By Assunta Ng
NORTHWEST ASIAN WEEKLY
Mayor Ed Murray addresses owners of small businesses at the New Hong Kong Restaurant on April 15, 2014 to discuss impacts of the proposed $15/hour minimum wage. (Photo by George Liu/NWAW)
The verdict is in for Seattle’s $15 minimum wage law — it has produced the opposite effect for low-wage workers.
The recent University of Washington (UW) report on wage loss for low-income workers resulting from the new wage law, displeases Mayor Ed Murray, and he even hired another research team to discredit the findings.
The UW report doesn’t surprise me a bit that low-wage workers are suffering from lost hours and lost wages. I don’t need a study to tell me the consequences of the gradual increase of the $15 minimum wage law.
Despite pleas in 2014 from the International District (ID) and small business owners, most officials turned a deaf ear.
Murray met with ID merchants and business owners they shouldn’t be alarmed because the City was implementing the new wage gradually.
“You (businesses) have three years to do it,” Murray said after he proposed it, and the Seattle City Council passed the ordinance.
Would three years guarantee that immigrant businesses could increase their profits to absorb the wage increase?
What if the business is struggling like our newspaper operation, and every year our income drops precipitously like Snoqualmie Falls? Although our goal is not to make lots of money, we need to make enough in order to pay our bills on time, and have a rainy fund. And for ID restaurants that are just barely making it without any prospect of improving profits (due to the language and cultural barriers), how do you expect them to turn things around? Three years wouldn’t change anything for many of the disadvantaged businesses.
“I’d like to know where the money is coming from?” asked one Asian businessman at a Seattle City Council hearing held at Rainier Beach High School on the proposed law in 2014. But no one had an answer. It’s not like the city has set aside a pot to help ethnic businesses for sudden expenses. The city does provide generous grants to nonprofit organizations, though.
Tam Nguyen, owner of Tamarind Tree Restaurant, said at another council hearing in 2014 in the ID, “Some immigrant businesses are happy making just $50,000 a year.” That amount, although small, is good enough for an immigrant family business to make a living and provide jobs for their family. But the small net profit would be tough for the business to survive.
Again, no officials listened. The Mayor and the Council assumed that businesses would adapt and manage after a while.
My office is in the heart of over 100 restaurants and grocery stores. And I frequently dine in mainstream restaurants. I can tell you things are not as rosy as the officials would like to be.
Make every hour count
There is no magic formula for small businesses especially mom and pops — just common sense to survive.
If a small business can’t balance its books, the obvious thing is to cut costs. Labor is one of the top expenses, and cutting workers’ hours is the quickest solution.
Quite a few downtown restaurants now close between 2 to 5 p.m. to save money not only in labor costs, but other operational items.
Never before have business owners paid such close attention to their employees’ hours. Make every hour count — absolutely no slack in between.
I was a waitress during my college days. I know what it means for the working class. For instance, during slow hours, the wait staff might clean the countertop and the entrance door, or take a little break. Now, there is no break.
We call it the split shift. You have a three-hour lunch shift and another three-hour dinner shift. In between, you can go home if you live close by or you sign out and hang around in the neighborhood till 5 p.m. I chose the split shift for summer jobs because those hours produced the maximum amount of income when the restaurant was at its busiest hours. But it offered no life at all other than working.
You are on your feet when you walk into the restaurant for the rush hour, and sign off as soon as business slows down a little. What is supposed to be a regular eight-hour shift for Seattle’s wait staff, has now turned into a stressful five or six-hour day with less pay.
Work harder, earn less
Mainstream restaurants have passed on the wage increase to customers by raising prices and adding a service charge. ID restaurants have a reputation for great food at a reasonable price. While many mainstream restaurants raised their prices from 10 to 20 percent, ID restaurants couldn’t do that. Their clientele is price-conscious.
With high labor costs in Seattle, it’s tough to make money. Before the new wage law, the majority of the ID restaurants opened seven days a week. Now, a few owners open only six days. That one-day closing means loss of income for a business, for owners and employees.
Why? Exhaustion. Health reasons. With the shortage of staff, the owners have to do the jobs of workers with cut hours. They badly need to take a day off to recuperate.
Shortage of labor
Even mainstream restaurants don’t have enough wait staff during their busy hours, and service goes downhill.
Recently, I was dining in a section close to the bar in a Pike Place Market restaurant. Normally, a waiter would serve us. Now, it’s part of the bartender’s job. He was practically running at times to serve everyone. A young fellow, he could take the heat.
However, when an older gentleman served us on another occasion, it was hard for him to keep up.
20 percent service charge
It is typical to see a 20 percent service charge when you dine at many downtown restaurants. That’s the wage increase being passed on to you. That’s a lot of money for some. But as a former waitress, I sometimes made a lot more than a 20 percent tip because I was superb at pleasing my customers. Some waitresses complain that they used to make more money before the new law.
It’s about psychology. Some customers are pissed that you actually charge a mandatory tip. Sometimes, that fixed fee discourages many to give more.
Two weeks ago, I was dining in a Lake Union restaurant with more than 20 friends. Because it said “20 percent service charge” on the check, my friend shouted to us, “No need to give tips, it’s already covered.” My husband may be the only one among my friends to give more, and I made sure he did. Maybe it’s because I used to be a waitress and I appreciate how hard it is. The waitress deserved more because it was a big group, and she volunteered to produce separate checks. That’s labor-intensive.
Service charge goes to?
Assume the tips will go to the wait staff, but there is no guarantee. Who knows? Could the restaurant also pocket some of the tip money to cover labor costs?
Once, I was in a five-star hotel in Hong Kong, dining in its restaurant. I was curious about the line service charge on the bill.
“Does the service charge go to you? I asked the waitress.
“Madam, you are the first one to ever ask the question,” she replied. “Not a penny goes to us. But I know many customers think it does.”
I wouldn’t be surprised if some Seattle restaurants take this measure.
The impact
Since the new law, I have seen the fall of downtown restaurants around 6th Avenue and the whole Westlake Mall food court disappeared. However, ID businesses never really close, they just change hands. One business’ failure is another’s opportunity. Buying and selling restaurants is easy in the Chinese community. All they need to do is place a small advertisement in the Seattle Chinese Post’s classified section. Sellers can recover some of their investment and take a necessary break. In six months or a year, another restaurant venture may be on the horizon in another town.
One of the businesses that sold in 2015 because of the new wage law was Lam’s Seafood, an Asian grocery store.
Former owner Yen Lam said it’s stressful and tough to run a business in Seattle. She opposed the $15 wage law and a union blacklisted her store at the time.
And there are those who are forced to go “under the table” — staff members asking for cash and not reporting it on their taxes. “I’d rather sell my business than go under the table,” Lam said.
Tam Nguyen, owner of Tamarind Tree Restaurant, said there are people in the community who pay cash to their staff and there are also those who prefer to get paid that way. If you get paid in cash, you are making less, he said, because the employer would likely pay less.
The wage law also affects young people who want to have full-time jobs. My friend’s daughter is a chef. She had a hard time finding full-time employment in Seattle. At one point, she worked three part-time jobs in odd hours, from one end of town to another. It took her a year to land a full-time job in Bellevue and not Seattle although she prefers to work in Seattle, where she lives.
Not all the businesses cut their staff hours. I-Muin Liu, owner of Eastern Café and Oasis said, “I have to constantly reinvent the business. I add beer and wine so they (staff) can be busy to sell other things.”
For businesses looking to expand, Taylor Hoang, owner of five Pho Cyclo Restaurants said, “Not in Seattle.” She is looking at the Eastside — Redmond or Kirkland.
Perhaps, Seattle would be passed over as the ideal town for new Asian restaurants if you see the percentage of growth of Asian eateries on the Eastside. Explosive. Since 2014, friends have been raving about a new Asian dining place with good food, opening every month.
What we Seattleites have missed besides the lost wages and hours of low-wage workers!
Assunta can be reached at assunta@nwasianweekly.com.