An investigation into January’s coming $1.50 per hour wage increase, the projected impact on your business and how we’ll help

An investigation into January’s coming $1.50 per hour wage increase, the projected impact on your business and how we’ll help https://wahospitality.org/wp-content/uploads/2019/11/TryingtoSurvive.jpg

By Jillian Henze, APR

In March 2019, the alarm sounded.

The alarm’s name is Cathy Fox, the association’s Seattle Neighborhoods senior territory manager, and a veteran staff member at the association. Members love Cathy with her abundant, frothy blonde curls and a shoot-from-the-hip personality.

“No one knows the state minimum wage is going up,” Cathy gravely announced.

Surely some of the members know, I thought.

An association-wide meeting was called in June and the department heads sat around our oblong conference table in the Olympia office to figure out what the alarm was all about.

Cathy and the Membership Team, our boots-on-the-ground territory managers, reported an increase in requests for member payment plans and the shocking feedback that our members did not know the statewide minimum wage was rising $1.50 per hour in January and did not have plans to mitigate costs. The scene was a flurry of evidence being passed back and forth across the table and staffers scribbling retention rates on the white boards.

We all left that meeting on the same page – we had to better understand the severity of the situation and we had to take a proactive approach to help members balance costs.

Digging for data

My gut told me there was something we could do to help.

A former investigative journalist and newspaper editor, I went digging for data, first-person accounts and anything that would better help the association understand what was in front of us. Here’s what I found.

The statewide minimum wage increase of $1.50 had happened recently – it went up from $9.47 to $11 per hour on Jan. 1, 2017, after Washington voters approved Initiative 1433, the minimum wage law that would phase in increases through 2020.

“The 2017 minimum wage increase was to market,” association President and CEO Anthony Anton said. “For the majority of Washington markets in 2017, the tight labor market dictated that employers were already paying above $11.”

After that increase in 2017, the association felt tremors of the impact. Two hundred and ninety members dropped that year. The number of members who went out of business, closed and sold increased. This was a marked difference from 2018. Dropped member numbers decreased by 30 percent in 2018 when the minimum wage increase was an easier-to-swallow $0.50 per hour.

I mapped all the trends, shared the significant outcomes with membership and continued to dig. I interviewed Membership Team members, directors and the CEO asking: “What are you hearing from members?” “Who is most at risk?” “What did we learn in 2017?” “What do members need to survive this?”

I pored over the hundreds of pages of membership surveys from 2014, 2016 and 2018 to see how members started talking about the minimum wage, how it progressed and what the fears and impacts were.

The data and anecdotes started to show differences in experience and stress among industry segments and then geographically. Much of lodging would be able to absorb the extra $1.50 per hour. Lex Nepomuceno, our senior director of communications and technology, said “it’s a matter of scale.” Seattle, SeaTac and Tacoma members were thinking “more of the same.” And our small restaurant members in rural counties emerged as the most at risk of not surviving this increase.

We conducted an email member poll and collected data in the field to learn how many members truly do not know about the increase. We learned about one-third of our membership did not know about January 2020’s statewide minimum wage increase to $13.50 come September 2019.

After about one month of collecting data, we understood what was happening and who was at risk. Now, we had to figure out: How can we ensure all our members know about the rising labor costs and outfit them with a battle pack of resources so they can survive?

“I don’t have anybody feeling like the cost-saving programs are going to be enough,” said Marla Fruit, our territory manager for the Eastern Washington Territory.

So, what solution would be enough?

Welcome to the HUB

On Sept. 30, 2019, the Washington Hospitality Association launched its first-ever, members-only, secure online access HUB filled with tools to help hospitality businesses increase revenues and cut costs. The Hospitality Industry Survival Strategies HUB will give you many roadmaps to mitigate all the new regulations added the last few years that have forced changes in your business.

We designed all of the content just for you. From labor cost calculators to podcasts and videos you can absorb on your commute, the HUB is full of tools for busy general managers and owners who do not have time or significant budget, yet must adapt to survive. Content meets strict quality standards, and it includes what your peers are doing and case studies.

We’re tapping renowned industry experts like Rick Braa who in a “Beautiful Mind” moment scribbled the perfect formulas to help you determine how much extra labor cost will be for you in 2020. We’ve turned the formulas into an easy online calculator in the HUB.

This fall and winter, our team will be using every tool in its arsenal, including this magazine article, to raise awareness that the minimum wage is increasing. Please help the cause by sharing the news with your peers. Some are unaware, while others are misinformed and don’t believe the higher minimum wages, including in Seattle, apply to their business.

Log on to access.wahospitality.org to get your login and tap into all of the tools. New resources are being added weekly.

“The ones who will weather the storm have very thoughtfully planned for it,” Fox said.

Tags: minimum wage