Restaurants Unlimited, Inc., a food and beverage firm headquartered in Seattle, recently filed for Chapter 11 bankruptcy protection, sparking debate among Americans who want to end poverty and raise the minimum wage to $15 an hour.
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In their filing, the company indicated that high wages were one of the main causes, stating that “over the last three years, the company’s profitability has been significantly impacted by progressive wage laws along the Pacific coast … the result was to increase the Company’s annual wage expenses by an aggregate of $10.6 million.”
Portland and San Francisco have also seen an increase in worker pay, which has risen to 35 and 41 percent, respectively. Employers in those cities must pay workers $12.50 and $15.59, respectively. Seattle, the first city to require a $15 minimum wage, has also increased pay by a whopping 69 percent and has raised the minimum wage to $16 per hour.
Restaurants Unlimited raised their menu prices and added a living wage surcharge to bills, but as Michael Saltsman of the Employment Policies Institute said, “people can stay home [or] opt to eat out less often,” implying that the company “can’t pass along the full impact of that labor cost increase to their customers through higher prices.”
Ethan Stowell, the owner of 14 upscale restaurants in Seattle, noted that there’s an inconvenience factor to the law as well.
“We have had to re-engineer some kitchens to work with one less person and we’ve had to be a little bit more efficient … I think it’s just the cost of doing business has gone up and it’s really hard to adjust your prices in a restaurant at the speed that the market changes,” Stowell said.
Almost all Democrats running in the 2020 election support the Raise the Wage Act, which would raise the minimum wage to $15 an hour by 2026, including former Vice President Joe Biden, who said: “it’s long past time, it should be $15 an hour across the United States.”
As of today, 29 states currently have laws that pay a higher minimum wage than $7.25 an hour, which it’s remained at since 2009.