Seattle’s new minimum wage is among the highest in big cities and businesses are closing

Bebop Waffle Shop, a beloved café in West Seattle, closed its doors just days after Seattle’s new minimum wage of $20.76 an hour went into effect Wednesday.

Bebop is one of several businesses in Seattle facing closure or financial difficulties as the city implements one of the highest wage laws in the country. The new policy eliminates tiered wages and tip credits, creating uniform wage requirements for all employers.

Why is it important

For tipped employees, the flat rate eliminates previous credits that allowed small businesses to count tips toward total compensation. Business owners argue that this approach places an unsustainable burden on their operations, forcing many to make difficult decisions about raising prices, reducing staff or closing altogether.

The new law, aimed at addressing income inequality, has sparked debate about how cities can balance fair wages for workers with the financial realities of running small businesses.

What to know

Under Seattle’s previous wage system, smaller companies could pay as little as $17.25 an hour if tips or medical benefits brought total compensation to $20.28. The new law establishes a fixed minimum wage of $20.76 for all employers, regardless of size or benefits offered.

For small business owners like Corina Luckenbach, owner of Bebop Waffle Shop, the increased costs were insurmountable. In addition to the financial burden of the wage increase, he cited inflation-driven food costs and decreased foot traffic due to remote work trends.

“This is no longer going to make financial sense. Because, for me alone, the increase would cost me $32,000 more a year,” Luckenbach told Seattle television station KCPQ.

The Washington Hospitality Association predicts restaurant closures in Seattle will increase by 5 to 8 percent this year due to higher labor costs.

“It’s just not sustainable,” said Anthony Anton, president and CEO of the Washington Hospitality Association, which represents restaurants across the state. The Seattle Times. news week contacted the association by email for further comment.

Others, however, expect the effect on businesses to be more modest, noting that the exact amount of the wage increase has been scheduled since the fall.

But worker advocates argue the increase is essential for economic justice. Katie Wilson of the Seattle Transit Riders Union said: “Workers and working families have really been struggling with rising costs of living. Getting a big pay increase will really help people as we move toward 2025 to reach the end of the month”, according to the Times.

Where the minimum wage is highest in the US

With the new measure in place, Seattle is now the top city with the highest minimum wage in the country, $20.76 an hour. However, it is not the highest within the state. Burien tops the list with a minimum wage of $21.16 an hour. Second highest is Tukwila at $21.10, followed by Renton and unincorporated King County, both at $20.29.

What people say

Isaac Seliger, grant writer, on LinkedIn: “It seems like a city can’t have huge increases in the minimum wage and the kind of extravagant restaurants that make the city worth living in. Like many other big cities, Seattle had decided to commit municipal suicide.”

Anthony Anton told Seattle radio station KNWN: “I think we will find an exciting economic environment in 2025. We will see many attempts at change for new ideas and new models.”

What happens next?

Anton said local restaurants must adapt their business models to remain competitive in the coming years.

Innovations like self-service kiosks and digital menus are already becoming standard. Additionally, more transformative changes are emerging, such as hybrid restaurant models that combine fine dining with fast-casual experiences.