Seattle’s minimal wage elevated to $20.76 per hour on Wednesday, and at the least one enterprise has already closed due to it.
Seattle adopted the Minimum Wage Ordinance in June 2014, amending the town’s municipal code to implement yearly will increase from January 1, 2016, via January 1, 2025. The regulation distinguished “Schedule 1” employers, which have greater than 500 workers, from “Schedule 2” employers, which have 500 or fewer. Till final Wednesday, the ordinance allowed the second group, however not the primary, to satisfy its compensation requirement via tax-preferred contributions to worker medical plans relatively than direct wage will increase. This created an incentive for corporations to not rent greater than 500 workers.
Counting medical advantages towards the compensation requirement additionally inspired employers to pay workers in-kind (to the extent that that is possible). That’s much less environment friendly for everybody: If employees simply obtained money as a substitute, they may spend it on no matter they worth most extremely—possibly a well being care plan, or possibly one thing else.
The ordinance was pitched as a strategy to scale back revenue inequality, however a 2021 examine by the Evans College of Public Coverage & Governance on the College of Washington found that that is not what occurred. The examine discovered “no proof to counsel…that Seattle’s minimal wage lowered the general stage of earnings inequality throughout all employees within the metropolis.” In reality, earnings equality “considerably widened” from 2014 to 2017.
The most recent hike will additional exacerbate each revenue inequality and unemployment. As the associated fee to small companies of hiring minimum-wage workers increases by wherever from 4 to twenty %, many will reply by both firing workers or closing fully. Already, Corina Lukenbach’s Bebop Waffle Store has responded to the brand new guidelines by shutting down. Do not be shocked if extra observe.
