Why the service sector is terrified of minimum wage hikes

The recent announcement of an increase in minimum wages in Seattle to $15 an hour over an average of five years, depending on the size of the business, is encouraging news. However, corporate interests are already planning to issue a legal challenge and prevent wage increases in other cities around the globe.

The reason for this abrupt backlash by corporations in the service sector is simple: they cannot export service sector jobs. A company cannot export a stocker, associate, or a cashier.

Customers expect and desire the interaction with front-line workers. Companies still need to serve and profit from the large markets of our urban areas.

Employers can only replace service positions through automation, and automation is costly, problematic, prone to consumer backlash, and requires even higher paid technicians to service them.

Minimum wage employers are terrified of hikes because they know it will cut their profit margins and drive up labour costs.

While I agree with the right on these measures impacting small business, there is no excuse for the majority of corporate service sector employers that squeeze every last nickel from their wage slaves.

Seattle is only the beginning of wage hikes to come, and I look forward to the day when everyone can be paid a living wage. However, inflation will probably catch up by the time that happens, and $9.35 in 2013 will equal $15 in 2018. Cynical but true.


 Alexander James David Wray

2A planning