Last week Councilmember Hollingsworth introduced legislation to continue Seattle’s minimum wage total compensation model, which is due to sunset at the end of the year. This action ignited a conversation among workers and employers about the economic climate of our city, and the consequences of continuing along the path when Seattle City Council originally passed its minimum wage ordinance in 2014. Much has changed since the passage of Seattle’s minimum wage ordinance. The issue is complex, and GSBA is committed to working toward a path forward that supports Seattle’s vibrant and diverse small business ecosystem.
The COVID pandemic and subsequent economic challenges in Seattle have left many small businesses struggling to stay afloat. Restaurants in particular operate on extremely low margins, often 2-5%, and must adjust quickly to compensate for economic shifts, largely because food ingredients are commodities that are most at-risk of price adjustments from inflation and other factors. Many are still struggling to rebuild: the average restaurant is $160,000 in debt from COVID, after factoring in government relief programs. Meanwhile, the cost of doing business keeps increasing. Rent for a business on Capitol Hill can average $20,000 a month; cost of healthcare benefits increased 15-35%; and the public safety crisis has led to skyrocketing monthly insurance rates, plus the out-of-pocket costs to fix property damage is never ending.
The rise in these costs has led to an incredibly volatile environment for small businesses. With margins as low as they are, small changes can lead to business closures. For example, multiple businesses along Madison Street closed in 2023 due to occasional schedule shifts brought on by construction of the new Madison Valley bus route. Customer turnout – or lack thereof – in one weekend can make or break a business. This is no fault of the business owners themselves; it is the result of the increasingly high costs to do business, largely brought on by the pandemic, to stay afloat in Seattle.
It is because of this environment that GSBA advocates to support the continuation of the total compensation model. Small businesses are a foundational ingredient in the character, culture and personality of Seattle’s neighborhoods. Minority-owned businesses, including LGBTQ+-owned, often hire from within their community, providing a source of employment for groups that are often economically disadvantaged. They engage artists and neighborhoods by promoting events, supporting artists, and selling products that are personalized to their community. Most importantly, they create essential third places where people can enmesh themselves with the culture and people of their neighborhood. We want to prevent a world where LGBTQ+ folks walk down streets of shuttered storefronts.
What GSBA hears from its members is clear: the cost to do business is too high, and an additional 20% labor increase in January will be insurmountable for many.
We also understand that the cost to live and work in Seattle is too high: rent increases, inflation, transportation and health care costs all make it harder to work in our city. That’s why GSBA is excited about engaging in the upcoming stakeholder process on the future of the total compensation model. The stakeholder place should be a safe place to share ideas and be creative even through disagreement. The public hearing on total compensation became a hostile environment for Councilmembers and members of the business community. Since the hearing, many of the business owners and others who support a continuation of total compensation who testified have been vilified and harassed online and at their places of businesses for sharing their positions and their absolute right to free speech. There should be no place for this type of harassment, intimidation and threatening behavior in our city. We hope that in establishing a stakeholder group where there is bound to be conflict and disagreement, that the participants show mutual respect for one another, and the City Council and Mayor’s Office advance a decorum that is conducive for reaching consensus on a complex and contentious issue.
We want Seattle to be a sustainable place to live, work, and operate a business. We are committed to delivering a path forward for our members. The consequences are real, and we recognize the threat that doing nothing poses to employees and employers alike.
For any questions or comments please reach out to me or Gabriel Neuman, Policy Counsel & Government Relations Manager, at GabrielN@thegsba.org.
In Solidarity,
Ilona Lohrey
pronouns she/her)
President & CEO
GSBA, Washington State’s LGBTQ+ & Allied Chamber of Commerce
400 East Pine Suite 322, Seattle WA 98122 | theGSBA.org
