(The Center Square) – Seattle City Councilmember Joy Hollingsworth pulled her proposed bill to extend the city’s $2.72 tip credit, as the executive’s office seeks an end to tiered wages.
Seattle’s current minimum wage is $19.97 per hour, but businesses that employ fewer than 500 employees can pay $17.25 per hour if they pay $2.72 per hour toward medical benefits, or if the employee earns $2.72 per hour in tips.
That tip credit is set to expire at the end of this year if the city does not act to extend it.
Hollingsworth’s pulled legislation would have sought to amend the city’s minimum wage ordinance to permanently establish the current minimum compensation as the pay standard for small employers.
The bill intended to provide financial relief for small employers, as it would have mitigated the impact of increased labor costs and unexpectedly high inflation, while still guaranteeing a minimum earnings standard for employees.
Instead, Hollingsworth is now seeking discussions with stakeholders in lieu of Council Bill 120830.
“My initial proposal was never an end, but the beginning of a process,” Hollingsworth said in a news release. “I look forward to the next few weeks to focus on working with stakeholders, including small business owners, labor unions, and our mayor’s Office to find a balanced solution.”
The withdrawal of the bill was announced on Friday, just three days after it was introduced to the city council on July 30.
In response to this decision, Seattle Mayor Bruce Harrell said that he is committed to ending the disparity in wages and noted that the COVID-19 pandemic and rising inflation that was not forecasted in the city’s original projections for further exacerbating the disparity.
“I have heard from struggling small restaurants who are still working to recover from the impacts of the pandemic and worried about the immediate financial impact of this expiration,” Harrell said in a news release. “I am committed to bringing appropriate stakeholders together to have a robust and thoughtful conversation with the twin goals of ending tiered wages and fostering an economic environment where small businesses can thrive.”
The Seattle Restaurant Alliance issued a statement expressing frustrations with the failure of city leaders’ will to address the impacts of the expiring minimum wage ordinance. The alliance claims city leaders are representing a betrayal of an agreement the two parties made in 2014 to raise the minimum wage.
“The goal of the employer community’s participation in the deal was to avoid running small business owners off a fiscal cliff and to avoid forcing massive cost-cutting decisions onto their businesses, including cutting employee hours,” the alliance wrote in a news release. “Increasing labor costs by 20% overnight – which was not part of the agreement but will happen if no action is taken by the city – will do exactly that.”
The Seattle Restaurant Alliance also pointed out that Seattle’s CPI increased to 5.5% in June 2021 and reached a high of 10% in June of 2022.
The city’s CPI has yet to return to under 4% since.
