Businesses brace for 'serious cuts' as city enacts highest-in-nation $15 minimum wage
As talk builds on Capitol Hill over hiking the federal minimum wage, one city in Washington state is poised to set the highest rate in the nation.
On Jan. 1, an estimated 1,600 hotel and transportation workers in SeaTac, Wash., will see their pay jump to $15 an hour, a 60 percent increase from the state's $9.32 minimum wage.
While many workers look forward to the higher pay, employers are looking for ways to absorb the big increase in labor costs. Some plan on eliminating jobs.
"We're going to be looking at making some serious cuts," said Cedarbrook Lodge General Manager Scott Ostrander. "We're going to be looking at reducing employee hours, reducing benefits and eliminating some positions."
That's in the short term. Eventually, those jobs and more are expected to return as the Cedarbrook Lodge looks to build an addition to the hotel. The plan is to increase revenue to offset the higher labor costs.
But not every employer is being so ambitious. One has told a trade group it is going to close one of its two restaurants, eliminating 200 jobs.
The plan has also caused Han Kim -- who runs Hotel Concepts, a company that owns and manages 11 hotels in Washington state -- to shelve plans to build a hotel in SeaTac. The company already has three hotels in SeaTac, and Kim and a business partner were looking to build a fourth on land they own.
"Uncertainty is bad for business, and right now we're right in that area so we're just putting everything on hold," Kim said.
Opponents of the $15 minimum wage did score a legal victory late last week when a King County, Wash., judge ruled that it does not apply to any of the workers at the SeaTac airport. Superior Court Judge Andrea Darvas ruled only the Port of Seattle can set wage and other work rules at the airport. That eliminates 4,700 workers from the successful ballot initiative.
Backers of the $15 minimum wage vow to appeal the ruling up the state Supreme Court. One of the biggest supporters is Kshama Sawant, a socialist who also won her election to the Seattle City Council. She plans on making Seattle the next city to have a $15 minimum wage.
"There may be a few jobs lost here and there, but the fact is, if we don't fight for this, then the race to the bottom will continue," Sawant said.
Sawant is skeptical that the higher minimum wage will lead to mass layoffs. But the American Car Rental Association estimates 5 percent of low-wage jobs will be cut; and another 5-10 percent of those workers will be replaced by more experienced workers.
The owner of Dollar Rental Cars told Fox News she'll outsource some functions, change schedules and cut some staff in response to the new policy.