Posted on 05/24/2015 6:33:11 PM PDT by nickcarraway
Stephane Bombet, Bill Chait, Brooke Williamson, and Alan Schulman give their thoughtful takes on the issue.
News broke on Tuesday that the LA City Council voted to increase the city's minimum wage to $15 by 2020. There is no question that the rather polarizing decision will put a serious strain on small businesses in its attempt to close the income gap. Restaurateurs, who manage notoriously thin margins, are hit especially hard with the new legislation. When asked for their reaction to the wage hike, four restaurant owners expressed disappointment for the failure to consider a more nuanced approach that considers tips into the compensation calculation:
Terrine_Stephane_Bombet_2__1_.0.jpg Restaurateur: Stephane Bombet Restaurant: Terrine Reaction: "In our restaurants no one is paid minimum wage. We respect our employees and help them grow in our organization by giving them access to better positions so they can make more money. However, our net margins are less than 13%, so the idea that we will be able to digest a 67% wage increase is wrong. The math just doesn't add up.
We want to pay everybody more if we can, but it has to be fair. Giving $5 more an hour to a waiter that already makes $40 to $60 an hour makes no sense. But giving $15 an hour to someone that makes $10 with no tips is something we want to do. Therefore, I support the total compensation idea. As long as tips are included in the calculation, everyone should get a raise. But this is the only way we can make it work. If tips do not count toward the minimum, there will be two consequences.
First, will have to let some employees go, and second, we will either be forced to close down or stop opening restaurants.
Does this make any sense to anyone? We have hired over 400 people over the past few years and paid millions of dollars in sales taxes. The answer is not to push restaurateurs in a corner, but to help us be part of the solution. We want to raise the minimum wage, but in a way that doesn't put at risk the jobs of ten of thousands of people in Los Angeles."
Bill_Chait.0.jpgRestaurateur: Bill Chait Restaurants: Bestia, Barrel & Ashes, B.S. Taqueria, Republique, Petty Cash Taqueria Reaction: "To say that we are disappointed with the outcome by the City Council is a tremendous understatement. The restaurants and many small businesses in Los Angeles came out in support of an increase in the minimum wage. In fact we fundamentally agreed with the premise about the necessity due to the high cost of living in the Los Angeles area, particularly for our kitchen staff.
Our basic premise was simple. Let's direct the minimum wage increase to those kitchen workers that needed the increase, and for our front of the house service staff which was already earning well in excess of double even the projected minimum wage, we asked for a bifurcated wage that recognized the huge additional income they earn which is not shareable with the kitchen staff under California law.
Will ultimately lead to the end of the tipping system
We have always felt this was an extremely unfair practice and will ultimately lead to the end of the tipping system. What was most distressing is that the city council president, Herb Wesson, in a closed door session, introduced two new additional amendments to the minimum wage ordinance that were incredibly harmful to small business and had never been discussed. He attempted to jam them through at the behest of organized labor which led to a very contentious situation and it continues to be today. This type of politics undermines the whole credibility of the process and the fair representation of all of us in Los Angeles."
Brooke_Williamson.0.jpgRestaurateur: Brooke Williamson Restaurants: Playa Provisions, Hudson House, The Tripel Reaction: "I understand and completely agree there is a need for a higher minimum wage standard. But in the official documentation from the city regarding the 2020 wage hike, it clearly states that this could result in layoffs and closures for small businesses.
The city is fully aware of the issues that will arise for family-owned restaurants like ours, but won't consider tip credits or a total compensation package as an option. This tactic is proven successful in other cities, and I'm very happy to compensate employees whose tips don't add up to minimum wage, unfortunately this is not an option here in Los Angeles."
IMG_6965__1_.0.jpg Restaurateur: Alan Schulman Restaurants: AKASHA, Sāmbār Reaction: "This is a major game changer for our industry. It will force our industry to redefine itself. There won't be a choice.
The IRS acknowledges tips as income and that is not being considered into the equation. Additionally, the impact the minimum wage will have on our industry is all passing through payroll so worker's comp is directly impacted.
We don't disagree with the increase of the minimum wage, we are asking that they take tips into consideration as part of the process."
I think three things will happen here. First, some restaurants will comply and suddenly a $14 dinner (2014 value) will be $20. Will customers just comply, staying with this restaurant, or quit it? Second, I agree....automation is coming to fast food restaurants within the next decade and it’ll change the dynamic of cheap labor in America. Third, as you escalate wages and the price of the end-product....you also are escalating the sales tax....something which no one talks about. If people get peppy about paying the higher cost/higher tax....you might see a decline in tax revenue, which isn’t very easily replaced unless you push the sales tax up again.
“Get ready for automated fast food restaurants”
It’s not just fast food that will be impacted by this. The entire food prep / manufacturing industry in LA employs only low-skilled labor for minimum wage or just a few cents above that. If the industry is forced to pay them essentially double what they pay now, they will have to either close up shop and move to another county/state or double the cost of their product. Which means people are looking at a massive increase at the grocery store.
Will be interesting to see what happens when they force this upon the manufacturers.
The LA restaurant owners just need to point to Seattle where liberals are reportedly whining about their favourite local restaurants closing because the owners can’t afford the $15 minimum wage.
They were already hit by Obamacare. Most servers work two jobs in the Boise area after their hours were cut to under 30 hours a week.
This is if they do it legally. LA has a huge illegal population who just pay cash under the table.
OBAMA village
You are correct. Raising the minimum wage will increase the welfare roles.
This stupid law is for what the liberals wish.
For cities wishing to raise the minimum wage to $15, they should study the effects of such policy an places that have raised the minimum wage. Washington State has had the highest minimum wage in the country for 15 years.
Those who support Washington States high minimum wage, point out that job growth has exceeded the national average and poverty has trailed the national average.
None of these claims withstand scrutiny. Washington boosted the wage floor and indexed it to inflation. It is one of seven states that do not permit employers to count employees tips towards meeting the minimum wage. Indeed, Washington with the highest minimum wage in the nation, at $9.47 an hour, should be the ideal situation to base policy.
For those industries with a prevalence of low-wage workers, growth has slowed. As Washingtons population rose 5.7% and its share of total U.S. jobs increased by 6.3%, the states share of U.S. accommodation and food service jobs fell by 5.7%.
Declining entry-level job opportunities have hit low-skill workers hard. The states teen unemployment has exceeded the national rate every year since the raise of the minimum wage to 34% during the recession.
Although the states poverty rate is relatively low, it was low before the raise of the minimum wage: Before the raise, it was 10.7%, and the national average was13.8%. After the minimum wage increase, the states average poverty rate rose slightly to 10.9% while the national poverty rate decreased slightly to 13.1%.
In 2013, the small airport city of SeaTac made headlines when voters narrowly approved the nations first $15 minimum wage. The consequences were immediate. A parking company has added a living wage surcharge to its rates. One hotel closed its restaurant and laid off 17 employees. Employees at another hotel lost an array of benefits.
Seattle quickly followed suit. The citys phased-in-minimum wont be fully implemented until 2025. With Seattles first hike of the minimum wage to $11 an hour occurring next month, the owner of Z Pizza announced shes being forced to close her doors, because she cant afford the higher labor costs.
Sixteen years after Seattle has adopted an unprecedented minimum wage increase that labor activists said would fix poverty and depoliticize the issue, Washington has little to show for its trouble other than fewer entry-level jobs and resurgent union protests seeking to raise the minimum wage even higher. It is doubtful that other cities would learn from Washingtons experience only to experience for their trouble, similar minimum benefits.
Unfortunately for the industry, they are dealing with pencil necked bureaucrats who understand not the economic system.
The destruction of the food industry is but another step toward eliminating the middle class, a goal of totalitarian governments.
Bring back the Automat! I loved eating there in Manhattan, NY, with my grandparents, when I was a kid living on Long Island.
It was maybe in the 1990’s when Californians moved to Colorado, sending Colorado’s affordable homes sky high - practically overnight - - -
Most in LA dont need to eat anyway...no biggie.
Suck it up buttercup, elections have consequences.
I watched as that little chirpy liberal girly guest on Cavuto kept saying "businesses have plenty of cash...they just have to let some go to the little people."
Libs think that business owners just have a stash hidden away and that they are all rich.
That’s right. They’ll have numerous robots and a couple of $50 grand techies running the show.
“While that’s probably true for the servers who also collect tips, it can’t be true for the kitchen staff...”
Actually the federal minimum wage of $7.25 is the floor. Unless your tips bring you to that level (which is probably always the case), the owner has to make up the difference. I suspect the $2.13 number was to help equalize the pay between dish washers that aren’t tipped and waiters that are tipped.
I guess I can charge 100/hour for putting software into a computer then. If some no educated lib van get 15, educated people must be worth more...
Many business owners would disagree with you on this one. I work with business leaders who cite some surprising reasons why they relocate from one place to another here in the U.S. Here in New Jersey, many businesses leave the state because their employees can't afford to live anywhere near the place they work. Excessive commuting costs and time end up driving these people away.
An employer who doesn't give a damn about the needs of his employees outside the workplace isn't likely to attract good workers.
Fresh pizza making bot/vending machine: http://youtu.be/j7_lxiU8eLM
Apparently they’re doing really, really well in Italy.
Why would consumers be expected to tip if the employees are making $15/hr.? We tip to bring up their pay. I would not pay high prices and tip.
typical progressive distraction from the real issues - why are real wages across the board dropping - why are so many jobs part time without any bennies - why are so many experienced, proven workers unemployed.
The government has already interfered in the market for labor by flooding the country with aliens, both illegal and legal and enabling shipping good paying jobs over seas (partly because of all those lovey ‘free trade’ agreements).
In fact wages have been so suppressed that record number of people need some government assistance to survive - just how the progressives like it.
Mind you progressive come with both -D and -R after names. Look at who doesn’t anyone to see the details of the TPP.
Up until recently the drop in reals wages has been hidden by access ro products and electronic toys made by neo slaves in third world countries plus artificially cheap credit, the promise that salaries and the worth of your assets (home, savings) would always go up, and the mantra ‘debt id good’.
It’s hit the fan and happy days are here again !.
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