In case anyone is still laboring under the delusion that forcing employers to pay an artificially high minimum wage has no negative impacts, passage of Initiative 1433 is already providing a reality check.

Last month I wrote about three child care centers in Spokane who were forced to dramatically increase their rates to cover the higher labor costs.

More day care providers are following suit.  Children’s Montessori Center in Spokane Valley is increasing rates by $140 to $150 per month.  Parkview Early Learning Center in Spokane increased rates by 15%.

One business owner wisely noted that the economic impact of I-1433 “is probably more complicated than the average voter gave it credit for.”

What’s happening with skyrocketing day care costs is a good example.

Children’s Montessori Center and Parkview Early Learning Center both accept state subsidies for providing care to low-income families.  The state’s reimbursement rates don’t cover the cost of paying workers $11 per hour.  Children’s Montessori Center says 60% of their clients receive state subsidies for child-care.  So they have been forced to drastically raise the rates for their families who do not receive subsidies to cover the costs; in Montessori’s case by 30%.

Of course, it isn’t just child-care providers and their customers who are feeling the squeeze.

Nonprofits are struggling also.  Goodwill Industries of the Inland Northwest provides job training to help workers learn skills that increase their chance of getting a job.  Goodwill pays them minimum wage during training, which usually lasts 3-6 months.  Thanks to the new $11 minimum wage, Goodwill says it will provide job training services to 19% fewer people this year.

In the for-profit world, things aren’t much better.

7-11 stores in Aberdeen have added a 25-cent fee on every sale to cover the higher labor costs.  Martin Bruni Liquor in Ocean Shores and Montesano increased prices to offset the new costs.  Gene’s Stop N Go in Montesano already is closed for the winter because his low-profit margin business is struggling; owner Ray Meyers says he’s not sure what will happen to his business when he reopens in the spring and is forced to pay workers $11 and provide paid sick leave.  Meyers says there is only so much you can charge for hamburgers, pop and ice cream.

The owner of David’s Pizza in Spokane says the wage hike and the law’s new paid sick leave mandate will add thousands of dollars to his monthly operating expenses.  Given the average restaurant’s profit margin is a thin 3-7%, that will likely leave little for restaurant owners to do but pass their higher costs onto consumers.  Which is exactly what David’s Pizza owner Mark Starr says he will do:

“It is my sincere hope that the public understands that with this [passage of I-1433], prices will be going up.”

Of course, not every business will offset the higher labor costs by simply increasing prices. Some will take the higher costs out on the workers themselves. The manager of Jimmy John's in Longview told her workers to prepare for fewer hours and encouraged them to look for second jobs.