Mark Harmsworth says it’s time to ease the burden and roll back B&O hikes targeting small businesses and index minimum wages more modestly to true affordability metrics
Mark Harmsworth
Washington Policy Center
Recent data from Wendy’s restaurant paints a stark picture of economic strain gripping America’s lower wage earners. Since March 2025, households earning under $75,000 visiting Wendy’s restaurants, have plummeted high single-digit to low double-digit percentages year-over-year, with young adults aged 18-34 (Wendy’s core demographic) leading the exodus.
Wendy’s CFO, Ken Cook, noted at a recent conference: “Wendy’s continues to see consumer pressure, particularly at the lower end of the income spectrum.”
The iconic Dave’s Single burger, once a budget staple, has seen sales erode as inflation-weary families pivot to cheaper home-cooked meals. It’s a symptom of a mixed recovery pattern since the pandemic. The affluent dine out unabated, while the lower income families are watching every dollar.
In Washington state, this trend hits hardest, amplified by aggressive minimum wage mandates and escalating business taxes that force corporations to hike prices. The state’s 2025 minimum wage stands at $16.66 per hour, the nation’s highest, up from $16.28 in 2024, tied annually to the Consumer Price Index.
Proponents tout minimum wages as a lifeline for low-wage workers, but evidence reveals the opposite. Minimum wage hikes erode the very purchasing power they aim to protect. A University of Washington study on Seattle’s phased $15 minimum wage found that while nominal wages rose, employers offset costs by slashing hours, leaving low-wage workers with scant net gains.
Nationally, a Purdue University analysis from 2015 estimated that elevating fast-food wages to $15 would trigger a 4.3% menu price surge, directly squeezing affordability for the less wealthy. History, unfortunately, has proved that a 4.3% increase was grossly underestimated.
California’s recent $20 fast-food minimum wage implemented in April 2024, it spurred a 6.6% short-run price increase at chains like Wendy’s and McDonald’s, per UC Berkeley economists, yet even they acknowledge the pass-through effect hits low-income diners hardest.
Seattle’s dining costs are 17% above the national average in major cities, largely attributable to wage mandates compressing razor-thin profit margins and compelling price adjustments.
Compounding this, Washington’s Business & Occupation (B&O) tax, levied on gross receipts, not profits, burdens restaurants further. Starting October 2025, retailing B&O rates climb to 0.5% (from 0.471%), while services over $5 million in revenue hit 2.1% (up from 1.75%).
Food and hospitality lobbies warn this will cascade into higher menu prices, as seen in a 2025 push against a three-year supplier surcharge that threatened to inflate grocery and restaurant tabs statewide.
Small eateries, already reeling from post-pandemic supply shocks, pass these taxes downstream, exacerbating the inflation gap between food away from home (FAFH) and at home (FAH), now a mere “couple of points” but still punitive for the those struggling to make ends meet.
The Washington Policy Center has long argued that such policies trap consumers in a cycle of higher costs without real relief. Despite 4.53% wage growth for lower-wage jobs from 2020-2025, per the Economic Policy Institute, living expenses outpace gains.
Wendy’s, by pricing more conservatively than rivals, positions for a rebound, but only if policymakers reverse direction.
It’s time to ease the burden: Roll back B&O hikes targeting small businesses and index minimum wages more modestly to true affordability metrics. Otherwise, consumers won’t just ditch Dave’s Single, they’ll be priced out of the American Dream altogether.
Mark Harmsworth is the director of the Small Business Center at the Washington Policy Center.
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Last Century, when I was in high school, I worked at McDonalds like many of my classmates. One of the biggest jobs to be filled were the young ladies who took and filled orders and ran the cash registers. Our store had six a cross the front on weekends due to our proximity to the local shopping mall.
These days more and more fast food franchises are switching over to kiosks where customers tell the computer what they want and pay with a debit or credit card. Someone behind the counter fills a bag and calls a number. Some places are increasingly automating their kitchens as well, so that some day the only human needed will be to shovel more supplies into the burger machine.
High school students need jobs, not “a living wage”. Instead of learning a skill that might actually lead to a good paying job, we get poor examples like Hillsboro High School that just sponsored a student walkout to protest ICE. This in a State with some of the highest spending per student, with the shortest school year in the Country, and at the very bottom of student performance skills.
So it goes.