an hour taking effect on April 1, 2015.
  • The chart below shows that the Emerald City MSA started experiencing a decline in restaurant employment around the first of the year (when the state minimum wage increased to $9.47 per hour, the highest state minimum wage in the country), and the 1,300 job loss between January and June is the largest decline over that period since 2009 during the Great Recession (data here).
  • The loss of 1,000 restaurant jobs in May following the minimum wage increase in April was the largest one month job decline since a 1,300 drop in January 2009, again during the Great Recession.
  • In contrast to the January-June loss  of restaurant jobs in the Seattle area: a) restaurant employment nationally increased by 130,700 jobs (and by 1.2%) during that same period (data here), b) overall employment in the Seattle MSA increased 1.2% and by 21,800 jobs (data here) and c) non-Seattle MSA restaurant employment in Washington state increased 3.2% and by 2,800 jobs(data here).

Screenshot 2015-08-09 08.41.41

My issue with the Seattle minimum wage hike is that it isn’t being applied evenly, it is stacked against franchise operators from larger chains.  You could have two sub shops in the same strip center owned by the same person.  One a Subway or Quiznos and the other a non-franchise operation.  The employees would be paid at different rates as the franchise shop would have to pay more for labor creating unfair competitive environment for the non-franchise operation.  Don’t forget that your local Subway is often times owned by your neighbor who wanted to be part of a national chain for advertising and support.

You can read the article below or click here to see the original.

 

In June of last year, the Seattle city council passed a $15 minimum wage law to be phased in over time, with the first increase to $11 an hour taking effect on April 1, 2015. What effect will the eventual 58% increase in labor costs have on small businesses, including area restaurants? It’s too soon to tell for sure, but there is already some evidence that the recent minimum wage hike to $11 an hour, along with the pending increase of an additional $4 an hour by 2017 for some businesses, has started having a negative effect on restaurant jobs in the Seattle area.

The chart below shows that the Emerald City MSA started experiencing a decline in restaurant employment around the first of the year (when the state minimum wage increased to $9.47 per hour, the highest state minimum wage in the country), and the 1,300 job loss between January and June is the largest decline over that period since 2009 during the Great Recession (data here). The loss of 1,000 restaurant jobs in May following the minimum wage increase in April was the largest one month job decline since a 1,300 drop in January 2009, again during the Great Recession. In contrast to the January-June loss  of restaurant jobs in the Seattle area: a) restaurant employment nationally increased by 130,700 jobs (and by 1.2%) during that same period (data here), b) overall employment in the Seattle MSA increased 1.2% and by 21,800 jobs (data here) and c) non-Seattle MSA restaurant employment in Washington state increased 3.2% and by 2,800 jobs(data here).

Screenshot 2015-08-14 20.26.49

Perhaps Seattle’s restaurant employment will recover, or perhaps it will continue to suffer from the upcoming full 58% increase in labor costs for the city’s restaurants that will be phased in during the coming years – time will tell. What we know for sure is that there are now 1,300 Seattle area restaurant workers who were employed in January who are no longer employed today, so it looks like the Seattle minimum wage hike is getting off to a pretty bad start.

 

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