Restauraunts Passing the Buck to the Customer due to Minimum Wage Increase?

The minimum wage in Washington has been of hot discussion for the past couple of years as there had been a push for higher wages for workers that had been relying on low-wage jobs. In the November election, Initiative 1433 passed across Washington to push the minimum wage up to $13.50 per hour by 2020. In other areas like Seattle and Sea-Tac, the rate can be as high as $15. Many businesses do not exactly support the increase, as they have to find a way to balance out the costs. Well, it seems that several restaurants across Washington are combatting it by passing it onto the customer in the form of a tax (thank you to Paul Constant for putting the instances together).

The Daily Beast wrote an article outlining what happened at a hotel in Seattle (the hotel has since removed the charge).

On the morning of Jan. 31, the man ordered room service. Yogurt and granola, bread, juice, and coffee. The staff person brought the food and the bill, which came to $23 even. The man looked down at the bill and noticed that there was a $2.21 food tax charge; nothing unusual there. But then there was also something called the “MW Surcharge,” totaling $1.50. MW Surcharge, the man thought; what the heck is that?

His question was answered immediately as he looked at the bottom of the bill, where he saw the words: “A 6.5 percent surcharge has been added to help offset the cost of the Seattle Minimum Wage. This is not for services provided and is not paid directly to service staff.”

A similar instance in Spokane occurred just two weeks ago when a restaurant included a fee for the increase in minimum wage. The TV station KREM in Spokane explains the idea:

A restaurant on the north side of town is charging a minimum wage fee after a law went into effect that raised the Washington minimum wage to $11.

Waddell’s Pub and Grille North is charging a service charge of 3 percent on each bill, they said, instead of being forced to raise their prices.

The owners have named it the “minimum wage fee.”

This is quite the precedent to set for other stores to consider using as the minimum wage gets higher and higher. As I reflect on these instances, it’s much easier for them to cut costs in say, energy of the building they are using than passing it back to the customer. If they are so fixated on passing it back to the customer, then raise the prices a little across the menu rather than drawing the attention to the fact that there is a specific tax for the minimum wage. It’s a direct response to the new law and it seems it could be less complicated.

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