Do they pay employees less than minimum wage?

Lots of owners of high-end restaurants have been shopping around some pretty extraordinary — and misleading — figures about how a $15 minimum wage would affect their costs. Just recently, the Puget Sound Business Journal reported Ethan Stowell said paying $15/hour would mean 25% higher prices at his high-end restaurant empire.

But the numbers don’t add up.

In restaurants, a third of costs typically go to worker paychecks. Tom Douglas quotes 35% in the PSBJ article, and it makes sense the number would be a bit higher at a higher-end restaurant. Let’s assume Stowell also has about 35% of his costs in worker paychecks right now.

If every single employee was currently paid exactly $9.32/hour — from the CEO (yes, Ethan Stowell Restaurants has a CEO) to the dishwasher to the prep cook to the sous chef to the front-of-house manager — then raising the minimum wage from $9.32 to $15 would result in a 61% labor cost increase. A 61% increase to 35% of costs would be a 21% total cost increase. (Not 25%.)

So even if you assume that:

  1. Every single employee in the chain is paid minimum wage,
  2. The restaurants would make absolutely no other adjustments to any other costs and find no other efficiencies, and
  3. There would be zero increase in demand from the wage increase across the economy…

You still can’t get to the cost increase Stowell cited. And none of those assumptions is accurate in an even vaguely plausible case.

So either these figures are intentionally misleading or the PSBJ buried the lede: are people being paid less than minimum wage??? (We trust that’s not the case. In fact, we trust that many Stowell employees are already paid substantially more than $9.32/hour, and so the cost of raising the minimum to $15 would be significantly less.)

Real figures on business impacts are an important contribution to the debate over how Seattle can craft a $15 minimum wage that lifts workers out of poverty, boosts the economy, and supports our community businesses.

Made up numbers and scare tactics are not.