Restaurant owners caught between their morals and the market

Editor’s Note: The divide over increasing the minimum wage to $15 an hour, first in SeaTac, Washington, and now in Seattle, is often construed as a business versus labor debate.

Last fall, local Service Employees International Union President David Rolf told Making Sen$e that raising the minimum wage is good for workers, who will then spend more dollars in the local economy. But a retired business owner told us that paying a higher wage for even unskilled, entry-level work would kill job opportunities for young workers looking to get their foot in the door. “You shouldn’t be getting in between the employers and the employees,” he said. Sounds like a fairly market-driven approach: keep the government (in this case, the city of Seattle) out of private transactions.

But there are plenty of liberals, who don’t usually toe the business line, who feel the same way. At 38, John Platt, a self-described social activist, left his job as a high school principal to work as a waiter in hopes of finally opening his own restaurant. He now owns St. Clouds, a Zagat-reviewed eatery in Seattle named after the orphanage in John Irving’s “Cider House Rules.” Each month, Platt opens up the kitchen for a community cooking event to feed the neighborhood homeless. He followed his passion and is living the dream he set out to achieve when he quit his job in 1996.

But with the latest push in Seattle to increase the minimum wage, Platt finds himself in an uncomfortable position as both a liberal who has supported most of his city’s progressive initiatives and a business owner worried about staying afloat. As he explains to Paul Solman in their extended conversation below, he’s scared of what the minimum wage hike will do to his restaurant, and he’s upset, even emotional, that this debate has left him so personally conflicted.

Hear more from Platt and other restaurant owners in Making Sen$e’s broadcast segment below.

Simone Pathe, Making Sen$e Editor

Where did the dream for owning a restaurant come from?

I came from a family of six kids and we sat down to dinner together every night. Everybody got together, and stories and jokes were told. It was something we could rely on. I think it’s a common fantasy to do this, and I’m not exactly sure of the genesis of it, but it’s the idea that you’re hosting. You bring people into your life, and you take care of them, and you make them happy.

You feed the homeless out of this restaurant every week?

The third Wednesday of every month.

And why?

In my life in Seattle, I look at the homeless problem and I do not know what to do about it. But I know they’re hungry. So we feed them. That, to me, that’s the human thing to do. I don’t have a philosophy and answer, but homeless people are hungry. We can feed them. Let’s do it.

So what happens to you if the minimum wage goes to $15 an hour here in Seattle?

A 60 percent increase? All of my employees make between minimum wage and 17 bucks an hour, so if we take the bottom up to $15, everybody goes up with it. I can’t even fathom it. I just really can’t and I don’t know that I want to.

This is a beautiful life. I love the people that come in here. I love the good we do for the world and for the community, but man, make it that hard and of course, the biggest problem is that all the customers are going to say: Wait. I can’t pay that much.

So it changes the whole terrain, from us being what is really perceived as a value restaurant – our best-selling item is our fish dish, which is the most expensive, usually 30 to 32 bucks. So we’re not a cheap restaurant, but people come and they know they’re going to get a full plate of food. But what happens when we’ve got to adjust our pricing to somehow absorb this huge increase?

The hardest thing is that I can’t argue against improving life for people that are on the minimum wage. I’m not arguing against that. But I take care of the people that work for me. We do a lot to try to take care of the world. I don’t know how I can take on more.

But everybody else is going to have the same upward pressure on pricing that you will, so relatively speaking, you won’t be in any different position than you were before, no?

That sounds good. But in 2009, when the economy tanked, everybody got nervous. What we saw was fewer people in the door, less spending, less tipping, a more nervous approach to dining out. This is not sustenance, it’s entertainment. So they pulled back on it. So isn’t that what’s going to happen? Is everyone going to just say: Sure. I’ll just put into my budget another couple thousand dollars a year to go out to eat. Certainly the first reaction is going to be: Whoa!

It might be that, but then it might be that a lot of your clientele says: I can’t get a cheaper meal anywhere else, and this means enough to me that I’ll grin and bear it. After all, you can’t be on minimum wage as a diner here if an entrée costs 30 bucks.

I’d love for that to happen. But I’m interested in the people who contact me and say: why do we tip so much? They’re immediately trying to figure out how they can get around this. “You raise your prices – I’ll tip less.” They want to leave here having spent the same amount.

There are studies that say that an increased minimum wage doesn’t depress spending. If that’s true, then alright, let’s go. Let’s climb that ladder and go. But we all know we’re speculating when we’re raising it 60 percent. That’s a wildly different number than has ever happened before.

You’re scared.

I’m very scared, yeah.

The whole argument that I keep hearing is that it’s the big guys who can absorb this cost. They’re the ones who should be willing to pay this. I don’t hear any of them in this city right now arguing against this. They’re going to feed off of all the small ones that can’t sustain it. I don’t have enough money in the bank that we can go for three years while everybody adjusts to this. We’ll close and what comes in? Does Applebee’s come in, because they’re the big guys? I don’t know.

But being a guy who spends part of his life serving the homeless, I suspect you’re conflicted about this?

Absolutely. I live in a state that has the highest minimum wage in the country. I live in a city that weathered a challenging economic time better than many. And yet, here we are, ready to go to the mat and maybe blow it all up. It’s very troubling and there are all sides to it. Are we just responding in a kind of a kneejerk way? Or are we really thinking about what that’s going to mean?

Suppose you heard that there was going to be the equivalent of a $15 an hour minimum wage in some other country – a poorer country. What would have been your first reaction when you heard that?

It’s a great question. You put it in another country – that’s great. Yeah, that’s a good idea.

We’re going to try this out in Seattle, it seems, but we’re blind on it. Is there going to be any evaluation along the way, and perhaps a decision that says, let’s keep thinking about other ways to do this?

Well, what other ways are there? You either boost people’s income or you don’t. Or am I missing something?

Of course you’re missing something. What we’ve done for many years is we pay taxes, we have social services, we have human services. There are all kinds of ways that we buoy people up and now we’ve got health insurance. One of my employees who is very part time came into me today and said: I signed up. So I’m not going to pay anything. Awesome! My God! Health insurance costs me $500 a month per employee.

Yeah, but that gets paid for by the United States government borrowing money from its own citizens and people in other countries because we’re running a deficit. It’s not as if we’re taxing ourselves to subsidize the employee you spoke to today.

Well, there’s actually an argument that whom we’re taxing is the businesses because the businesses have to provide health insurance now. And you know, I’m not completely comfortable here arguing this side of the coin; I don’t live on that side of the coin really. But…

You mean the right wing, or market-driven side?

Yeah. But a great, smart person I was talking to said, well, we’ve tried trickledown economics since the ‘80s and this is about bottom up economics. I think that’s a really cool thought. This whole discussion is so interesting, but I don’t know that this restaurant will live through that.

So see if I’ve got this right: What’s upsetting you – you’re almost crying here when you’re talking to me – is that the fantasy that this establishment represents, and what you’re doing with your life, is somehow thrown out of kilter by the argument that you find yourself in the midst of, and maybe from your own personal point of view, on the wrong side of. Is that fair?

Oh my God, my life is thrown out of kilter by this! I’m a big boy. I should be able to handle my life getting thrown out of kilter a little. But I’m a little suspect of Seattle, which has said yes to so much. I’ve always loved living here. We live in a nice place here where we take care of each other; we have paid sick leave; we care about our environment. Saying yes to what seems like everything — and I agree with gay marriage, pot being legalized, all those things — it’s sort of become de rigueur. Is that a liberal issue? Yes, we say! On this one, are we really thinking it through? Six months ago, this was not on the playing field at all. Now, maybe it’s going to happen on July 1. Wow.

But part of what’s upsetting you is that you’re now thrust into a position that you never intended to be in – being on the other side, perhaps, of a liberal issue and being in conflict when that’s the last thing you want.

For me, being on the liberal side has meant that I’ve run a business in a way that takes care of the people that work for me. So yeah, I’m rankling at government stepping in. I set out to have a business that was totally responsible. And from the beginning, we said that the way we’re going to keep our employees is to make this a place where you can make a living. But all kinds of things go towards making a living. Part of it’s how many dollars you make; part of it’s got to do with things like health insurance or a 401K that builds a kind of reliability around your life. Part of it has to do with an even schedule.

And a law like this doesn’t acknowledge that. If you figure in total compensation here, what are you paying your people? Health care included, 401K included, and so forth?

A tricky part of the restaurant business is that you’ve got all these people who are making tips and they make minimum wage, so they’re already making $9.32 an hour and this will give them a $5.68 raise, but really they’re making 25-35 bucks an hour. We are trying to bring up people that are making literally minimum wage, not total compensation.

In the end, this is not about poor me, okay? I just feel like so far so much of the conversation has been about: These people deserve this. But are the people with money in their pockets ready to stand up and say, “I understand how I’m going to support that. I’m going to pay for it and I’m there”? And if everybody in Seattle says they’re going to do that, that’s great. I just am not sure that everybody’s figured out, oh, that’s me.

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