Paying the Price for $15 an Hour

With the economy soaring, it’s hard to gauge the effectiveness of Seattle’s minimum-wage hike. Some small-business owners remain dubious.
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When the Seattle City Council passed the $15 minimum- wage ordinance in June 2014, David Lee, founder and CEO of the Field Roast Grain Meat Company, was not happy.
 
“The minimum wage hurts businesses like ours that compete on a national level,” says Lee, who believes it makes employers feel “cheap” and weakens “the goodwill that bound employers to employees.”
 
Even so, reflecting the mixed feelings of many Seattle businesses that want to do the right thing even as they struggle to survive, Lee decided to raise the minimum pay of his workers more than 20 percent — to $15 an hour — this fall, years before he was required to do so under the law.
 
“I wanted to get it behind me,” he explains.
 
Under a complex, multitiered system, Seattle companies with more than 500 employees must begin paying a $15-per-hour minimum wage starting in January. Companies with fewer than 501 employees  have until 2019, unless, like Lee, they provide health care or other benefits, in which case the $15 minimum wage rule applies to them beginning in 2021. Lee says his decision will cost Field Roast $300,000, about a quarter of its total earnings in 2015.
 
Ivar’s Seafood increased prices by 21 percent in 2015 to cover an increase in employees’ minimum wages to $15. The company didn’t have to start paying $15 an hour until next year, but Ivar’s President Bob Donegan believed it was the right thing to do. The decision helped resolve long-standing tension between lower-paid workers in the kitchen and wait staff who received much higher wages thanks to tips. Donegan says most patrons continue to tip even when they are told gratuities are now included in their bills.
 

A CASE OF COMPRESSION: Lynn Stacy unwraps grain meat for sausage products at Field Roast,
which has a flatter pay structure because of its higher minimum wage.

Some companies, however, remain concerned that the higher minimum wage could still hurt them. BrightStar Care, which offers home care and medical staffing in most states, is operating at a disadvantage because of the minimum wage, says CEO Shelly Sun. “Our Seattle franchise has only about 50 employees,” Sun notes, “but it’s being treated like a big business.”
 
Because Seattle treats the franchised operation of a national chain as if it were a large business, BrightStar will have to pay $15 an hour as of January, whereas some of its competitors with similar employee numbers in Seattle may not have to pay that much until 2019. Sun says a consequence may be reducing the size of the Seattle franchisee’s staff, which could have implications for clients.
 
Meanwhile, the national restaurant chain Buffalo Wild Wings says it is hesitant to expand in Seattle because the high minimum wage makes it economically inefficient to hire and train inexperienced workers. Still, what was once considered a movement isolated to “liberal” western cities like Seattle and San Francisco has gained sufficient momentum nationwide to be included in the national platform of the Democratic Party this election season. 
 
Thanks to Seattle’s strong labor market — the unemployment rate in the Seattle metropolitan area was 4.4 percent in July (compared to 5.8 percent statewide) — the higher wages have had little negative effect on the economy.
 
A report released in July by the University of Washington’s Evans School of Public Policy and Governance concluded that the new minimum wage law hasn’t had a lot of upside, either. Since a strong labor market would have increased wages in any case, the study concluded, only a quarter of the recent gains could actually be attributed to the minimum-wage law — a little more than a few dollars a week. 

Revisiting the minimum-wage story | Seattle Business magazine examined the minimum-wage issue in its May 2014 issue, just as the Seattle City Council was considering an ordinance raising the minimum hourly rate to $15 in a gradual process over several years, depending on a company’s size. This is the magazine’s first follow-up since passage of the minimum-wage law.

Bright Idea: Labor Saver

Bright Idea: Labor Saver

Forget email. Shyft Technologies makes shift swapping easy.
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New legislation requiring Seattle businesses with 500 or more employees to schedule workers’ hourly shifts two weeks in advance will be a boon to some, but it could complicate the lives of many workers and employers.

Seattle startup Shyft Technologies has created a free smartphone app that simplifies the tangled dance of schedule shuffling by making it easier for employees to swap shifts and for bosses to get shifts covered on short notice. 

The app notifies all staffers automatically when open shifts are posted. Swaps can be approved right on the app. By matching in real time the hours when workers are available with the hours employees need work done, the app creates a more efficient market.

A worker or manager can easily add a bonus as an incentive to fill a shift on short notice, says

Shyft CEO Brett Patrontasch. “It’s a lot easier than email,” he observes. Meanwhile, workers can quickly change their availability status if they want to make more money or free up more time.

The Shyft app uses a combination of geolocation, financial transactions, machine learning and big data analytics to determine availability and pricing. The goal is to create an on-demand workforce that has more control over schedules while providing employers with the fluidity to operate efficiently.

As of late September, more than 12,000 Starbucks baristas, 3,500 Old Navy staffers and 7,500 McDonald’s employees were using Shyft’s app.

Founded in Toronto, the startup moved to Seattle in February to participate in the three-month Techstars mentoring program. This past summer, Shyft obtained $1.5 million in funding from Seattle’s Madrona Venture Group and other investors.