The law that has incrementally increased Seattle's minimum wage is having an impact on more than half of the city's child care businesses, according to a study out of the University of Washington.
Child care businesses have been affected by labor costs since the city's minimum wage increased to $13 per hour.
As a result, according to the study, many businesses have raised their prices or fees and/or reduced the number of staff. The biggest cost for child care is wages and benefits. Tuition is often the source of income for the businesses.
The city passed legislation in 2014 to increase the minimum wage for all workers from $9.47 an hour to $15 an hour by 2021. Currently, businesses employing 500 or fewer people must pay $12 an hour if they provide medical benefits and/or tips. They must pay $15 if they do not.
Businesses employing 501 or more people must not pay at least $16 per hour.
The study found that all child care businesses at the time the law passed employed 500 or fewer people. There were nearly 3,000 child car employees serving about 18,000 children.
As required wages continue to rise, many businesses reported they would have to have a number of strategies to adjust to cost increases without relying completely on the families they serve.
The study used payroll data from 200 child care businesses, examining factors including number of employees and wages. Researchers also surveyed 41 business directors and conducted interviews with more than a dozen of them.
“This study illustrates how singular policies can affect more than just payroll and can shape organizational structure and service delivery,” said lead author Jennifer Otten, an associate professor in the School of Public Health.
The study was one of two recently released.
The second focused on food prices at supermarkets. Researchers couldn't find significant evidence of price increases linked to the minimum wage law.
“This is really great news for low-wage earning Seattle shoppers,” said James Buszkiewicz, a doctoral candidate in the Department of Epidemiology and lead author on the study. “Typically null findings do not get that much attention, but in this case, if local food prices remain steady while earnings increase for low and minimum wage workers, then that could mean increased purchasing power for things like fresh fruit and vegetables for the consumers that need it most.”
