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Seattle's Minimum Wage Hike Is Already Bringing Extra Charges

The $15 wage will be phased in over the next seven years and by 2021 all Seattle employers must pay $15 an hour regardless of their size.

by Olivia Becker
Jun 11 2014, 8:10pm

Photo via Reuters

On June 2, the Seattle City Council unanimously voted to raise the minimum wage to $15 an hour, making Seattle the city with the highest minimum wage in the country.

The announcement was met with cheering crowds outside of Seattle’s City Hall, mostly made up of union members, fast food workers and activists who worked on the passage of the historic law.

But not everyone was happy about the wage hike in Seattle — especially business owners.

Under the new ordinance, minimum wage workers will receive raises in April of next year, starting with businesses that have the greatest number of employees.

The full $15 wage will be phased in over the next seven years and by 2021 all Seattle employers must pay $15 an hour regardless of their size.

How Seattle passed the highest minimum wage in America. Read more here.

A local parking garage in SeaTac imposed a “Living Wage Surcharge” fee shortly after the law was introduced in SeaTac in January. The fee consists of an additional 99 cents per day of parking.

According to Master Park’s website the fee is "due to the new $15 per hour minimum wage requirement for certain businesses in SeaTac. The surcharge covers a portion of the resulting increase in operating costs.”

Roger McCracken, managing partner at MasterPark told the Seattle Times in February that this fee was the best and most transparent way for the business to cover its increased operating costs.

“Whatever we do, service is key," McCracken said. “We want an employee answering our phones, and anytime someone pulls into one of our lots, they’re greeted by a human being.

“That’s great news for our employees,” McCracken added. “They’re pretty happy campers right now.”

Is Seattle's socialist city council member going to show us how to ditch the two-party system? Read more here.

Parking garages are not the only businesses making changes to cover the increased labor costs. The Seattle restaurant industry is also struggling to adapt their business model following the wage increase.

Many restaurant owners in the city said they might have to institute a service charge on top of all bills (similar to Master Park’s surcharge), increase prices on the menu, or cut down on staff.

Other Seattle restaurants have considered banning tipping altogether in response to the wage hike, saying that it is too expensive to pay their employees $15 an hour on top of gratuity.

McDonald's accused of 'wage theft' by thousands of employees in lawsuits. Read more here.

But these higher prices and charges that businesses are imposing might not be a direct implication of increased labor costs, but rather a political gesture, said Gary Burtless, a senior fellow in economics studies at the Brookings Institute.

“Often it is the case that business owners blame government regulations or taxes for a price hike that they would incur anyways,” Burtless told VICE News. “But these cost increases are not necessarily traceable to the minimum wage hike.”

Since the increased minimum wage has yet to be fully implemented, and will not be completely put in place for another seven years, it is unlikely that businesses are feeling the effect of increased labor costs immediately, added Burtless.

“Wages are not the biggest component to the cost of many businesses, especially in the fast food industry,” said Burtless. “A lot of this represents political opposition by business owners rather than immediate cost to doing business in the short-run.”

Follow Olivia Becker on Twitter: @obecker928