As the year ends, we’re seeing more headlines like this one in The Seattle Times: Three big changes should benefit Washington workers beginning next year. The story reports on the increases in the state and local minimum wage, the new overtime rule, paid family and medical leave, and changes in the law governing non-compete agreements. The lead restates the conventional wisdom:
A trio of significant new benefits taking effect in 2020 bolster Washington’s claim to be one of the best states in the country for workers. [The trio referred to are the non-compete, overtime, and leave policies; the wage hikes are cited as more of an incremental boost.]
But the assumption that new and stiffer labor regulations are an unmitigated benefit doesn’t always square with reality. There’s plenty of documentation, for example, of the consequences stemming from steep minimum wage increases. A recent op-ed in the Wall Street Journal by Simone Barron tells the story well. Barron works for well-known Seattle restaurateur Tom Douglas. She writes,
…the restaurant where I’ve worked for six years is closing as a consequence of the city’s harmful minimum-wage experiment….
being an established chef and a good employer doesn’t save you from the burden of a sharp minimum-wage increase, up 73% from $9.47 in 2015. For large-scale employers like Mr. Douglas, there’s no separate rate for workers who earn tips. In Washington and a handful of other states, tips aren’t counted as income earned on the job. That means restaurateurs are expected to pay servers like me the full minimum wage in addition to our considerable tip income.
When rent is too high, labor costs too much, and customers don’t want to pay $40 for a roast-chicken entree, the only way for many operators to ease the pain is to close.
Read the whole thing; it’s brief and informative in a highly personal way. The “benefit” for her is,
Instead of receiving a bigger paycheck, I’m left without any pay at all due to the [minimum wage] policy change.
The Seattle Times story focusing on the new “benefits” does acknowledge some potential downsides.
For businesses, however, the new year brings another round of adjustments to schedules, employment contracts and potentially the prices they charge their customers. Some have hinted they may try to challenge the new overtime benefits.
And, again, Tom Douglas is cited, this time speaking of the overtime rule.
Seattle restaurateur Tom Douglas said his company has yet to assess the impact of the changes.
“What I will say is that, like any new expense, it will escalate the price of going out to eat at a restaurant,” he said in an email. “It’s then up to the consumer who gets to vote with their dollars. They get to make the final choice if this is a good idea or not.”
When discussing the impact on employers, it’s important to recognize that those impacts are shared by employees, who may face reduced hours of work, reduced opportunities to advance in their careers, or even unemployment.
Certainly, many will benefit from the new policies. We’re simply pointing out that sometimes, when trying to improve working conditions or compensation, new regulations risk, as Barron writes,
The truth is that the city has made it nearly impossible for many small businesses to survive…. I’m proudly progressive in my politics, but my experience shows that progressives should reconsider minimum-wage laws that hurt the very workers they’re trying to protect.
That, of course, makes for a very different headline.