Seattle’s Grocery Crisis Was Created by City Policy. The Fix Isn’t Government-Run Stores

Government policies and actions (or inactions) are placing burdens on Seattle’s big and small businesses. These struggling employers face:

• More taxes and regulations which neighboring cities and states do not face
• Public safety concerns which keep customers from visiting their neighborhoods
• A continuing retail theft problem with a revolving door justice system which immediately releases offenders to steal again

Thus far the progressives’ response has not been to fix the policies causing the problems, but instead, they want to allow government to own and operate the businesses that are closing.

A recent survey of the city’s merchants found that just 12% were making enough revenue to cover expenses. Additionally, 67% say they are under more financial stress today than they were during the covid lockdown in 2020 and 2021, when government assistance payments were available.

The survey of 136 businesses was conducted last November and December by Intentionalist, a local small business support organization.

The Seattle Times article on the survey’s findings focused the blame for the financial struggles on a short term 10% tariff imposed by President Donald Trump  which impacted just one business in the survey. Yet the paper failed to explain the far greater impact of government-mandated wage limits, taxes, and regulations have on the increasing cost of doing business. Evidently the Times believes that a one-time tariff fee has more of an impact on the cost of retail products than the permanent $0.50+ a gallon carbon tax (increased transportation costs for all goods), higher B&O taxes, or government-imposed wage requirement. Washington has the highest minimum wage for any state in the country at $17.13. Seattle’s is more than $4.00 higher at $21.30.

The newspaper also failed to mention the impact that homelessness, public drugs use, and crime (retail and other), are having in keeping customers away while increasing the security and insurance costs of businesses. Seattle’s downtown retail core continues to struggle due to unsafe conditions from lax drug laws and a still severely understaffed police department.

Washington State businesses lose $3 billion annually from retail theft and is consistently ranked as the state most impacted by the crime in the country. While many communities around the state, including Bellevue and Issaquah, have passed tougher laws to combat the problem, there is little belief that such measures will be passed in Seattle with soft-on-crime advocates Katie Wilson as mayor and Erika Evans as city attorney.

While many Seattle retailers are struggling, closure of restaurants and grocery stores are obtaining the most attention.

Restaurants are normally one of the first businesses impacted by economic insecurity. It seems every week we are reading about another restaurant that simply cannot survive the number of obstacles progressives keep imposing.

Government imposed wage mandates (i.e. higher minimum wage) have severely impacted the local restaurant community. Anthony Anton, president and CEO of the Washington Hospitality Association said that employee costs are normally around 30% of overhead. Yet in Seattle it is over 40%, helping to make the city the second most expensive place to operate a restaurant (only San Francisco is higher).

To make matters even worse, Seattle’s PayUp ordinance increased drivers fee for gig drivers, giving the city the highest delivery charges in the country and diminishing a major revenue stream for restaurants.

Wage mandates and delivery charges are also impacting grocery stores, especially those near the city’s borders where customers can easily shop at non-Seattle stores with lower overhead costs.

Retail theft is also an important factor in why retail stores, including grocery stores, are going out of business. When announcing the closure of the Lake City Way Fred Meyer (a few blocks from the city’s northern border), a spokesperson stated that the store had already increased its security budget more than 50% due to high retail theft, mostly from those living in the nearby encampments the city keeps delaying to remove.

The closure of the Lake City Fred Meyer store elevated discussions about “grocery deserts,” neighborhoods where there is limited access to fresh foods. Seattle officials successfully passed a measure to allow other stores to easily move into recently vacated locations. while others have proposed a more radical idea – government owned grocery stores.

Representative Darya Farivar, (D-Seattle) filed a bill (HB-2313) which would allow governments to own and/or operate grocery stores. It also allows the cities to use eminent domain to take any land or facility it chooses to use for the store.

A government owned grocery store raises many obvious concerns.

• While only a couple of very small towns (population under 1,000) have essentially opened co-ops, Seattle would be the first city in the country to own stores.
• Last summer a heavily subsidized grocery store in Kansas City closed after the city wasted $18 million attempting to prop it up.
• Government grocery stores in other countries often end up with empty shelves. And, without competition, there is no incentive to innovate to bring lower prices and better service to the customer.
• Grocery chains will be reluctant to enter the market or make large investments in their current locations if they know they must compete against the deep pockets of big government.
• Undoubtably the store will be staffed by government employee union members, a group not known for prioritizing efficiency and customer service.

Instead of promoting solutions which will further complicate the grocery industry, government officials should look at their own actions which are causing these stores to close. If having the top minimum wage in the country is causing stores to close, then reduce wage requirements. If public safety and homelessness policies are imposing exorbitant security and insurance costs due to a retail theft epidemic, then change the public safety policy to one where customers (and employees) feel safe going to the store.