Seattle is about to embark on a civic experiment that most experts predict will be an economic disaster; a $15 an hour minimum wage is set to go into effect on April 1st. And some restuarants in the city have already shuttered their doors and are either going out of business or moving to friendlier climes.
This was entirely predictable – and was predicted when the measure passed the Seattle city council. Restuarants are particularly sensitive to this sort of increase in wages since most of their employees are paid at the minimum, and such a large percentage of their operating costs go to labor.
“Washington Restaurant Association’s Anthony Anton puts it this way: “It’s not a political problem; it’s a math problem.”
“He estimates that a common budget breakdown among sustaining Seattle restaurants so far has been the following: 36 percent of funds are devoted to labor, 30 percent to food costs and 30 percent go to everything else (all other operational costs). The remaining 4 percent has been the profit margin, and as a result, in a $700,000 restaurant, he estimates that the average restauranteur in Seattle has been making $28,000 a year.