Mike Klotz is co-owner of Delicatus, a Seattle delicatessen. This piece is part of a series of minimum wage op-eds from activists, business owners, low-wage workers, and experts. If you have an editorial you'd like to submit, send it here.
I am a progressive, and upon hearing of your campaign for city council, I found myself with a moral dilemma. I was excited to support a candidate who spoke of the injustices of corporations, but as a small-business owner, I was also concerned at the impact a 60 percent wage increase would have on the very business I worked so hard to create. My business partner felt as I did, and on October 26, 2013, he wrote you an e-mail addressing our very real concerns. Less than 24 hours later, he received a response from your campaign assistant* addressing our concerns and closing with this assurance:
We would not want to enact a minimum wage increase without also guaranteeing subsidies/tax credits to small business owners, an overhaul of the B&O tax code, and the establishment of a non-profit municipal bank to invest in small business. So in many ways, the plight of small businesses will be in a much better position with someone like Kshama in office fighting for the interests of ordinary people.
Because of that campaign promise, we both voted for you. And it is because of that statement that I find myself at odds with what you have done since taking office. You refuse to discuss any option but a 60 percent increase in the minimum wage, you threaten to take it to the ballot, and most unsettling of all is your unwillingness to unbiasedly listen to small-business owners about our very real concerns. You promised to find a way to elevate the minimum wage without destroying the very fabric of diverse, small, independent businesses that make this city so spectacular.
My small business employs 18 people, including my business partner and me. We were victims of the very corporations you speak of, where profit is valued above all else. In 2009, as the economy began to crumble, the corporation that employed us determined it was too costly to the bottom line to pay the nation's highest minimum wage and chose to close. Fortunately, we had managed to save some money and decided to sink every penny we had into opening our own restaurant. In the spring of 2010, during the worst recession this country has seen in a generation, we opened Delicatus. Since that day, we have worked shoulder-to-shoulder with our employees. And after four years, my business partner and I still work 60-plus hours a week.
I am writing today to hopefully begin a discussion that addresses the costs associated with a drastic 60 percent increase in the minimum wage. What I've heard from you since your election is a politicized and radical agenda that narrowly defines small business while lacking any specifics about the small-business tax credits and B&O overhaul your campaign promised—an agenda I fear will cripple the very businesses that make up Seattle's identity. My business operates in a segment of the restaurant industry where the $5 foot-long reigns supreme. We do not compete by engaging in the sort of irresponsible business practices that would be required to sell $5 foot-longs, as to do so would be to support the very policies that allow huge multibillion-dollar corporations to profit at the expense of not only their workers but also the local economy and the environment. We choose to purchase from local suppliers, farmers, and ranchers, and we adhere to a standard of sustainable and responsible business practices in choosing our suppliers. Because of this, we charge more than the big corporations, and fortunately many Seattleites understand the quality and principles we adhere to come at a cost.
Largely lacking in the rhetoric surrounding the demand for a $15 minimum wage is an honest assessment of the impacts of such a drastic increase to small business versus big business. Also lacking is how the majority of minimum-wage workers are employed by big business but the most damaging impact will be on small businesses. Again, I am a progressive and therefore I support legislation that mandates that big business pay the real costs associated with doing business. I also understand that if everyone made more money, there would be more money to spend—but there would be a cost, and that cost is an increase in prices. This is not debated. What is debated is who would be affected by a raise in costs and who would benefit. The nature of capitalism would dictate that those costs would be mitigated and those mitigations would be by either raising prices or reducing workforce, more than likely a combination of both. Corporations like Chili's and Applebee's would have an advantage, as they are already installing tablets at tables for self-checkout and automated ordering, resulting in a reduction in servers while minimizing price increases. Meanwhile, the small, independent restaurant would be forced to lay off workers and raise prices, with many having no choice but to close. With a drastic wage hike, all employers would expect higher levels of experience, training, and flexibility from employees. Less skilled, inexperienced, and less flexible employees, such as students and single parents, would be left without a job. Seattle would be flooded with highly skilled workers from outside of the city, resulting in fewer opportunities for less skilled workers. This would result in a larger number of chronically unemployed workers that would ultimately be forced out of Seattle in order to secure similar or lower paying jobs elsewhere. Without an incremental approach to an increase in the minimum wage, you will hurt many of the people your proposal intends to help.
The other way to mitigate costs would be to compromise on principles and products. This would force restaurants like mine into the arms of larger corporate suppliers with distribution centers outside of Seattle and therefore immune to a drastic wage increase. Without an incremental wage increase, the small, independent suppliers I currently source from would be at a competitive disadvantage. This coupled with a need to raise prices would make them unable to compete with corporate suppliers on price. You have stated repeatedly that big business is hiding behind small businesses, which is absolutely true. Small-business owners stand to lose the most—and as we speak out not against an increase in minimum wage but in an irrational 60 percent increase, we are being shouted down as greedy capitalists while big multinational corporations stand in the shadows. You say you speak for the just under 100,000 people who elected you into office, so does that mean you speak for me as well? If so, why do you refuse to listen to the concerns of the very constituents that helped you get elected? Why did you speak at labor-union rallies in SeaTac where the very unions that support you demand to be exempt from the minimum-wage increase while you refuse to engage meaningfully with the small-business community about their concerns? How do you justify allowing labor unions to collective bargain less than a proposed minimum-wage increase? You say you have not heard an alternative proposal. I write you today to inform you that I and many other local, small, independent businesses have come together to create many grassroots organizations that stand for a responsible approach to income inequality while ensuring the very nature of Seattle's truly small, independent businesses are preserved for all to enjoy in the future.
You ask us to join you but demand that it has to be your way. We are asking you to join us in working together to bring about the improvements we all want to see without decimating the unique nature of Seattle's small businesses. Independent businesses are what make Seattle great, and together we can implement real changes that will ripple across the nation.