By Aaron Allen, The Seattle Medium
Seattle City Councilmember Joy Hollingsworth announced that she will not move forward with legislation concerning the minimum wage tip credit. Instead of advancing her proposed bill, Hollingworth says that she aims to lead a collaborative discussion among stakeholders. The current minimum wage tip credit, effective since 2015, is set to expire at the end of this year, sparking intense debate among workers and business owners.
“Seattle’s small, neighborhood restaurants help define our diverse communities, provide critical jobs, and offer opportunities for career advancement for workers and entrepreneurs. It is in the spirit of helping these restaurants survive lingering pandemic disruption and increased costs that I began this conversation—equal with the commitment to advance wages and the rights of all workers in our city,” says Hollingsworth. “My primary goal has always been to help create an environment to put the most money in workers’ pockets. The well-being of our workforce is paramount to our city.”
Hollingsworth’s proposal aimed to exempt businesses with 500 or fewer employees from matching the higher minimum wage required for larger businesses. According to her legislation, the hourly minimum wage for any small business “shall be increased annually on a percentage basis to reflect the rate of inflation calculated to the nearest cent on Jan. 1 of each year thereafter.”
“I am trying to sound the alarm about the financial cliff that’s going to happen Jan. 1. That’s just the reality. That’s Economics 101. That’s what I’m trying to avoid,” Hollingsworth said.
A 2015 Seattle law allowed small businesses to credit tips and benefits toward the minimum wage. Currently, most small businesses pay a $17.25 hourly wage, while large businesses pay $19.97. Hollingsworth’s proposal would eliminate the expiration date of the tip credit, making it permanent and maintaining the two-tiered wage system.
However, the proposal faced significant backlash from workers and labor advocates.
“The whole idea of a minimum wage is that it’s a minimum,” says Charlie Lapham of MLK Labor. “It’s the floor that we set, and we know that in Seattle, those who earn the minimum wage struggle to meet their basic needs. Businesses agreed to the minimum wage 10 years ago and they’ve had time to prepare. Instead of paying people for what they’re worth, they’re making this change in the eleventh hour. Creating a permanent sub-minimum wage would be a deep mistake and harm workers all across Seattle.”
Patrick Gibson of Workers Strike Back echoed a similar sentiment.
“Councilmember Hollingsworth represents my district and I am ashamed that she’s introduced legislation blatantly attacking thousands of our city’s most vulnerable workers. Many of them are women, immigrants, and people of color. Her district is an epicenter of displacement in Seattle, with people constantly being pushed out of their homes due to ever-increasing rents. She is making it clear who she stands with: Seattle’s business establishment instead of renters in her district.”
In response to the criticism, Hollingsworth defended the importance of continuing the “status quo” to “save jobs.”
“Small local businesses are potentially facing a catastrophic financial cliff on January 1st when the total compensation of the tip credit ends,” she said. “This bill does two things: (1) it raises everyone’s minimum wages by inflation and keeps the tier system currently in place, and (2) it requests our city departments, Office of Labor Standards and Office of Economic Development, work with all stakeholders to provide a report and policy recommendations. Workers deserve to make Seattle’s minimum wage without relying on a tip-credit in a safe, secure, and healthy working environment. We also want to make sure that those working environments exist.”
Hollingsworth also emphasized that her proposal was intended to continue the existing system rather than introduce new legislation.
“The idea was to propose something that would continue the status quo that we have, not new legislation,” she said. “So, everyone could come to the table to figure out how we factor it in a little bit better so businesses can absorb it, we can save jobs, and continue those services that we have.”
Small business owners have expressed concerns about the impact of increased minimum wage requirements.
“Thank you, Joy Hollingsworth, for introducing this legislation because we understand that this is actually about saving jobs. It’s needed and it’s needed fast. I’m just going to speak from my heart. This is my reality,” said Destiny Sund, who owns a bakery in Pike Place Market. “I employ six people and I do take the tip credit. My employees are amazing. I wish I could pay them all $100 an hour. I’m doing my best right now to save my bakery. I’m still paying off my emergency SBA loan. I’ve almost exhausted my pandemic government money. I lost over $16,000 last quarter. The truth is Pike Place vendors are struggling. $3 an hour, in addition to the current minimum wage, is not sustainable for my business. I’ve raised my prices as high as my customers are willing to tolerate.”
Despite the pushback, Hollingsworth remains steadfast in her belief that her legislation is designed to help small businesses and their workers.
“Ideally, we’re just trying to find a solution that could road this out, so small businesses can absorb this, continue to pay workers the minimum wage and also still survive,” she said.
“Our method will be open, transparent, educational, and honest about our current economic landscape for restaurants and food service,” Hollingsworth emphasizes. “Over the next month, I will pour my energy into working with workers, small business owners, and labor unions to hopefully find a sustainable and scalable solution. We will not focus on politics or political stances, but actual good policy that will encourage job growth, increase wages to address affordability, and keep small businesses open.”