Big jump in minimum wage will mean tough choices for some Whatcom businesses
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Effects of minimum wage increase
Voters passed Initiative 1433 in 2016, directing the state to steadily increase minimum wage. The next jump will have a large impact in Whatcom County. We explore those effects in this series, a bonus to subscribers.
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A big boost in the minimum wage is coming in January and local small-business owners are looking for ways to adjust.
The passage of I-1433 in 2016 directed the state to steadily increase the minimum wage, but this time around it is a big jump. The rate will go from $12 an hour to $13.50 an hour, a 12.5% increase. For a full-time worker, that’s an extra $3,120 a year.
For an employer who has workers making the minimum wage, that’s an expense they need to account for starting Jan. 1. Western Washington University’s Small Business Development Center has scheduled a series of workshops proactively planning for the increased expenses.
The upcoming increase has caught the attention of business owners, unlike changes in previous years, said CJ Seitz, director at the Bellingham Small Business Development Center. During the past two years the increase was smaller, rising 50 cents an hour. In 2017 the hourly minimum wage rose $1.53 to $11.
The big concern is not only paying the increase, but whether to increase the wages of more experienced workers already being paid above the minimum wage.
“Many (business owners) want to know what everyone else is doing,” Seitz said. “But every (business) is different.”
The workshops provide an opportunity for a checkup on expenses and what can be done. Cutting expenses is the preferred route of business owners, Seitz said, because otherwise they would need to raise prices for customers.
Taking a second looking at expenses is leading to some interesting ideas, said Asche Rider, a Small Business Development Center-certified business adviser who ran a recent workshop in Blaine. Some companies are looking at adjusting business hours based on when customers are in the business, while others are looking at shared office space options. Some are looking at outsourcing services, such as delivery.
“The conversations have been thoughtful,” Rider said, noting that many are balancing competing issues of paying workers fairly with what customers are willing to pay for products.
It’s not just the minimum wage increase that’s on the minds of business owners. Other expenses are also going up, Rider said.
Another option in cutting expenses is reducing the hours current employees work each week. Among the clients they’ve worked with, Seitz said that is not something they want to do.
“For the most part they are advocates for employees and want to keep the hours in place,” Seitz said. She added that cutting hours also raises the risk of losing valued employees altogether.
Based on the conversations with clients, Seitz doesn’t expect to see an above-normal number of business closures.
“It would be hard for me to see the minimum wage increase as being the final straw with our clients,” she said.
However, she said, the reality is that prices will go up at some businesses.
The next Small Business Development Center workshop for small business plans for the wage increases will be held 2:30 p.m. to 4:30 p.m. on Wednesday, Nov. 20. It’ll be held at the Dorothy Haggen Building Conference Room at 2211 Rimland Drive. For further details, call 360-778-1762 or email sbdc@wwu.edu.
