Labor
Goodbye to Seattle’s small businesses: The city’s new minimum wage is forcing restaurants to close
Seattle began implementing a minimum wage of $20.76 per hour when the new year began, and the higher rate has led some smaller establishments to close shop.
Seattle increased its minimum wage to $20.76 per hour on New Year’s Day, and it’s now one of the highest rates in the country. This number is almost four dollars more than the state minimum wage, which was just raised to $16.66 in Washington, also on the first day of the year.
While a higher minimum salary is generally good news for workers, the hike has resulted in some of them losing their jobs after small businesses had to close shop.
All employers now have to pay the same minimum rate, as the new policy removes tiered wages and tip credits. Previously, establishments with tipped employees were given credits that allowed them to count gratuity toward total salaries.
Small businesses could compensate staff with a $17.25 salary if tips or medical benefits could bring up the total to $20.28 per hour. The latest policy sets the wage at $20.76 for all companies, regardless of its size.
READ ALSO: These are the states with the highest minimum wage
Smaller establishments shutter operations
Entrepreneurs say the new law makes their operations unsustainable and has forced them to cut down on staff or close their business completely.
Those in the hospitality industry warn the new minimum wage could strain many stores and restaurants.
According to the Seattle Times, the Washington Hospitality Association projects the rate of restaurants closing in the city will increase by 5% to 8% in 2025 due to the higher salaries.
Jackson’s Catfish Corner, breakfast restaurant Bepop Waffle Shop, and cocktail bar The Jilted Siren have already announced they were closing in part because of the new law.
READ ALSO: Florida’s minimum wage to increase in 2025
In the face of the struggles of smaller enterprises because of new minimum wage laws, many workers will benefit from bigger salaries. The Economic Policy Institute says more than 9.2 million employees in 21 states will earn an increase totaling $5.7 billion.
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