SoylentNews is people
SoylentNews
$15 minimum wage didn't decimate the local economy, after all
Critics would have you believe that upping the minimum wage in restaurants will lead to massive layoffs and closures. But since raising the minimum wage to $15 per hour nearly a year ago, the restaurant industry in New York City has thrived.
I'm a professor with a focus on labor and employment law. My research on the minimum wage Critics would have you believe that upping the minimum wage in restaurants will lead to massive layoffs and closures. But since raising the minimum wage to $15 per hour nearly a year ago, the restaurant industry in New York City has thrived.
I'm a professor with a focus on labor and employment law. My research on the minimum wage suggests a few reasons why this might be true.
The article goes on to explain why the rise in the minimum wage has not been as bad as had been predicted; in fact, it claims the both restaurant revenue and employment are up.
However, these claims are contradicted by 2 Anonymous Coward submissions, which could be from the same AC but we cannot tell, of the same story from the New York Post:
As predicted, the $15 wage is killing jobs all across the city
https://nypost.com/2019/09/30/as-predicted-the-15-wage-is-killing-jobs-all-across-the-city/
Just as predicted, the $15 minimum wage is killing vulnerable city small businesses, with the low-margin restaurant industry one of the hardest-hit as it also faces a separate mandatory wage hike for tipped staffers.
In Sunday's Post, Jennifer Gould Keil reported on the death of Gabriela's Restaurant and Tequila Bar — closing after 25 years. It struggled all year to find a way out, gradually laying off most non-tipped employees, including some chefs, only to find that quality suffered and customers fled. Owners Liz and Nat Milner finally hung it up.
Other eateries share the pain. In an August survey of its members, the NYC Hospitality Alliance found more than three-quarters have had to cut employee hours, more than a third eliminated jobs last year and half plan to cut staff this year.
"It's death by a thousand cuts," the Hospitality Alliance's Andrew Rigie told The Post, since "there's only so many times you can increase the price of a burger and a bowl of pasta."
Finally, there is another AC submission which claims that the minimum wage has had an effect - but that it is only part of the story. It is important to consider the increase in rents in NY City, and that there might be a shift in the entire market.
Famous Restaurant where Alexandria Ocasio-Cortez Bartended Closes Due to Rising Minimum Wage
[...] And yet, even this high level of sales wasn't enough to inoculate the business from the rising cost of rent and wages in New York. Coffee Shop co-owner and president Charlies Milite told Forbes that rent had become "unusually high," accounting for close to 27% of the restaurant's gross revenues. Add in the scheduled $2-per-hour minimum wage hike set to take place on December 31—an increase that, across Coffee Shop's 150 employees and multiple dayparts of service, would have added $46,000 to the monthly payroll—made it impossible to break even by cutting costs elsewhere.
"It's a wakeup call for our industry in general," Milite said. "When a restaurant is one of the top-ranked restaurants in America, sales-wise, and can no longer afford to operate, you have to look at that and say there's a shifting paradigm in the business."
Original Submission #1 Original Submission #2 Original Submission #3 Original Submission #4
(Score: 3, Touché) by Appalbarry on Thursday October 31 2019, @11:51PM (3 children)
So, as I understand it, if I walk into the bank with a business plan that is predicated on paying rent that is 30% below the commercial market, and budgets electricity and gas at 50% of what the local utility charges, I'd be shown the door.
But if my 3% profit margin is calculated based on paying the absolute minimum wage to my employees, with no anticipation that the pay scale will ever increase, I'm obviously a very smart business owner.
(3% is considered a good margin in the restaurant business.)
(Score: 0) by Anonymous Coward on Friday November 01 2019, @12:31AM (2 children)
I think most people have 0 clue how much a restaurant costs to run. Most of the 'owners' do not own jack shit. There is some company in another state that owns the franchise. Some one else owns the building. They are probably renting the equipment. They are told which vendors they can and can not use.
The 'split' usually works about like this. 60-70% of your gross goes to the franchise owner. The rest (including taxes on that 60%), pay for your staff, vendors, etc you pay out of your remainder. Most owners are lucky to clear 100k a year. Many much much much less.
If you want to fix 15 an hour you have to start with fixing that. Take mcdonalds. They went from up 80%s of corp ownership to low % ownership. They converted them all to 'mom and pop'.
Where I live 15 an hour would put most of these places out of business. They are run that thin. One good recession and they will be gone. Everyone there will be out of a job. Take that same business and put it in a higher traffic area like new york and they *might* be able to survive 15 an hour.
Also many restaurants do not pay even min wage. Look up the tip wage. That is what they 'pay'. Oh they are supposed to make up the difference. But speak up on that? Yeah suddenly you are a slack ass, your hours are cut, or a reason to fire you within a month.
(Score: 2) by JoeMerchant on Friday November 01 2019, @02:22PM
Where I lived in the late 70s / early 80s, there were 8 fast food restaurants in a shopping center with enough market to support about 6. I think Burger King was the only one that hadn't cycled out of business and been replaced after 10 years. Every year or so, one of the two empty restaurants would be refurbished and reopened with a trendy new something that appealed. The local market was actually quite fickle and prone to flock to the "new thing" whatever it was, starving the existing restaurants for weeks, months if the new thing was any good. Of course with this kind of pattern, the "new thing" is almost always a raving success for the first year, or two, or four, until it gets tanked by the next "new thing" that comes along.
🌻🌻 [google.com]
(Score: 0) by Anonymous Coward on Friday November 01 2019, @02:43PM
Where you live... what's it cost to rent an apartment? What are food costs like? In short, what's it cost to exist there, and does your minimum wage make that a possibility? (And I'm not necessarily talking living alone, either, just what is it like to live there on what wages?) That's why states and municipalities are welcome to raise the minimum wage, to account for differences of location.
And if you'd read TFA's I think you would have found that in regards to this law the minimum for tip wage under the new statutes was a little over $10 an hour.