The smoking ban, the minimum wage, and the customers you don’t have yet

The experience in our state when smoking was banned in bars & restaurants sheds a lot of light on the current debate over demand, business costs, and the minimum wage.

When Washington voters overwhelmingly passed I-901 in 2005, many bar & restaurant owners were concerned. Several suggested massive layoffs would result from the loss of customers who wouldn’t go out if they couldn’t smoke.

In fact, just days after the election, KOMO news reported that the owner of The Swinging Door in Spokane: “said the ban - which takes effect Dec. 8 - could force him to lay off of as many as 15 of his 50 employees due to expected loss of business.”

The owner of the Spar Cafe in Olympia told KOMO something that also sounds familiar:

"I’ll be honest with you. I’ve run my numbers. I have a hard time believing all these nonsmokers are going to show up in place of my smoking customers.”

Both the Swinging Door and The Spar Cafe remain open today.

Why were these specific prediction so wrong — don’t business owners know their business better than anyone?

A good business owner certainly knows the customers they have. But here’s the thing: they don’t always know their potential customers very well.

So back in 2005, many bar owners looked at their current customers, many of them smokers, and worried they’d lose them.

But their predictions about the business impact were so wrong because they couldn’t see the customers they didn’t have yet — in this case, all the people more likely to go to a bar without second-hand smoke.

The situation around the $15 minimum wage is similar. Business owners are  clearly worried about how potential price increases might cost them some business from the customers they have. But they’re not seeing the tens of thousands of potential customers out there who aren’t yet spending money in their business because they can’t afford it on poverty wages.

This is another reason why all the data shows that despite the myths & claims, there’s no job loss when wages go up

Long story short: you can contribute a lot more to the economy on $15/hour than your can on $9.32. Multiply that by 100,000 workers in Seattle, and it’s an incredible opportunity for any business ready & willing to seize it.