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posted by janrinok on Thursday October 31 2019, @07:45PM   Printer-friendly
from the toss-of-the-coin dept.

$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

https://www.forbes.com/sites/maggiemcgrath/2018/10/12/remembering-the-coffee-shop-a-new-york-institution-is-closing-after-28-years/#6608736d10a0

[...] 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 #1Original Submission #2Original Submission #3Original Submission #4

 
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  • (Score: 2) by JoeMerchant on Friday November 01 2019, @01:21PM (13 children)

    by JoeMerchant (3937) on Friday November 01 2019, @01:21PM (#914548)

    We didn't need those jobs anyway.

    Actually, yes, that's the point. We don't need tannery apprentices with ~5 year life expectancy, we don't need sharecroppers who get deeper in debt to the company store each year just for rent and food, and we don't need pizza delivery drivers who net-lose money if they don't consistently break traffic laws while making their deliveries.

    If you don't need the money to live, get a hobby. If that hobby is taking food orders and delivering plates of food to strangers, more power to you, maybe if there are enough people like that then there can be business models built on them.

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  • (Score: 1) by khallow on Saturday November 02 2019, @12:46AM (12 children)

    by khallow (3766) Subscriber Badge on Saturday November 02 2019, @12:46AM (#914886) Journal

    we don't need sharecroppers who get deeper in debt to the company store each year just for rent and food

    Obvious rebuttal: You nostalgically lauded [soylentnews.org] your 100 productive acres (from last century) which implicitly require sharecroppers. We don't need sharecroppers, but your business model does.

    If you don't need the money to live, get a hobby. If that hobby is taking food orders and delivering plates of food to strangers, more power to you, maybe if there are enough people like that then there can be business models built on them.

    And if you do need that money to live, then well, we didn't need that hobby anyway - by definition!

    • (Score: 2) by JoeMerchant on Saturday November 02 2019, @02:38AM (11 children)

      by JoeMerchant (3937) on Saturday November 02 2019, @02:38AM (#914920)

      for having 100 productive acres on which to provide for your family.

      I get it now, even though you can troll through the archives for "supporting evidence" for your point, you just don't have basic reading comprehension. Nowhere in that statement of 100 productive acres on which to provide for your family was it intended, implied, or stated that sharecroppers were required, desired, or even considered - the sharecroppers are just a projection from your imagination to support your own world view.

      If I had free and clear access, quiet enjoyment of 100 productive acres, why the fuck would I invite sharecroppers to come onto my land? So I can feed them too? Not my style, thank you. Far easier to hunt and gather from the woods, with a small plot in a small clearing to grow starches to cover for when the hunting isn't so good, and maybe the women would take an interest in growing vegetables and salads.

      And if you do need that money to live, then well, we didn't need that hobby anyway - by definition!

      Pretty much agree there, unless I am not understanding you. I bring up the hobby thing because I've been in a number of small companies when the shit hit the fan and all the paychecks stopped. At that point, it becomes crystal clear who needs the money and who is just there because they like the place for whatever reason (often not much more than because it has become familiar and comfortable) - it's actually shocking how many people in those places _don't_ need the money and do continue without pay or good chance of future pay - close to 20% in my experience - not that that is representative of the larger population in general, but in those small high risk enterprises they tend to concentrate because the risk of loss of income isn't a risk for them.

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      • (Score: 1) by khallow on Saturday November 02 2019, @05:28AM (10 children)

        by khallow (3766) Subscriber Badge on Saturday November 02 2019, @05:28AM (#914962) Journal

        was it intended, implied, or stated that sharecroppers were required, desired, or even considered

        The part where you were renting that land out to someone else. Those are the sharecroppers.

        • (Score: 2) by JoeMerchant on Saturday November 02 2019, @04:50PM (2 children)

          by JoeMerchant (3937) on Saturday November 02 2019, @04:50PM (#915056)

          If you've got more land than you need, why not? Depend on transients to provide your livelihood? Sounds like a fool's game.

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          • (Score: 1) by khallow on Monday November 04 2019, @03:38AM (1 child)

            by khallow (3766) Subscriber Badge on Monday November 04 2019, @03:38AM (#915570) Journal

            Depend on transients to provide your livelihood? Sounds like a fool's game.

            Or the standard rent model for the lodging and residential rental industries. Somehow they get by.

            • (Score: 2) by JoeMerchant on Monday November 04 2019, @02:21PM

              by JoeMerchant (3937) on Monday November 04 2019, @02:21PM (#915710)

              Or the standard rent model for the lodging and residential rental industries.

              Key word: industries.

              Somehow they get by.

              I believe the short analysis is: they have adequate resources to spread the risk so than when they to connect with a (minority, but far from rare) deadbeat tenant, they can absorb the loss and take it out of their paying tenants.

              Individuals renting a single property that they need the income from? That is the fool's game, and for every 3 or 4 rosy stories of great tenants, best thing we ever did, the money is really great, there's one or two stories of: deadbeats trashed my house, never paid rent after the first month, took almost a year to evict them, I lost half the value of the property and have no hope of ever collecting on my legal judgement against them.

              It's back to: it's good to be King - if you don't need the income, take the risk and it usually pays off. For serfs who have just what they need and not much more, attempting to act like a King is a good way to get yourself worse off than you already are.

              Oh, and circling back to OP - if there's a minimum wage that's high enough for your tenants to actually pay rent and have enough left over to live, at least the ones who have a job aren't as likely to stiff you.

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        • (Score: 2) by JoeMerchant on Saturday November 02 2019, @04:56PM (6 children)

          by JoeMerchant (3937) on Saturday November 02 2019, @04:56PM (#915059)

          6 million is 1.7%, not really a huge improvement over Medieval Feudalism - would not be surprising for 2% of an estate to be enjoying the benefit of the King's residence. In some ways, we all have it "better" now, with technology, medicine, easy food, cheap shelter, fast travel, etc. In other ways, if you're not part of the top 5% or so, you have it so much worse today with increased population densities, lack of free space to migrate to, etc. Enjoy the air conditioning, electronic entertainment, and packaged foods, even if they are a weak/fragile substitute for having 100 productive acres on which to provide for your family.

          Where, in this comment you linked, is the word rent, or concept of renting your family's land? Having - simple ownership - not some government based rent seeking structure.

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          • (Score: 1) by khallow on Sunday November 03 2019, @01:51AM (5 children)

            by khallow (3766) Subscriber Badge on Sunday November 03 2019, @01:51AM (#915183) Journal
            First, the part where you laud Medieval Feudalism is yet another indication that your 100 productive acres model implicitly has renters in it.

            Having - simple ownership - not some government based rent seeking structure.

            Like say UBI, minimum wage, etc?

            • (Score: 2) by JoeMerchant on Sunday November 03 2019, @01:32PM (4 children)

              by JoeMerchant (3937) on Sunday November 03 2019, @01:32PM (#915312)

              the part where you laud Medieval Feudalism is yet another indication that your 100 productive acres model implicitly has renters in it

              No, not lauding Feudalism - maybe it was good to be King, do you identify with Medieval Kings in your current living circumstance? I was saying the Kings and their Courts might have comprised 2% or so of the population, but from my perspective what's good for the top 2% of the population is largely irrelevant to the remaining 98%.

              What was "better" in that model was that the serfs had relative autonomy and control of their productive land. Sure, they paid taxes to the Lords (landlords?), but we can romanticize at least that they were reasonable, on the order of a tithe to the Church and another tithe to those who "protected" them - no doubt often in the way that the Mob families "protect" local businesses, and no doubt some Lords took quite a bit more than a tithe, in all manner of types of payment. A tithe to the 2% would fall into the (now long defunct) Ben & Jerry's ideal of no more than a 5x pay differential across all employees of the company.

              Compare to the modern "serf" who lives in a landlord's building but has no access to productive land, only the option to labor for money in other landlord's businesses - money which they cannot eat, but only exchange for food in yet other landlord's businesses. They still pay taxes at every turn, often higher taxes than the landlords do, and their labor comes with pre-requisites of training for which they usually pay, transportation which they must purchase, etc.

              Now, in the more populous regions of the middle ages, the landlords would place restrictions on hunting in "their" land, harvesting of trees, and other less than ideal restrictions - agrarian feudalism breaks down under population pressure fairly quickly - but, so does the entire planet with modern population pressure.

              Having - simple ownership - not some government based rent seeking structure.

              Like say UBI, minimum wage, etc?

              I see those as "rent seeking" by the 98%, not the 2%, and I would call that positive progress.

              There's nothing bad, and quite a bit good actually, about stratification of income and wealth, up to a point. Whether that point is Ben & Jerry's 5x income differential, or a 100x wealth differential, or some other limit - at some point excessive income/wealth differential devolves into tragic nepotism, you get idiot children taking control of empires.

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              • (Score: 1) by khallow on Monday November 04 2019, @03:40AM (3 children)

                by khallow (3766) Subscriber Badge on Monday November 04 2019, @03:40AM (#915571) Journal

                only the option to labor for money in other landlord's businesses - money which they cannot eat, but only exchange for food in yet other landlord's businesses.

                Food which they can eat. There's not much point to the argument when that money buys a lot of food, shelter, etc.

                • (Score: 2) by JoeMerchant on Monday November 04 2019, @02:33PM (2 children)

                  by JoeMerchant (3937) on Monday November 04 2019, @02:33PM (#915711)

                  that money buys a lot of food, shelter, etc.

                  Does it, though?

                  Florida minimum wage: 8.46 USD per hour

                  Minimum rent in Jacksonville seems to be around $500 per month, or ~60 hours of work (neglecting taxes): https://www.trulia.com/for_rent/Jacksonville,FL/0-500_price/ [trulia.com]

                  Cost of food for 1, top Google result: $250 per month, or ~30 hours of work. https://www.google.com/search?q=average+grocery+bill+for+1&ie=UTF-8 [google.com]

                  So, if you're lucky enough to get full time employment, that's ~$1350 per month, with $750 right off the top for minimal food and shelter - $600 left over to handle transportation, clothing, emergency expenses. To secure that full time employment, and be able to shop for economical food and clothing, you're either going to need a car, or spend the remainder of your non-working waking hours on public transit, going with the car option, top Google result is $2500 per year in Florida, or another $210 per month.

                  Down to $390 per month now, revisiting taxes, just FICA is 7.65% (quite the bargain, considering you'll probably be needing social services multiple times before retirement), there's $100 per month gone, down to $290 now - and you're still naked.

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                  • (Score: 1) by khallow on Tuesday November 05 2019, @02:37AM (1 child)

                    by khallow (3766) Subscriber Badge on Tuesday November 05 2019, @02:37AM (#916089) Journal

                    So, if you're lucky enough to get full time employment, that's ~$1350 per month, with $750 right off the top for minimal food and shelter - $600 left over to handle transportation, clothing, emergency expenses.

                    So even at minimum wage - which most people are earning more than, that's pretty damn good.

                    To secure that full time employment, and be able to shop for economical food and clothing, you're either going to need a car, or spend the remainder of your non-working waking hours on public transit, going with the car option, top Google result is $2500 per year in Florida, or another $210 per month

                    Or split the rent and food costs with other people and drive a used car. It's not rocket surgery.

                    • (Score: 2) by JoeMerchant on Tuesday November 05 2019, @02:30PM

                      by JoeMerchant (3937) on Tuesday November 05 2019, @02:30PM (#916247)

                      Or split the rent and food costs with other people and drive a used car. It's not rocket surgery.

                      No, what it is is scraping bottom. Some wizard somewhere came up with a "minimum emergency fund" figure of $2200ish. Without that much cash cushion, you can expect to encounter typical, probable emergency situations which require that much money, and will be a whole lot more expensive if you don't have that much money readily accessible somehow. The above analysis, neglecting clothing or any other "unnecessary" expenses, would require 10+ months of savings to build up such a princely emergency fund.

                      Sure, we can shack up with other working poor, 4 to a bedroom - no chaos or added risk / expense in doing that, is there? Your idea of sharing transportation sounds good, but that's the dopeler effect - it only sounds good coming at you real fast, once you look at the overall expense profile, owning your own transportation is a very cheap thing compared to the risks to employment and time costs of not having control of your own transportation, plus - you can work Uber/Lyft in your spare time for that awesome extra $30 per month of net income - assuming you're immortal and $1.25 net profit per hour is worth more than the risk of injury while driving to you - you did get comprehensive health coverage in that minimum wage job, didn't you?

                      By the way, $2500 per year is the net expense of a used car, not a new one. Little things like legally required insurance take up almost half of that, fuel and maintenance costs of driving 100 miles a week eat up the rest. New cars have lower maintenance and sometimes lower fuel costs, but way more than make up for that in depreciation.

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