Higher wages a surprising success at Seattle restaurant

SEATTLE – Menu prices are up 21 percent and you don’t have to tip at Ivar’s Salmon House on Seattle’s Lake Union after the restaurant decided to institute the city’s $15-an-hour minimum wage two years ahead of schedule.

It is staff, not diners, who feel the real difference, with wages as much as 60 percent higher than before.

Seattle’s law, adopted last year after a strong push from labor and grass-roots activists, bumped the city’s minimum wage to $11 an hour beginning April 1, above Washington’s highest-in-the-nation minimum of $9.47. Scheduled increases that depend on business size and benefits will bring the minimum to $15 within four years for large businesses and seven years for smaller ones.

There’s little data yet on how the law is working.

“To the extent that we can look at macro patterns, we’re not seeing a problem,” Seattle Mayor Ed Murray said.

As Washington, D.C., and other cities consider following Seattle, San Francisco and Los Angeles in phasing in a $15-an-hour minimum wage, Ivar’s offers lessons in how some businesses might adapt. In April, Ivar’s Seafood Restaurants President Bob Donegan decided to raise prices, tell customers that they don’t need to tip and parcel the added revenue among the hourly staff.

For some of the restaurant’s lesser-paid workers – including bussers and dishwashers – that meant as much as 60 percent more. Revenue has soared, supportive customers are leaving additional tips even though they don’t need to, and servers and bartenders are on pace to increase their annual pay by thousands, with wages for a few of the best compensated approaching $80,000 a year.

“It’s been a surprise,” Donegan said. “The customers seem to like it, the employees seem to like it, and it seems to be working, at least in this location.”

Rochelle Hann, 25, has performed a variety of roles at Ivar’s, including serving, bookkeeping and even dressing up as a giant clam. If she keeps working 30 hours a week, her annual pay will jump about $12,000 – money she’s socking away for accounting classes at a community college.

“Before, I felt like it was maybe not quite paycheck-to-paycheck, but now I don’t even have to worry about it,” she said. “I just went away for the weekend, and it was an easy expense.”

Other industries with minimum wage employees could have a tougher time as worker pay climbs.

“What we expect to observe is this is not going to be a policy that’s universally good for everybody or bad for everybody,” said Jacob Vigdor, a University of Washington professor who is leading a study of Seattle’s minimum wage law. The study includes recurring surveys of 700 Seattle businesses and ongoing interviews with about 50 low-wage workers and their families.

Downtown Emergency Services Center, which relies heavily on government contracts to provide housing and other services for chronically homeless residents, might need to cut those services unless the city boosts its funding.

“The economic justice that would be happening for our employees would be borne by our clients, who are extremely vulnerable people,” executive director Daniel Malone said.

At Ivar’s Salmon House, Donegan attributes at least some of his pay policy’s success to Seattle’s white-hot economy.

A few other table-service restaurants have started following suit, and Donegan said he gets inquiries every day from owners wondering how Ivar’s policy is working. But the approach is unlikely to be replicated among fast food restaurants or others where servers make less in tips. Even Ivar’s isn’t expanding its new policy to its quick-service seafood stands.