By Aaron Allen, The Seattle Medium
Seattle’s recently increased minimum wage has created significant challenges for small businesses, particularly Black and minority-owned establishments. Starting this year, all employers—regardless of size—must pay a minimum wage of $20.76 per hour, the highest rate in the nation. The new policy also eliminates the ability of small businesses to count tips or contributions to employees’ medical benefits toward minimum compensation requirements, adding further strain.
While the wage hike seeks to ensure workers earn a “livable wage,” the rising cost of living in Seattle, compounded by inflation and supply chain issues, has left many small businesses struggling to adapt.
“It’s hard to live in Washington with high prices on everything,” said Theo Martin, owner of Island Soul restaurants. “It was an increase that I have to say on both sides was needed. But as a business owner, it’s about figuring out how I’m going to generate the money to pay for it. That’s where I am now.”
For Martin and other small business owners, balancing higher wages with increasing costs of goods and services has required difficult decisions, including reducing staff hours.
“It’s the toughest decision to have a 40-hour-a-week chef that’s been with you for 27 years and say, ‘I’ve got to cut you by eight hours because we can’t afford to do more,’” Martin explained. “We had to adjust everyone’s hours.”
Seattle’s minimum wage law, passed in 2014, initially raised the city’s minimum wage from the state’s rate of $9.47 to $15 per hour. Phased in over several years, the wage was designed to reflect a more equitable standard of living. Now, 10 years later, the minimum wage is more than double what it was at the time it was approved in 2014, and more than 25% over the targeted minimum wage approved by voters.
While the law reflects Seattle’s commitment to ensuring livable wages for workers, many small business owners argue that policymakers failed to consider the disproportionate challenges faced by smaller establishments, particularly Black-owned businesses. These businesses often operate with limited resources, thinner profit margins, and less capacity to absorb rising costs compared to larger corporations.
“A lot of us are already owner/operators, so then we’re just having to deal with less staffing,” said Lillian Rambus, owner of Simply Soulful. “The minimum wage increase was basically a 20% increase in our bottom line—not to mention the cost of goods and stuff like that. I used to pay $40 for a case of catfish; now I can pay anywhere from $96 to $110 for the same 15 pounds.”
Rambus says that external factors like the COVID-19 pandemic and supply chain disruptions have exacerbated the financial strain.
“The city of Seattle made this deal 10 years ago, but nobody could have predicted COVID, and prices have skyrocketed and never come down,” she said.
The ripple effects of wage hikes also extend to other expenses, such as delivery fees, rent, and utilities, making it harder for small businesses to stay afloat.
“I have traveled the country and have seen how other places have turned customer service into counter service, where you walk to the counter, place your order, sit down, wait for a buzzer to go off, and then get up to get your own food,” Martin said. “You have to cut hours to make it happen.”
For many Black-owned businesses, which often face systemic barriers such as less access to capital and a higher concentration of family-run operations, these financial challenges are even more acute.
Both Martin and Rambus believe that city officials failed to adequately address the realities faced by small businesses when designing the wage policy.
“If the city council and mayor had taken more action as far as small businesses are concerned, things could have been different,” Rambus said. “If they’d just done the tip credit for people with under 20 employees, they could have captured 82% of small businesses. But instead, they decided not to give us any relief, and you see not just Black businesses, but businesses of all races, going out of business.”
Todd Minor, owner of Nana Southern Kitchen, echoed this sentiment, calling for a more thoughtful and balanced approach to wage legislation.
“I do wish that elected officials would consider the size of the business when determining the minimum wage,” Minor said. “Small businesses can’t be treated the same way as large corporations.”
Despite these challenges, Minor emphasized that resilience is an essential mindset for small business owners, particularly in the face of mounting pressures.
“We’ve seen the pandemic, social unrest, and all different types of things, so if you’re a small business owner, you already know you have to have the mindset of resilience and perseverance,” Minor said. “Labor is part of your budget, but it’s also about having a business model that accounts for these challenges.”
Martin also highlighted the importance of creativity in keeping his business afloat.
“At the end of the day, the only thing I can do is keep doing what I’m doing to keep my business afloat,” he said. “Nothing’s changed; I’ve just got to keep being creative. We have to be that restaurant that keeps offering more things to keep people coming in.”
One aspect that Black and minority-owned businesses share is their deep connection to the communities they serve. Beyond providing goods and services, these businesses foster relationships, support local causes, and offer opportunities to residents.
“Small businesses leave meaningful deposits in the communities they serve,” Minor explained. “They feed the homeless, provide opportunities—even the smallest roles—to someone looking for work. They create relationships that last for generations.”
This unique value sets small businesses apart from larger corporations, which often operate with fewer ties to local neighborhoods.”
“Big companies mostly just make withdrawals from communities, but small businesses invest in them,” Minor said.
Rambus pointed out that the closure of small businesses has far-reaching effects.
“When a small business closes, it’s not just the owner who loses. It’s the employees, the customers, and the community that lose a vital part of their fabric,” she said.
While Seattle’s minimum wage increases aim to create a more equitable economy, they have highlighted the challenges faced by Black and minority-owned businesses that operate on thinner margins and often lack access to the resources available to larger establishments.
As policymakers continue to navigate the complexities of wage laws, business owners like Martin, Rambus, and Minor urge officials to consider the unique needs of small businesses. They also stress the importance of fostering partnerships with the community to build a more sustainable future.
“Small businesses are the backbone of our communities,” Minor said. “Elected officials need to recognize that and treat us accordingly.”
For now, small business owners are focusing on adaptation, perseverance, and their commitment to serving their communities. Despite the hurdles, they remain hopeful about the future.
“We’re here, we’re resilient, and we’re going to keep pushing forward,” Martin said.
Source: Seattle Medium
