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FYI Guy

Seattle Times news librarian Gene Balk crunches the numbers

April 25, 2014 at 4:03 PM

Minimum wage: Is a firm with 500 employees a small business?

Business owner Dave Meinert exiting a meeting of the mayor's income-inequality panel (Bettina Hansen/The Seattle Times)

Business owner Dave Meinert leaving a meeting of the mayor’s panel on income-inequality (Bettina Hansen/The Seattle Times)

The income-inequality committee led by Seattle Mayor Ed Murray failed to submit a proposal for raising the city’s minimum-wage to $15 an hour. But as reported Thursday in The Seattle Times, the committee did agree on a number of points, including that the minimum-wage hike should be phased in gradually for small businesses — that is, those with 500 or fewer employees.

Five-hundred?  Is that really a small business?

Size standards established by the U.S. Small Business Administration vary from industry to industry, and for some, 500 employees is indeed the threshold for a small business.  But for many others, it is as low as 100 employees.

If Seattle does wind up using the 500-employee upper limit for a small business, how many establishments would be “small”?

A report commissioned by the city from the University of Washington Evans School of Public Affairs, using 2012 data from the state Employment Security Department, found that only 79 Seattle establishments employ more than 500 full-time workers.

As you can see on the chart below, that means only a small fraction of Seattle businesses — not even 1 percent — would have to pay workers a $15 minimum wage with no phase-in period.

However, that small number of businesses employs a big chunk of Seattle’s workforce. As the chart on the bottom illustrates, 30 percent of full-time employees in Seattle, or about 144,000 people, work for an establishment with 500 or more workers.

Scroll over these interactive graphics to see the underlying numbers:

[do action=”establishments-2″][/do]
[do action=”employee”][/do]
University of Washington, Evans School of Public Affairs

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UPDATE (May 5, 2014): Since this blog post was published, Mayor Ed Murray announced a minimum-wage plan that uses a different definition for large businesses than the Evans report had used.

While the Mayor’s plan still has a 500-employee cut-off, it includes companies that have 500 employees nationwide. The Evans report data only included companies that employ 500 workers within Seattle.

Because of this distinction, the number of companies that are considered large businesses under the Mayor’s plan will increase, as will the number of employees who work for them.  Currently, the data isn’t available to indicate how large that increase will be.

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Comments | More in Government Data, Reports | Topics: minimum wage

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