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'59er Diner owner expects to lose $40,000 this year due to state's increased minimum wage

The diner's owner says a tax credit would lower the minimum wage for servers but make up for it through tips. Small restaurants would also pay less out of pocket.

CHELAN COUNTY, Wash. —

With the minimum wage increase in Washington state, some small diners are finding that the larger wages for employees are eating into their profits. 

Joe Canatta, owner of the '59er Diner near Stevens Pass, said he expects to lose $40,000 this year with the increased minimum wage. He said he has already raised prices twice over the last three years to accommodate. 

"If it's $15 for a hamburger, on their way home, people are not gonna stop at the diner because it's just too expensive,” Canatta said.

As of 2020, the state’s minimum wage will increase to at least $13.50 an hour for some types of employers. 

Canatta supports a higher minimum wage, but he thinks there's a better way to do it.

He's in favor of something called a "tip credit."

Here's how it works: The state would lower the minimum wage for servers to a yet-to-be-determined rate. If tips don't bring their hourly wage to $15, the restaurant would pay the rest. That guarantees a wage of at least $15, but not all of it would come from the employer's pockets.

"I think restaurants are the third biggest employer in the country," said Canatta. "At least let's talk about this part of our business instead of just raising hamburger prices and kicking people out of the service process."

RELATED: Washington's minimum wage increasing in 2020

While most states employ some form of tip credit, there doesn't appear to be a political appetite in Washington.

Some Democratic lawmakers believe any decrease in the minimum wage would be a step backward in the fight for fair pay.

The new minimum wage in 2020 will be as follows:

  • Large employers in the city of Seattle: $16.39 per hour. 

  • Small employers in the city of Seattle: $15.75 per hour or $13.50 per hour if they pay at least $2.25 per hour toward the employee’s medical benefits or the employee earns at least $2.25 per hour in tips.

Washington voters passed Initiative 1433 in 2016, setting increases to the state’s minimum wage every year from 2017 to 2020 when it will reach $13.50 an hour.

Having a “tip credit” is not even up for discussion in Olympia at this point.

Without some sort of credit, Canatta sees all the waitresses in his diner named "Flo" being replaced by computer kiosks, the same ones seen at chain restaurants.

"Those computers on the tables at every Applebee's. They're not there for looks. They're there to replace people's jobs. I'd much rather walk in and greet Flo and give Flo a hug. You can't hug a computer,” Canatta said. 

RELATED: Restaurant owners struggle with Seattle's 'tough business environment'