Posted on 03/17/2015 8:50:32 PM PDT by nickcarraway
Early indicators suggest the $15 minimum wage will not be as positive as City Hall intended
In a few weeks, Seattle’s new, highest in the country, $15 per hour minimum wage will go into effect. Like many liberal policies, it was passed by City Hall with the best of intentions. The only problem is, in the end, it may do more harm than good for many.
Private businesses, unlike government entities (which, in theory, can always raise taxes or borrow), must make more than they spend in order to pay the rent, make payroll, keep the lights on, pay their business taxes, and, heaven forbid, have some left over for the owners and investors who are taking the risk and putting in the long hours.
Earlier this month, Seattle Magazine asked, Why Are So Many Seattle Restaurants Closing Lately?:
Last month—and particularly last week— Seattle foodies were downcast as the blows kept coming: Queen Anne’s Grub closed February 15. Pioneer Square’s Little Uncle shut down February 25. Shanik’s Meeru Dhalwala announced that it will close March 21. Renée Erickson’s Boat Street Café will shutter May 30 after 17 years with her at the helm…What the #*%&$* is going on? A variety of things, probably—and a good chance there is more change to come.
The magazine went on to report that one “major factor affecting restaurant futures in our city is the impending minimum wage hike.” Anthony Anton, president and CEO of Washington Restaurant Association, told the magazine, “It’s not a political problem; it’s a math problem.” He estimates that restaurants usually have a budget breakdown of about 36 percent for labor, 30 percent for food costs, and 30 percent to cover other operational costs. That leaves 4 percent for a profit margin. When labor costs shoot up to say 42 percent, something has to give.
Restaurants can take actions to adjust, such as raise their prices, acquire cheaper ingredients, and cut their operating hours and labor force. However, all those actions generate reactions from the public which can still lead to lower revenues for the restaurant and, for some, the decision to close their doors.
The Washington Policy Center explains:
When prices rise consumers seek alternatives, a behavior economists call the “substitution effect,” which results in lower demand for the higher-priced product. In the case of restaurants, consumers have access to the ultimate substitution – they can stay home. 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.”
Seattle had a foretaste of the effect of the $15 minimum wage earlier this year when Prop 1, which made a $15 minimum wage for those working in parking garages and hotels near Seattle-Tacoma International Airport, took effect. A reporter asked a cleaning woman and a part-time banquet server, who work in a hotel near SEATAC, what they thought of the new law:
The cleaning woman responded, “It sounds good, but it’s not good,”
“Why?” I asked.
“I lost my 401k, health insurance, paid holiday, and vacation,” she responded. “No more free food,” she added.
The hotel used to feed her. Now, she has to bring her own food. Also, no overtime, she said. She used to work extra hours and received overtime pay.
“What else?” I asked.
“I have to pay for parking,” she said.
I then asked the part-time waitress, who was part of the catering staff.
“Yes, I’ve got $15 an hour, but all my tips are now much less,” she said. Before the new wage law was implemented, her hourly wage was $7. But her tips added to more than $15 an hour. Yes, she used to receive free food and parking. Now, she has to bring her own food and pay for parking.
The Seattle Times reported that a Clarion Hotel recently made the decision to close its full service restaurant (laying off 15 people) and let go of a night desk clerk and a maintenance worker. It also plans to raise its rates by 10 percent to offset increased labor costs.
As the April 1 deadline approaches, the residents of Seattle will have a front row seat to the effects of the $15 per hour minimum wage, but early indicators suggest it will not be as positive as City Hall intended.
A bag of nuts for a flight to Baltimore cost me $12.
If you inferring I’m a liberal friend you’re very much mistaken.
If you are interested, I would suggest you do some research on the demographics of these cities. Look at the most heavily democrat cities in the country. They are all monocultures, like either all black Detroit, or all white Aspen. Democrats don't mix races. And policies enacted by Democrats will change the demographics of the city.
Black population deserting S.F., study says
We know that Seattle does not want people who can't earn $15 an hour any more. What is the demographic makeup of people who only earned $14 or less?
Ding ding ding.
The whole reason for these increases. Not for the poor downtrodden employees. It is merely a thinly veiled increase in taxes, using the employer as the tax collector, for the "king' in the legislature.
I think I might have a solution to this.
Lib: I’m a good person because I support the State imposing feel-good policy X.
Con: Here’s what’s going to happen if you do that.
Lib: No it won’t.
Con: Would you be willing to sign this paper allowing me to publicly kick you in the nuts when it does?
It is fitting that liberal-infested Seattle moved out to perform this folly in front of the rest of the Nation to present an example of what NOT to do.
Only time will tell if other cities are paying attention.
Get the gov. out of business.
They better also prepare for the influx of Obama’s immigrant squad seeking the higher wages - then even if they don’t obtain positions they will hang out for the grubermint freebies.
Except for the fact that Amazon and Microsoft are in Bellevue and Redmond. Those cities restaurants are booming because Seattle-ers can eat cheaper there.
Yes, they can, although the rest of the paragraph details what happens when they do. But there's more to it than that. Business can do all of these things given time to ease into them. Given an unalterable mandate that these changes come into being immediately, businesses simply can't adjust. It's all about cash flow, and the only thing ignorant government administrators can do is screw it up. Which they have.
I saw it on FR yesterday but I didn't note the author - welcome to the REAL minimum wage: $0.00.
Was $6.50....
Total robbery...
Isn’t that pretty cheap compared to brewskis @ most sports palaces these days?
I would pay $6.50 for a beer at an airport. Better be a microbrew however.
Just thought...I was getting ripped...when I could get a 6 pack of 16oz..for $6
And let me tell...you the ambiance was about a 1 on a scale of 10...HA!!!
You’ve never been to Sioux Falls, So. Dakota..I expect.
You got entertainment..cheer leaders, a football game...the crowd..etc.
I was in an airport!! HA!!!
Have the city politicians who passed this asinine measure voted themselves free meals yet?
(free to them but paid by taxpayers of course)
After all - with restaurant prices going up they can’t be expected to pay the higher dining prices themselves.
/s
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