The Biggest Problem for Seattle Restaurants in 2017? Too Much Competition
High-wage Seattle continues to avoid the promised $15 apocalypse
On January 1st, the minimum wage for some, but not all, Seattle workers increased to $15 per hour. Seattlish explains the ins and outs of the law, but the gist is that large employers (defined as businesses that employ more than 500 people nationwide) who don’t provide health insurance for their employees are up to $15. Other large employers are at $13.50, and small employers range from $11 to $13 per hour, depending on the benefits they provide.
And so where are we now? Well, before the minimum wage became law, restaurant owner Tom Douglas estimated that “we would lose maybe a quarter of the restaurants in town.” Now, as Working Washington noted, Douglas has done an about face. The Puget Sound Business Journal interviewed Douglas about the competition he’s facing as a Seattle restaurateur staring down a new year. Douglas replied, “Almost 400 restaurants have opened in the last year. It is a challenge.”
Huh. So which is it? Will increasing the minimum wage kill a quarter of all restaurants, or does Seattle have way too many restaurants since raising the minimum wage? Douglas, who has previously recanted his opposition to the $15 minimum wage, seems to be entirely on the other side of the fence now: the minimum wage isn’t a problem for restaurants, he’s saying, aggressive competition is the problem.
Of course, some folks can promote two opposing ideas at the exact same time. Over the holiday break, conservative talk radio KIRO’s website published a story about the closure of Louisa’s Café on Eastlake. Louisa’s owner, Alcena Plum, is asked about her business’s closure.
“I don’t want to put this all on the minimum wage,” Plum told KIRO, “but it was definitely a factor.” But another factor that Plum says led to the decline of her business is “the huge labor shortage for kitchen staff in this city.” The article says when she placed help-wanted ads, she would get “zero response.”
Again: which is it? Are you having trouble because of the minimum wage, or are you having trouble because of too much competition? Clearly, someone must be hiring; why isn’t everyone having the same trouble with the minimum wage? The piece ends with Plum arguing that people who own multiple restaurants (like Douglas) and businesses with wealthy backers will thrive, but that restaurants “like mine won’t survive this.”
I’ve eaten many times at Louisa’s, and I always enjoyed it — especially the cinnamon buns. But Plum’s last comment there reminds me of the owner of a closing Capitol Hill Z Pizza franchise, who famously warned that she had “no idea where” her employees would “find jobs, because if I’m cutting hours, I imagine everyone is across the board.”
The truth is, there are plenty of other dining options near Louisa’s old space. On the same block, you’ll find the venerable 14 Carrot Café for breakfast and lunch options and Pazzo’s for Italian lunch and dinner. I’ve eaten at, and can vouch for, both restaurants. I haven’t been to Pomodoro, the Italian restaurant across the street, but it’s got wonderful reviews on Yelp. On the next block over, you’ll find Mammoth, a fancy new-ish sandwich shop with a loyal following. None of these are chain restaurants, and many of them have been around for longer than Louisa’s. (The 14 Carrot is 40 years old this year, and Pomodoro is over two decades old.)
I’m not pointing this out to make light of Plum. It’s never easy to close a business, and Louisa’s was absolutely a neighborhood gem. But the trickle-down crowd are using Louisa’s as a symbol of failure for all of Seattle’s minimum wage increase, and that’s a painfully dumb leap to make. You’d have to be a real jackass to claim cause and effect based on a single data point — especially when that data point is from a city like Seattle, with a low unemployment rate, a high number of food service workers, and a high restaurant opening rate.
As I’ve told you time and again, the trickle-down crowd is desperate to tie minimum wage increases to economic devastation. (Why wouldn’t they, after all? If they don’t have to pay employees more, they get to keep that money for themselves.) And they’re getting more and more desperate as time passes, because reality reflects that their position is wrong. The minimum wage is increasing in 21 states in 2017 because Americans are finally realizing that when workers make more money, they’ll spend that money in their local communities.
The fact is that businesses close all the time, for a variety of reasons. Seattle’s rent is ridiculously high. People are moving here at a ridiculously fast pace. And when the next recession hits — which will likely happen sooner than later, given our incoming presidential administration — every business will have to take some cuts.
But let’s not transform our (justified) sadness over one restaurant’s closure into an irrational fear of the minimum wage. The fact is that many more Seattleites are doing better now than they were before we raised the minimum wage. In fact, given that minimum-wage employees are spending their increased paychecks, we’re doing even better than we would be if we hadn’t raised the wage. Anyone who claims otherwise is either manipulating the numbers in an unsavory way or doesn’t have a clear understanding of what’s really happening in Seattle.
