Small businesses brace for higher minimum wage in King County

New wage for unincorporated areas went into effect Jan. 1, but the rules are still being determined.

The three owners of Fall City’s Aroma Coffee Co. — Sara Cox, Emily Ridout and Kelsey Wilson — are wholly committed to their business and the community it serves.

But, as of Jan. 1, you won’t find them behind the counter, taking orders or making lattes.

Aroma resides in unincorporated King County, which has new minimum wage requirements this year under an ordinance the King County Council passed in May 2024. In order to pay a minimum wage Aroma can afford, its staff has to be 15 people or less, which doesn’t include the owners.

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“The three of us can’t work for our own business,” Cox said. “We need all 15 bodies to be on payroll, so the three of us don’t get to earn money from our own business.”

King County now has the fourth highest minimum wage in the country — behind other Washington cities Tukwila, Renton and Seattle — due to the ordinance introduced by Councilmember Girmay Zahilay in 2023. Zahilay pursued the higher minimum wage in unincorporated King County after hearing from UFCW 3000, a labor union that represents QFC grocery workers, with concerns of how pay varied across locations that were in neighboring towns.

All but two King County Councilmembers voted in favor of the ordinance at the council’s May 14 meeting. That day, councilmembers also discussed and voted on several amendments to the ordinance.

Councilmember Sarah Perry, who represents the Snoqualmie Valley and the rest of King County District 3, voted in favor of the ordinance.

“It was clear it was going to pass,” she said. “What we do as a council 99% of the time is to vote alongside the majority of the council, and the best we can do is to bring in amendments and in some way make it better, knowing it’s going to pass.”

How minimum wage works in unincorporated King County

The ordinance has increased minimum wage in unincorporated King County to $20.29 an hour, but there are exceptions based on staff and revenue size. Those exceptions will phase out in the coming years, until 2031, when all businesses, regardless of size and revenue, are paying the same minimum wage.

Businesses with 16 to 499 employees will pay $18.29 an hour this year, as will businesses with 15 or fewer employees that have a gross revenue of $2 million or more a year. (Gross revenue, in this ordinance, refers to global revenue.) This is because businesses of that size get a $2 deduction on minimum wage this year. Their deduction will lessen by $1 a year until 2027, when they have no deduction.

Businesses with 15 or fewer employees that have a gross revenue of less than $2 million a year will pay $17.29 an hour this year. These businesses (the smallest of the bunch) get a $3 deduction on minimum wage this year, but their deduction will lessen by $0.50 per year — in 2026, their deduction will be $2.50 less than minimum wage, and so on.

These deductions are in dollar amounts because the deductions stay consistent, even when minimum wage doesn’t. Each year, minimum wage will be adjusted in line with the Consumer Price Index, so it keeps up with inflation. All new deductions and the new minimum wage will go into effect on Jan. 1 of each year.

Number of employees is determined by the average number of employees a business has had in the last 12 months.

King County will implement the ordinance, but it will not directly be enforcing it. If an employer does not comply with the new minimum wage, employees are able to seek damages through a lawsuit filed in civil court.

A customer places an order at Fall City’s Aroma Coffee Co. Jan. 14, 2025. (Grace Gorenflo/Valley Record)

A customer places an order at Fall City’s Aroma Coffee Co. Jan. 14, 2025. (Grace Gorenflo/Valley Record)

New ordinance has few exceptions

Before this year, Aroma Coffee Co. paid its employees the state minimum wage ($16.28 in 2024) as a base rate, with pay bumps based on seniority. Aroma employees make an extra $7 to $10 an hour from tips, Cox said, so they already made more than $20.29 per hour.

In fact, Cox says Aroma employees are at risk of making less money under the new ordinance because the business might have to reduce its operating hours to afford the wage increase.

This is also a risk at Cascadia Pizza Co.’s Maple Valley location. Many employees from this business spoke at the May 14 council meeting. Cascadia staff spoke in favor of an amendment introduced by Councilmember Reagan Dunn that would have changed the ordinance to include total compensation. Total compensation, which is used in Seattle, would have meant that a worker’s tips would be included in their minimum wage, rather than being additional pay.

Lack of total compensation is particularly an issue for the food service industry, where the costs of doing business are up and tips help staff make a livable wage, restaurant owners say.

Councilmember Rod Dembowski spoke against the total compensation amendment, saying it was a “slippery slope” because it included healthcare benefits as well as tips.

“I’m not sure what line you would draw to not include vacation benefits, paid parental leave benefits … to the point where you basically evaporate the basis of the law, the minimum wage,” he said.

The total compensation amendment failed, with only Dunn and one other councilmember voting in favor.

‘This could potentially shut us down’

By December, Aroma reduced its staff about 40% to meet the lowest minimum wage threshold. They are no longer hiring part-time staff, such as high school and college students, because they need their 15 people to work as many hours as possible.

This month, the small business raised wages 8% across the board. Cox expects they will have to raise wages again later this year, when they inevitably have to hire more employees, pushing them into a new pay threshold.

Aroma, a small and relatively new business, doesn’t generate a profit. The owners say they are just trying to keep the lights on. Cox said they’re considering several options to help balance the budget, like reducing scale of product, reducing hours or renting out the shop for private events.

Aroma will also likely have to raise prices, but that can only take them so far, Cox said.

“We’re a commodity, so we don’t have an inelastic demand,” she said. “At some point, you’re going to price somebody out of a cup of coffee.”

Across the Valley, at South Fork restaurant, co-owner Johnny Blair is less concerned about raising wages. He agrees that his employees should be able to afford living where they work, and the restaurant already pays more than minimum wage.

But he isn’t convinced the ordinance will do much to close King County’s affordability gap. Higher minimum wages, he said, will cause the price of goods to go up, in turn affecting customers.

“If we’re gonna have the highest restaurant wages in the country, guess what? We’re gonna have the most expensive restaurants in the country,” he said. “I don’t see $25 burgers, $28 burgers, out of the realm of possibility next coming year.”

Both Cox and Blair agree that tackling affordability takes more than simply raising the minimum wage. Cox, who has a background in business and economics, said she doesn’t feel the ordinance was well-thought-out.

“Just to raise the minimum wage as a solution feels like such a scapegoat of a political move,” Cox said. “When you look at the economic impact of that over time, you’re just creating inflation more, so you’re not solving the problem.”

Opportunities for public input

On top of tight finances, Cox said one of Aroma’s biggest concerns has been the lack of communication from county officials. Cox said she and her co-owners didn’t hear much about the ordinance before it was passed, and they haven’t heard much since. They’re anxious to learn the ins and outs of the ordinance, such as whether employers have to be included in the employee count — something the county is still deciding on.

“This massive legislation that’s going to affect small businesses went completely under the radar,” Cox said. “We haven’t received anything in the mail. We haven’t gotten an email notice about it. How are we supposed to be liable to enforce something that hasn’t been communicated?”

The ordinance is being implemented by King County’s Department of Local Services, which is charged with providing government services to unincorporated King County. Local Services is still working on the administrative rules for the ordinance and is collecting community feedback on its proposed rules, which cover how to calculate the number of employees a business has, employer record keeping and more. The proposed rules can be found at publicinput.com/kcwage.

Local Services also held a public Zoom meeting Jan. 9 that was advertised as a listening session. Much of the meeting time was spent on explaining the ordinance to the 10 or so business owners who attended, during which comments popped up in Zoom’s chat feature like “small businesses can’t afford it” and “this will cause many restaurants to close.”

As chair of the council’s Local Services and Land Use Committee, Councilmember Perry said she wants to stay “intimately connected” to how the ordinance plays out.

Perry is hosting a roundtable on Feb. 20 to collect input from farmers in unincorporated King County, and said she is hoping to also organize a discussion with local small businesses, like Aroma Coffee Co., to see how she can help.

“I’m happy to do whatever I can to help the businesses,” she said. “If the businesses find ways that this could work better for them, I will go to bat for them.”

Talk to us

If you are a business owner in the Snoqualmie Valley and want to share how the unincorporated King County minimum wage ordinance has impacted your business, email reporter Grace Gorenflo at grace.gorenflo@valleyrecord.com.

A barista makes espresso at Fall City’s Aroma Coffee Co. Jan. 14, 2025. (Grace Gorenflo/Valley Record)

A barista makes espresso at Fall City’s Aroma Coffee Co. Jan. 14, 2025. (Grace Gorenflo/Valley Record)