By Aaron Allen, The Seattle Medium
Seattle’s minimum wage will rise to $22.14 an hour on Jan. 1, 2027, continuing an annual inflation adjustment that has pushed the city’s wage floor well beyond the $15 benchmark established when Seattle adopted its landmark minimum wage law more than a decade ago.
For workers, the annual increases are intended to keep the minimum wage from losing purchasing power as prices rise. For small business owners, particularly those in labor-intensive industries such as restaurants and retail, each increase adds to payroll costs alongside rent, insurance, utilities, food and other expenses.
That tension has kept Seattle’s minimum wage at the center of an ongoing debate over how the city can protect workers’ earnings while small businesses manage the higher labor costs that come with those protections.
For Erika White, owner of Fat’s Chicken and Waffles in Seattle’s Central District, the latest 84-cent increase illustrates how a seemingly modest hourly adjustment can multiply across a small staff.
“That extra 70 to 80 cents, that’s huge, that makes a difference,” said White. “You got like 8 to 10 people on a small staff, and I know places paying 20 or 30 people. You have to make sure you have that cushion because you never know what’s going to happen.”
Seattle’s minimum wage ordinance was unanimously approved by the City Council in 2014 and took effect in April 2015. The law established a phased path toward a $15 minimum wage, with different schedules based on employer size, while providing for subsequent adjustments tied to inflation.
For years, employers with 500 or fewer workers could count employee tips or qualifying payments toward medical benefits toward minimum compensation requirements. That provision expired in 2025, when Seattle moved to a single minimum wage for employers of all sizes. Tips and medical-benefit contributions can no longer be counted toward the hourly minimum.
Combined with annual inflation adjustments, the end of that provision has changed the calculation for small businesses in industries such as restaurants, where payroll is one of several major operating expenses.
Steven Marchese, director of the Seattle Office of Labor Standards, or OLS, said the annual wage increase is not a discretionary decision made by city officials each year. The adjustment is required under the ordinance.
“When we set the new minimum wage, we do that in the context of an ordinance that provides very clearly how we do that. This is not a discretionary calculation; it’s a very simple mathematical calculation,” said Marchese. “We take the current year’s minimum wage, we multiply it by the inflation rate that the federal government sets for the Consumer Price Index for this region, and then we give a new rate for the next year. This will happen perpetually until somebody changes the law.”
The calculation uses the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W, for the Seattle-Tacoma-Bellevue area. For 2027, the formula increases Seattle’s minimum wage from $21.30 to $22.14 an hour.
Marchese said the underlying purpose of the minimum wage remains establishing a floor that allows workers to pay for basic necessities in one of the nation’s more expensive cities.
“The minimum wage itself is there to ensure that workers have the ability to afford their basic necessities and spend their money on things they need to run their lives and their families whether it’s food, rent, clothing, childcare, transportation,” said Marchese. “Seattle is not an inexpensive place to live, and we have to think about what’s the number needed to ensure people can at least make basic payments. It’s a baseline, and we set that baseline because our city passed an ordinance stating there needs to be an acceptable floor.”
For small business owners, however, the policy goal does not eliminate the practical question of how to absorb another increase in payroll costs.
White said maintaining fair compensation while keeping a small restaurant financially viable can require owners to make sacrifices themselves, particularly during slower periods.
“Maybe it means the owner doesn’t pay themselves so that they can keep the door open to pay their staff,” said White. “Where you have to trim some of that fat, you’re going to have to, but it also means the owner is going to have to step in a little bit more to balance it. When it’s busy, you staff up. When it’s not, then I’m going to just have to run a shift.”
Marchese acknowledged that minimum-wage increases affect businesses along with workers and consumers, particularly when employers are already managing other operating expenses.
“Increasing the minimum wage is going to increase the cost for some employers because workers they employ will have to be paid that higher number starting January 1st, and that affects everybody, workers, businesses, and consumers,” said Marchese. “Running a business involves a lot of costs: labor, rent, insurance, materials, food, utilities. Minimum wage has to be put in context with all those other costs, and businesses do have to adapt, which is hard.”
White said adaptation does not necessarily mean reducing what employees receive. At Fat’s, she has emphasized tip-pooling as one way to make sure employees working in the kitchen share in tips along with front-of-house workers.
“I’ve always wanted to make sure tips get pooled so the back of the house gets tipped along with their hourly wage,” said White. “You hope all restaurants have something that makes their kitchen and front-of-house feel protected and safe, so you don’t have high staff turnover. When workers feel taken care of, they show up and create great energy, which brings more people in.”
White also sees customers as part of the equation. She pointed to Pack the House, a 10-week campaign organized by The Seattle Medium in partnership with the Urban League of Metropolitan Seattle, Byrd Barr Place and Central Area Collaborative. Each week, the campaign highlights a Black-owned restaurant and encourages residents to support it by dining in or ordering directly from the business.
The campaign is designed to turn community awareness into sustained customer support, something White said can make a difference as restaurants manage rising operating costs.
“That’s why initiatives like ‘pack the house’ matter, more butts in seats means everybody can eat,” said White. “Word of mouth is crucial. Share the news, tell your friends, and come out to support. This is our community, and while the community has changed a lot, our brand of Southern, soulful cooking is still alive and well.”
For businesses trying to understand their obligations under the minimum wage law, OLS provides technical assistance, workplace information and outreach. Marchese said employers can contact the office with questions about implementing the requirements without the inquiry itself triggering an enforcement investigation.
“We have a technical assistance program directly with our staff. If a business owner or manager has a question about how to implement or isn’t sure what to do, they can call us up,” said Marchese. “We don’t use that information to launch an investigation; we provide an answer to the question… We also work closely with community organizations that do business outreach work, particularly with business owners of color, new arrivals, and small business owners who need information to help them navigate these requirements.”
While the city provides assistance, Seattle’s labor laws also carry financial consequences for employers that fail to pay workers what they are owed. Those consequences can include back wages, interest, liquidated damages and civil penalties.
“Our laws in Seattle when we get into enforcement are pretty strict. We provide for back wages, interest, liquidated damages up to twice the amount owed, and civil penalties,” said Marchese. “The purpose is to encourage business owners to do the right thing the first time. If a business tries to skirt the system, it’s going to end up costing significantly more than if they simply paid their workers properly from the start.”
Marchese said enforcement also is intended to prevent employers that underpay workers from gaining a competitive advantage over businesses that follow the law.
For White, however, preparing for another minimum-wage increase ultimately comes back to the daily calculations required to keep a small restaurant operating: how many people to schedule, when an owner needs to work a shift herself and whether enough customers come through the door to support the people working inside.
As Seattle approaches another increase in its wage floor, those calculations illustrate the continuing tension surrounding a policy designed to protect workers’ earnings while requiring businesses to absorb the higher labor costs that come with it.
