Minimum Wage Pressures Build, Hourly Wage Jumps To $15 In Seattle

If the federal minimum wage increases to $10.10 an hour from the current $7.25, will fewer entry-level jobs be created and will restaurant unit growth stall?

That’s the prediction CKE Restaurants CEO Andy Puzder recently made to CNBC. Puzder said that minimum wage hikes will lead to store closings and slower growth for his company’s Carl’s Jr. and Hardee’s chains. The California-based chain will see its home state’s minimum wage increase to $9 in July, making it among the nation’s highest, and $10 by January 2016.

The Seattle City Council has gone even further, unanimously raising the local minimum wage to $15 an hour, more than double the federal minimum. The vote will give the city’s low-wage workers—in phases and with different tracks for different business sizes—the highest big-city minimum in the nation. Washington state already pays the highest minimum wage in the nation, $9.32. Most foodservice operators, like other smaller employers, will not be fully affected by the change until 2021. The hourly wage will rise to $15 by 2017 for employers with more than 500 workers that do not provide health insurance and by 2018 for large employers that do. In its early years, the law allows employers to include tips as part of a workers’ compensation in reaching the minimum, but that provision is phased out over time.

Some business owners who have questioned the proposal say that the city’s booming economy—much of it because of Amazon, which makes its headquarters there—is creating an illusion of permanence. The fat times and the ability to pay higher wages, they warn, will not go on forever.

The vote accentuates the patchwork in wages around the country. Eight states and the District of Columbia already have boosted minimum wages this year—the most in a single year since 2006—and at least eight other states and municipalities could put minimum-wage ballot measures before voters by November.

Many states, including much of the South, hold fast to the federal minimum of $7.25. Experts tracking minimum-wage law say the range of mandated minimums, lowest to highest, is the largest it has been since Congress established a national minimum in 1938. Economists are not sure of the effect of having such sharply varying levels; in some areas, the minimum wage is twice that of others.