You’d expect certain objections to approval of a $15 minimum wage in Seattle this week. The International Franchise Association, for example, isn’t happy.
The oldest and largest trade organization of its kind represents franchises worldwide. And it wasted no time in filing a discrimination suit against the city over the new rules.
In a prepared statement issued following city council’s approval, International Franchise Association President and CEO Steve Caldeira said:
“The Seattle City Council and Mayor Murray’s plan would force the 600 franchisees in Seattle, which own 1,700 franchise locations employing 19,000 workers, to adopt the full $15 minimum wage in 3 years, while most other small business owners would have seven years to adopt the $15 wage. These hundreds of franchise small business owners are being punished simply because they chose to operate as franchisees. Decades of legal precedent have held that franchise businesses are independently-owned businesses and are not operated by the brand’s corporate headquarters.”
But it turns out even small business owners who originally supported the law are now having second thoughts.
Take Jody Hall, owner of Cupcake Royale, the brand behind seven Seattle coffee shops that sell artisan cupcakes and ice cream in the city. Hall’s reservations are probably common to a lot of small business owners caught between a rock and hard place in the national minimum wage debate.
Certainly many acknowledge it would be difficult, if not impossible, to live on the current Seattle minimum wage and would certainly like to pay employees more. But there are also business realities to consider.
Small businesses face intense competition in an unpredictable and changing economy, and must balance this reality against a desire to boost employee wages.
While Hall signed up in support of Seattle’s minimum wage increase originally, she recently admitted to KOUW.org:
“I really have a hard time. Even though I signed support for a seven-year phase in with the mayor, this is keeping me up at night like nothing ever has.”
One concern is a group called 15Now which is collecting signatures for a charter amendment. It would require businesses with more than 500 employees to start paying $15 immediately instead of the three year phase in offered by the recently passed city measure.
But more significantly to small business owners like Hall, it would shorten the time they have to reach $15 an hour to just three years. Hall says that would likely force her to close half her locations and layoff about half her 100 employees.
A similar story is told by other small business owners. Some have suspended plans for expansion within the city limits while others say any further growth will have to happen elsewhere.
It’s going to be very interesting to see how things go in Seattle. First, Washington already had a higher minimum wage. It’s a liberal state. But Seattle has pushed much further now and we’ll start to see how businesses adjust to the increased cost. It’s not like they’re just going to take it. Either headcount will be reduced or prices go up for consumers. That’s how businesses operate. Second, having a different standard for franchises versus SMBs how they’ve defined it doesn’t seem fair.
Let’s not lose it just yet! I give most 7 yrs to meet the new standard. That is 2021 if you are not good with math. Would those opposed feel we should keep the current min. wage level, until that year! Min. wage is used by small business as a gauge of how their wage and benefits rate compared to others. If you run a good business and have a great product, you want great staff that are worth paying for.
As for the difference between Franchises and SMB’s. McDonald’s is not a small business. A franchise owner has access to many of their corporate offerings (ad dollars, etc) that SMB’s do not.
Great reporting, Shawn.
This is a huge issue, and we’ll see how it develops in the next weeks and months.
The Franchise King®
The only business this is going to help is the legal marijuana locations.
I think that it is more of an issue on money spent. While it can make employees happy, there will always be some trouble adjusting to the new minimum wage rule regardless if you’re a small business owner or a franchisee.
Who has the right to set the minimum wage?
How about the people who are working sometime for less than the so-called minimum wage, i.e., small business owners? Where should we go and get a hand-out from the Big Brother?
I recommend you that you go to Dr. Peikoff’s podcast show and listen to Yaron Brook’s answer to the minimum wage:
“What is a good response to the liberal argument that raising the minimum wage would get a lot of people off of government programs such as food stamps” – February 17, 2014.
People are so dumb… “Yeah!!! $15 Bucks an Hour, whooooooo!!! Now i can buy shoes, and LV Bags, and a Sound System for my Riiiiideeeee….Obama RULES!!!!.” Good job morons…… Hi, i’m Jack, of Jack’s Flap Jacks and i sell Flap Jacks for $3/ each…. well guess what? Now i gotta pay your dumb ass $15/ hr so my Flap Jacks are now $18/ each. (ok, so my math isn’t statistically correct), but when the Walden family stops eating at my establishment because the prices are so high……..? Well, now your dumb ass doesn’t have a job because i’m out of business…….Enjoy your LV bag……
I’m all for the working class getting theirs, and i know the current minimum doesn’t keep up with inflation, but who the hell picked $15/hr? Was ANY thought or study put in to this? I feel bad for the business owners. And once it takes in Seattle, it won’t be long before the rest of the country is crying for their $15/hr as well….Canada is looking better and better…