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posted by Fnord666 on Saturday January 13 2018, @04:58AM   Printer-friendly
from the warning-earworm-ahead dept.

You probably remember Subway's famous "five-dollar footlong" promotion as much for the obnoxiously catchy jingle as for the sandwiches themselves. (Sorry for getting that stuck in your head all day.)

The sandwich chain recently resurrected the promotion in a national advertising campaign promising foot-long subs for just $4.99—but the special deal won't fly at one Subway restaurant in Seattle, where owner David Jones posted a sign this week giving customers the bad news.

Sadly, the consequences of high minimum wages, excessive taxation, and mandate-happy public policy are not limited to the death of cheap sandwiches. The cost of doing business in Seattle is higher than the Space Needle, and the unintended consequences of those policies are piling up too.

The biggest cost driver, as Jones' sign mentions, is Seattle's highest-in-the-nation minimum wage. It went from $9.47 to $11 per hour in 2015, then to $13 per hour in 2016, with a further increase to $15 per hour planned.

The result? According to researchers at the University of Washington's School of Public Policy and Governance, the number of hours worked in low-wage jobs has declined by around 9 percent since the start of 2016 "while hourly wages in such jobs increased by around 3 percent." The net outcome: In 2016, the "higher" minimum wage actually lowered low-wage workers' earnings by an average of $125 a month.

And now those same employees will have to pay more for sandwiches from Subway—and everything else too.


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  • (Score: 1, Informative) by Anonymous Coward on Saturday January 13 2018, @09:09AM (1 child)

    by Anonymous Coward on Saturday January 13 2018, @09:09AM (#621738)

    First of all, those numbers were norms for the city, not specific to the Subway restaurant example. But anyway...

    Suppose the business decided that the total wages paid out to all employees would not change. (this is your expectation) Since the wage rate goes up, the amount of hours must go down. So far so good, but we have a problem: the required workload did not decrease.

    Ideally, the workers would become more productive. Well, that isn't too realistic. They will get less done, which means fewer sales and less revenue. An expense needs to be cut.

    You might not think that cutting the workforce makes sense, because after all this will decrease the ability to do work, but that argument applies to every other expense too! Some tough decisions need to be made. Most likely, a little bit of everything gets cut. This has to do with demand curves that the business has for the various things it needs. The franchise agreement with Subway and the lease agreement with the landlord may limit the options, but ignoring that: cut back a little bit on service, a little bit on food quality, a little bit on portion size, a little bit on building size, a little bit on advertising... until the restaurant is profitable. If there is no way to become profitable, then close the business.

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  • (Score: 0) by Anonymous Coward on Sunday January 14 2018, @02:40AM

    by Anonymous Coward on Sunday January 14 2018, @02:40AM (#622059)

    It's standard business owner histrionics. They're negotiating, that's all. Most of them will probably cut service waay back, more than it needs to be, as some form of *gasp* collective bargaining.