Washington workers adjusting to life at $13.50

While The Mighty Bowl continues to grow, other restaurants, including Tommy O’s in downtown Vancouver, have closed because of financial pressures, including the higher minimum wage. Some, including Twilight Pizza, are for sale. All owners among the roughly 260 restaurants and grocery stores in Clark County may have to consider raising prices, reducing the quality of ingredients and the size of portions and cutting staff hours or positions altogether.

Even so, Scott Bailey, regional economist with the state Employment Security Department, said some of those adjustments will be a “very minimal” for consumers, such as increasing the cost of a fast-food burger by a nickel. At the same time, Bailey said, minimum-wage workers are going to have an easier time paying for increasing rent and increased cost of goods.

Some of the impacts of the increasing costs will be from minimum-wage workers who have more money in their pockets and can spend it on more expensive food, Bailey said. And those employees are more likely to stay working for longer; less employee turnover means less time spent on training. And not to mention, employees are happier.

Kenzie Gagnet, 25, is one of the thousands of minimum-wage workers in the county. Behind the counter at The Mighty Bowl, she makes food bowls and trains new staff.

The wage increase for her means she’ll be able to save money and avoid living paycheck to paycheck. It will also help her pay back student loans and take the edge off an expected rent increase at her apartment.

“I’ve started to not to have to worry so much,” she said.

Evolving businesses

Over a decade, Washington’s minimum wage has increased by about 57 percent, from $8.55 in 2010 to $13.50. The impact of those increases is felt strongly in the restaurant industry, which has a disproportionate number of minimum-wage workers, including wait staff and bartenders who may also get tips.

At fast-food restaurants and coffee shops, about 50 percent of all full-time equivalent jobs are minimum wage, according to Bailey. Raising the minimum wage increased the total payroll for those businesses by 3.3 percent.

“With labor representing roughly a third of total costs in the industry, a 3.3 percent increase in payroll would translate to a 1 percent increase in the cost of a burger or cup of coffee,” he wrote in an email to The Columbian.

Another highly impacted industry is gas stations, according to Bailey, where 58 percent of all full-time equivalent jobs would need a wage increase. But since labor costs at gas stations represent a relatively small share of costs, “the impact on gas prices or the price of a soda at the minimart at the gas station would be negligible,” Bailey wrote.

Growing sales, adding tips

Vancouver-based Burgerville USA employs about 1,200 people in Oregon and Washington, and about 14 percent are minimum-wage workers.

The company is attempting to counter rising labor costs by making more-appealing items for customers, including its new locally sourced line of milkshakes and its new eco-friendly burgers.

“Our preferred means is to grow sales, but we are looking at all levels right now,” said Hillary Barbour, director of strategic initiatives.

Barbour said it’s hard to quantify the impact of the wage increases compared with all the other rising costs of doing business in Washington and Oregon.

The company also took the relatively unusual step for fast-food restaurants of asking customers to tip their server when they place their order at the counter.

“Since we have rolled out tipping, it has made a dramatic difference,” she said. “Our employees are really happy about it.”

Burgerville also took out a $3 million loan last year to give its employees a raise; the company said the loan was not triggered by the minimum-wage increases.

Domino effect

At Billy Blue’s Bar and Grill in Hazel Dell, owner Bill Gianukakis is trying to balance all the increased costs of doing business, but he said there’s a domino-type effect on prices.

Increased prices result in more sales revenue, and his insurance charges him more. He’s also pressured to not only give wage increases to minimum-wage workers, but also for his backroom staff — the cooks and managers, who generally are more skilled and earn a higher wage.

“You have all these skilled workers in the back saying, ‘Hey, what about us?’ You have to see that each individual staff member is being taken care of,” he said.

Gianukakis said the minimum-wage increases are causing distributors to raise prices, putting more financial strain on restaurants.

“Everybody in the chain is all raising their prices,” he said. “Any time you have wage increases, prices are going to have to go up. The money has to come from somewhere.”

For example, Mighty Bowl owner Valenta said his food vendors had raised their prices by about 15 percent since last year.

Tom Owens, owner of Tommy O’s Pacific Rim Bistro, didn’t specifically mention a higher minimum wage when he announced on Facebook that he was closing his downtown Vancouver location, but he wrote that the increased cost of doing business factored into the decision.

Twilight Pizza owner Morgan McColum also told The Columbian that the yearly wage increases made business more difficult, through minimum-wage increases were a less serious reason to sell the restaurant than some family health issues.

Even though the latest wage hike was the last resulting from the voter-passed Initiative 433 from 2016, it won’t be the final increase. The minimum wage will continue to rise every year, depending on the Consumer Price Index.