Restaurants feel pain of wage law

Already mired in workers' compensation costs and skyrocketing health care, San Francisco small businesses worry whether they can handle another blow delivered by the new minimum wage increase.

Restaurant owners have been especially vocal in their opposition to the raises since most of their service staff will see their base pay go up to $8. 50 an hour from $6.75 an hour, on top of the tips they already receive.

"It will definitely require us to reconsider health benefits, and it will definitely require us to consider higher prices," he said.

No kidding. I've been saying this for years on the ridiculous minimum wage laws. You can raise minimum wage all you want but the cost of goods and services will also rise proportionally, swallowing up any gain by the working man.

The cost of labor is factored into the price of just about every consumer product and service imaginable. You raise that cost and that cost is simply passed on to the consumer. Also consider that any increase in the minimum wage would result in an across-the-board increase for all workers. When I was a teen, I worked at a supermarket when the minimum wage was $2.65 an hour. A few months later, I got a raise to $2.90 an hour. Well, the minimum wage also went to $2.90 an hour shortly after that and my employer adjusted my pay to $3.15 so that I would not become de-motivated by having new hires make just as much as I after all my hard work. In fact, everybody in the store got a raise by 25 cents an hour so that they could maintain their places in the pecking order. Otherwise, morale would have been shot to hell.

So playing around with the minimum wage is a very expensive game. And it really doesn't do anything to help people at the bottom of the ladder because, well, they are still at the bottom. You could make it $100 an hour but then a meal at McDonalds would probably run you about $75.

Sort of the same deal in the town where I work..
My wife and I realized that we could not afford to live here, but we damn sure can afford to work here.
San Fransisco is the same way...
Have you seen how much even a cheesy 1 Bdrm apartment goes for inside 25 miles of downtown??
Most of the folks that work those lower wage jobs don't live in SF, they just work there.
All the increase will do is drive up prices in SF, and make money for the Walmarts in the surrounding communities.

According to a study released by Michael Reich, an economics professor at UC Berkeley, the changes in wages will not dramatically affect small businesses. About 13.6 percent of businesses with 100 employees or fewer will see an increase greater than 5 percent in operating costs.

Ha! The first thing I thought about was the Rodney Dangerfield movie Back to School. Rodney played a self-made millionaire (non collegiate of course). Rodney was taking a business course from a Brit instructor who was leading the class in a discussion about starting up a new manufacturing company. Rodney brough real-life experience to the discussion and brought up hysterical considerations one faces in the field, not in a book.

Apparently, our Professor Reich thinks a 5% hit on operating costs is no big deal. But if that company is realizing a net 10% profit, that additional cost is going to sink the net profit by 50%. Profit is the final take-home pay for a small busines owner. I wonder how Mr. Reich would deal with a 50% drop in his net income.

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.