and the RATS, take another one in the.........HA ha!!!
Posted on 04/18/2017 11:51:14 AM PDT by SeekAndFind
Whenever I write about the “Fight for 15” and the impact of steeply increasing minimum wage rates on employment I am regularly assured by liberal activists that such concerns are either false or severely overblown. There is an entire body of work in the progressive sphere dedicated to nothing but this particular propaganda effort. The premise makes no sense in terms of basic economics (or simply math, for that matter) but it keeps on being repeated. And yet, when the experiment is moved off of the chalkboard and out into the real world the opposite always seems to happen.
The Washington Examiner takes a look at a new study by the Harvard Business School this week which specifically digs into the restaurant business in San Francisco, where they have been jacking up their minimum wage like a golden escalator. The results pretty much speak for themselves.
San Francisco’s higher minimum wage is causing an increasing number of restaurants to go out of business even before it is fully phased in, a new study by the Harvard Business School found.
The closings were concentrated among struggling, lower-rated restaurants. The higher minimum also caused fewer new restaurants to open, it found.
“We provide suggestive evidence that higher minimum wage increases overall exit rates among restaurants, where a $1 increase in the minimum wage leads to approximately a 4 to 10 percent increase in the likelihood of exit,” report Dara Lee and Michael Luca, authors of “Survival of the Fittest: The Impact of the Minimum Wage on Firm Exit.” The study used as a case study San Francisco, which has an estimated 6,000 restaurants in the Bay Area and is ratcheting up its minimum wage. Restaurants are one of the largest employers of minimum wage workers.
San Francisco is leaving most other metropolitan areas in the dust in terms of the minimum wage. They’re already at $13 per hour (well above the state or federal minimums) and will be at $15 per hour next year. Even more significantly in terms of the restaurant business is the fact that they make no exception for tipped employees, covering almost all of the wait staff in eateries. And the impact has already been dramatic.
Proponents of higher minimum wage levels will likely want to point to the fact that not all restaurants are affected equally. As the Harvard study found, the most expensive and highly rated restaurants don’t seem to be affected at all. The closures and cutbacks are hitting all of the more modest priced outlets with lower customer ratings. Unfortunately for San Francisco’s workforce, that’s the majority of them. And the difference they are seeing makes total sense. If a five star restaurant which already charges fifty dollars for a steak has to raise their prices by 10% to cover the higher labor costs, the clientele they are attracting probably won’t complain too much. They are serving the sorts of people who can afford to pay well for good service and top rated chow. But a price increase which hits the places serving those who are counting their pennies will drive patrons away rather quickly.
A number of owners have tried to adopt to this brave new world by enacting a no tipping policy, but in case after case that simply hasn’t worked. (Joe’s Crab Shack was one of the most famous and they gave up in under a year.) Dumping the higher labor costs directly onto the customers with the diners having no say in how the wait staff performed was unpopular. And as for the workers, the really skilled ones who get jobs in higher end eateries can (and do) earn many times their base salary in tips if they do a great job. Policies such as these actually provide a negative incentive to excel at your job.
We’ve seen this in one city after another. Rapid increases in labor costs simply can’t be ignored by the free market no matter how politically popular they are. And San Francisco is just the latest location to learn this lesson the hard way.
Because the LEFT doesn’t ask what works. They just ask what will make me feel better about myself. Like passing a higher minimum wage law.
Hope House of Nan King doesn’t go under. Best Chinese Restaurant in the city.
My wife was shocked when I told her that 95% of economic studies show that raising the minimum wage lowers employment - because the MSM only ever reports of the 5% outliers.
Probably good a few are culled out. Also gives some restaurant owners who are doing badly an external excuse to blame thier failure on.
I have often wondered how the government (Fed, State, and/or Local) can tell an independent business how much they can pay their employees. If the Gov does not provide the business revenue, then they should have no say in fiscal matters.
Someone needs to go to the closed restaurants and put up
“15 closed me down” or “thank god for 15/hr!” signs.
To any municipality reading this post.
I will not patronize any restaurant that requires the owner to pay a minimum wage of $15/hrs.
Yes, I know I will have to cook my own meals.
5.56mm
Just shut down the tips. I usually tip 20% for good service and 10% for lousy.
Most people are just plain ignorant as to the true costs of running a business. When you raise wages, a lot of other Costs go up as a result, namely Workers Comp,liability insurance, employer responsibility of SS,Medicare Taxes,...
It costs me $100K to pay my sole employee $75k per year.
It’s not a spike. A spike is a line on a graph that suddenly rises and then drops back down. A very hot day would make a spike on a temperature graph. San Francisco’s increased minimum wage is not a spike because it isn’t going back down.
The left will call for raising it to $20.
First, the author is assuming that San Francisco has learned something. I kinda doubt it.
Second, I'm surprised that some enterprising soul has not couched the debate in terms of the proponents of the minimum wage creating "restaurant deserts" in needy neighborhoods. Or how proponents, "don't want poor people to eat at a restaurant". Or how proponents, "are racist 'cause they only want rich white people to be able to go to a restaurant."
That sounds about right. You’re not in California, I hope.
Democrats have no idea how business works. How could they?
Minimum wage = debtor’s prison redux
If you can’t produce enough value, you’re not allowed to produce at all.
Lol, no wonder why the democrats want to keep their slaves.... I mean undocumented citizens.
These Klansman are just saying this trying to make their cross burn brighter! (/liberal)
10% for lousy? Seriously? They're only required to report 7.5% on tips for income tax purposes. I wouldn't give more than 7.5% for lousy, I would give less. In a lot of places, the tip money is pooled for all the employees so the lousy ones don't get punished versus the good employees. If I enjoy overall service, I tip great. If not, but the waiter/waitress is good I slip money into their palm.
I do the same thing. I pay with CC and give cash to good waiters. I also cash tip to kids working at fast food and subshops.
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