Posted on 03/22/2015 10:01:57 AM PDT by Diana in Wisconsin
"Why Are So Many Seattle Restaurants Closing Lately?” asks a recent Seattle magazine headline. The Scrapbook is no restaurateur, let alone knowledgeable about the local economy, but we’ll guess it has something to do with the fact that Seattle’s new $15 minimum wage starts phasing in on April 1. However, the first rule of liberals confronting the laws of basic economics is deny, deny, deny.
A feature in the Seattle Times called the “Truth Needle” (we’re guessing the Times didn’t want to pony up to license PolitiFact’s logo) declares the claim that minimum wage has anything to do with the undeniably large number of restaurant closings is “false.”
Now, it’s certainly the case that restaurant operators in liberal Seattle are claiming a higher minimum wage has nothing to do with their business decisions. This is likely somewhere between a delusion and a lie, so let’s split the difference and call it public relations. Again, basic economics tells us that the typical restaurant operates on a slim profit margin, and wages typically run about 35 percent of operating costs.
Nonetheless, in very liberal and very wealthy Seattle, angering your customer base by proclaiming your opposition to redistributive social justice would be foolish. It would also be foolish to anger the local regulatory czars in a city that has proclaimed the new wage law a political triumph. “Restaurateurs are business people, not politicians, and angering the mayor over the law he signed is not a smart business move,” notes the Washington Policy Center.
However, there’s little doubt that the city’s heralded food scene is running scared. A spokesman for the Washington Restaurant Association told the Washington Policy Center, “Every [restaurant] operator I’m talking to is in panic mode, trying to figure out what the new world will look like.” We’re fairly certain it will be a Brave New Seattle, where there are fewer great restaurants, to say nothing of all the other labor-intensive businesses that will be shutting down.
Naturally, this means fewer jobs for the poor. Worse, the increased wages will also amount to a regressive tax. Economist Tyler Cowen flags a new study in the Journal of Political Economy by Stanford’s Thomas MaCurdy, concluding an increase in the “minimum wage produces a value-added tax effect on consumer prices that is more regressive than a typical state sales tax.”
The study also points to another reason why cash-strapped municipal governments like artificially raising wages. “Unlike most public income support programs, increased earnings from the minimum wage are taxable,” MaCurdy writes. “Over 25 percent of the increased earnings are collected back as income and payroll taxes. . . . Even after taxes, 27.6 percent of increased earnings go to families in the top 40 percent of the income distribution.”
So minimum wage increases grow government, make the rich richer, and still allow liberal politicians to demagogue the hell out of poor voters by falsely claiming they’re putting more money in their pockets. In the longer term, living wage laws and other en vogue liberal policies are likely to transform one of America’s best cities into Detroit on the Puget Sound. It would be nice if there were a stronger political counterweight in our overwhelmingly Democratic cities, but the best hope for conservatives regaining a foothold in urban America might be simply to stand back and let liberal economic policies work their magic.
Oops! This might need to be in Bloggers and Personal? Not really ‘news,’ more of an opinion piece. Sorry!
Just an unfortunate coincidence... :{)
There isn’t an income tax in Washington.
They just think they are helping the poor.
Nonetheless, in very liberal and very wealthy Seattle, angering your customer base by proclaiming your opposition to redistributive social justice would be foolish. It would also be foolish to anger the local regulatory czars in a city that has proclaimed the new wage law a political triumph. “Restaurateurs are business people, not politicians, and angering the mayor over the law he signed is not a smart business move,” notes the Washington Policy Center.
It used to be that mayors did everything to please business or folkes around. Man, businesses in America is run by a bunch of disorganized wussies. Why is the chamber of commerce not on it? They are firing the gays after all.
indeed, minimum wage is a direct redistributive tax, an example of how a tax typically destroys business.
The Seattle Weakly article was a study in denial. A typical attribute of owners who were closing businesses was “Oh, everything is just peachy but I’m tired of the restaurant business”.
The problem is that it is still too soon to accurately gauge the damage. Seattle proper is (as this piece alludes) very prosperous and in a position to absorb more economic blows that many other locales.
But not forever.
Here in the Puget Sound region just north of Seattle, I am hoping that more businesses will move north to Everett and south to Tacoma. Both those cities have waterfront, charming old buildings and less onerous government.
Seattle is really stuck on its own relevance with the totally socialist city government.
“[Madison, WI] is really stuck on its own relevance with the totally socialist city government.”
We’ve got the cancer here, too!
I can’t understand why restaurant owners cannot just raise prices to cover the cost of doing business. Surely the rich and socially generous people of Seattle can afford it?
These businesses need to relocate themselves to Bellevue and Redmond. Cheap or free parking, low crime, and an overall saner form of city government.
Sarcastic but a great comment!
Anytime somebody tries to build their credibility by calling themselves, “The Truth Needle”, it’s a pretty good indication that you aren’t getting the truth.
I mentioned that on another thread and there were a lot of comments that Seattle people won’t tread outside of town, even if all their restaurants dwindle.
Seattle = San Fran north
What used to be a great city is no more.
Still a beautiful place (I lived there 23 years), and fun to visit.
But I could not put up with their political stance as it is today.
News reports from around Washington state mostly agree that the increase in minimum wage is the cause...
Will the last person to leave Seattle please turn out the lights.
Not that they are burning any too brightly now.
It’s depressing that so many great locales have been overtaken by liberalism.
One thing to understand about the lilly white gentry class is that they hate tainted money. Tainted money is the kind they have to work for themselves. They like money to just appear for them, having been skimmed off the population and routed through government to a program they benefit from. Think of Hillary's university speaking tours. She doesn't rip off the students directly, she just goes and speaks for an hour, collects a six figure speaking fee from the university, which skimmed from the students who go further in debt. And its all untainted money for Hillary.
I guess the wealthier areas of Seattle need more bicycle paths or something. That will raise the property values for the lilly whites.
As Bellevue continues to grow, the demand for good restaurants will continue also. I would much rather go to John Howie Steak or Seastar then spend $50 to cross the bridge and park even before I am seated at The Met.
“These businesses need to relocate themselves to Bellevue and Redmond.”
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Slightly off topic but—
About 10 years ago I was have Microsoft problems and was speaking to one of their ‘brilliant’ reps. I was so angry I asked if I would be better off calling Redmond,Washington directly.
He said,”I’m sorry Ma’am,I don’t know who he is.”.
.
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