Bellingham Initiative 1, sponsored by a political action committee ‘Community First Bellingham’, labor groups and local activists appears to have passed with 58% of the vote.

In a statement in support of the measure, ‘Community First Bellingham’ said “Our initiative lifts the minimum wage in Bellingham by a dollar in 2024 and by another dollar in 2025.”

Unfortunately, the real-life impact for workers in Bellingham will be different. While in the short term, workers will see an increase in wages, long term costs will increase negating the increase in minimum wage.

For many service industries, such as restaurants, retail and hospitality services, profit margins are as low as 3%. Minimum wage mandates wipe out that profit and can put a business into negative fiscal territory. Business owners are forced to cut operational costs and use more automation, cutting the need for employees.

In other words, business owners are forced to lay off workers or reduce work hours. Instead of a salary bump, many workers instead find their work hours cut or their jobs eliminated completely. For some employees, if they fall below a minimum hour threshold required for benefits, they lose benefits too.

For unionized workers, the problem is more acute. Labor contracts that prevent staffing changes leave companies with few options; to either increase prices or go out of business. An increase in prices negates any benefit to the employee as the new higher wage the employee is receiving no longer buys as much as it used to.

High mandated wages often make a business non-viable in a given market region. When a business closes employee wages fall to zero.

In a recent Salish Current article, Bellingham’s Jack’s BBQ general manager said the wage increase was obviously not a bad thing for employees but the increase in wage costs is likely to show up in menu price increases.

Already, restaurants have increased prices due to inflation, wholesale food price increases and forever increasing Washington State taxes, it is not uncommon to find ‘$20 Cheeseburgers’ and ‘$26 Fish and Chips’ on the menu. Just a few years ago they cost 50% less.

Diners choosing between a restaurant inside the Bellingham City limits, where prices will be higher, and a restaurant outside the city, will be weighing the meal cost in their decision on where to dine. The passage of Initiative 1, unfortunately, will place Bellingham at a competitive disadvantage to other local jurisdictions that did not increase the minimum wage.