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$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: 0, Troll) by zion-fueled on Friday November 01 2019, @01:28AM (5 children)
What is $15/hr in NYC even? Whatever little gain for the employees easily inflated away. In a business paying $7/hr the rent likely exceeded payroll.
It was a cost of living increase plain and simple. Both sides are acting like this was some monumental thing. Everything didn't go out of business and the working class is no richer.
The dollar is worth less there. Something similar played out in SF where they couldn't fill regular jobs at what sounded like reasonable wages for anywhere else.
(Score: 2) by JoeMerchant on Friday November 01 2019, @02:25PM (4 children)
Whatever gain the employees got was 100% disposable income. If they went from $10/hr to $15 - that's not just 50% increase in salary, that's all money they (presumably) didn't "need" just to get by day to day. If their expenses have inflated 10%, they still have a 40% net raise.
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(Score: 1) by zion-fueled on Tuesday November 05 2019, @02:48AM (3 children)
I think we've got different definitions of "disposable". They were already under, it just brought parity. Both people and companies can run at a deficit. That supposed 40% is going to keep shrinking as time goes on.
(Score: 2) by JoeMerchant on Tuesday November 05 2019, @02:19PM (2 children)
If they were not making ends meet, then they were in untenable situations - counting the days of "runway" until financial ruin like an entrepreneurial startup. That's fine for businesses hoping to create new markets, or otherwise shake up the status quo - the majority of people shouldn't be faced with that kind of employment as their only option, falling back on social services when they "don't make it out of the hole."
In other words, I think it's fine for an experimental corporation to try and fail financially - we as a country can watch the corporation die and not shed a tear, or a penny, at their loss. People are not corporations, and when they hit bottom, somebody has to pick them up. Better in so many ways to make sure they don't go there than to let businesses exploit them on the way down and then leave social services and Chapter 11 protection to pay for and clean up the mess.
In some cities, sure, $15 per hour still doesn't "cut it" - but, that depends a whole lot on what you consider an acceptable lifestyle. 4 roommates sharing a studio in NYC can get some pretty cheap rent that way...
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(Score: 1) by zion-fueled on Thursday November 07 2019, @03:57PM (1 child)
It shouldn't be this way but for many it is. Are 4 people living in a studio acceptable? Not really. Sleeping on the subway and showering at the planet fitness is also a lifestyle.
Most of the cities so proud of raising their minimum to $15/hr are where costs are the highest and it has the least effect. You touch on social services and that's part of the deal. Keeping people working for $7.50, the rest of that money does come from welfare and costs the government more. None of this was an altruistic endeavor, just cost shifting.
(Score: 2) by JoeMerchant on Thursday November 07 2019, @05:42PM
While I agree, I also firmly believe in the right of those 4 people to live that way if they choose.
Back in 1988, renting a room in the NYC YMCA was a $100/week proposition and that was about the lowest rent in town short of stacking up with roommates or going completely homeless. Full time minimum wage employment should cover more than that - back in 88, I think it was around $3.50 per hour, so 29 hours a week minimum wage work just for the cheapest imaginable rent, then there's food, etc...
I think it still has a huge effect, changing lifestyles from "well, I waited tables until I spent all my savings and had to go sponge off of ..." to "well, I waited tables until I got tired of hoping for an acting gig so I finally moved away" plus a few more "I couldn't even find a job waiting tables" because the town isn't full of meat-grinder jobs with daily turnover.
That's basically all that any tax or wage or social services laws are, and shifting the true cost of employees to the employers sounds like the most "free market" idea I've heard in a long time.
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