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Impending Minimum Wage hike causing restaurants to close

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  • Impending Minimum Wage hike causing restaurants to close

    Remember when we had that thread (can't find it now) about how fast food workers were complaining about the minimum wage and wanting to get paid $15 to flip burgers?

    The liberals kept saying that it wouldn't cause businesses to close down.

    Well, they were wrong.

    http://www.washingtonpolicy.org/blog...urant-closings
    Seattle's $15 wage law a factor in restaurant closings

    As the implementation date for Seattle’s strict $15 per hour minimum wage law approaches, the city is experiencing a rising trend in restaurant closures. The tough new law goes into effect April 1st.

    The closings have occurred across the city, from Grub in the upscale Queen Anne Hill neighborhood, to Little Uncle in gritty Pioneer Square, to the Boat Street Cafe on Western Avenue near the waterfront.

    The shut-downs have idled dozens of low-wage workers, the very people advocates say the wage law is supposed to help. Instead of delivering the promised “living wage” of $15 an hour, economic realities created by the new law have dropped the hourly wage for these workers to zero.


  • #2
    But at least the ones that don't close will be paying more.
    I DENOUNCE DONALD J. TRUMP AND ALL HIS IMMORAL ACTS.

    Comment


    • #3
      Good. The National Restaurant Association are amnesty shills. Let them all burn.
      "As for my people, children are their oppressors, and women rule over them. O my people, they which lead thee cause thee to err, and destroy the way of thy paths." Isaiah 3:12

      There is no such thing as innocence, only degrees of guilt.

      Comment


      • #4
        Originally posted by Sparko View Post
        Remember when we had that thread (can't find it now) about how fast food workers were complaining about the minimum wage and wanting to get paid $15 to flip burgers?

        The liberals kept saying that it wouldn't cause businesses to close down.

        Well, they were wrong.

        http://www.washingtonpolicy.org/blog...urant-closings
        Seattle's $15 wage law a factor in restaurant closings

        As the implementation date for Seattle’s strict $15 per hour minimum wage law approaches, the city is experiencing a rising trend in restaurant closures. The tough new law goes into effect April 1st.

        The closings have occurred across the city, from Grub in the upscale Queen Anne Hill neighborhood, to Little Uncle in gritty Pioneer Square, to the Boat Street Cafe on Western Avenue near the waterfront.

        The shut-downs have idled dozens of low-wage workers, the very people advocates say the wage law is supposed to help. Instead of delivering the promised “living wage” of $15 an hour, economic realities created by the new law have dropped the hourly wage for these workers to zero.
        I read through that article and the other two it referenced. They don't seem to really have a case other than "owners are worried". It's a phased increase to $15, and different business sizes have different timelines. Meanwhile, the author acknowledges there's no clear link to the cost increase causing the closings:

        Though none of our local departing/transitioning restaurateurs who announced their plans last month have elaborated on the issue, another major factor affecting restaurant futures in our city is the impending minimum wage hike to $15 per hour.
        I'm not here anymore.

        Comment


        • #5
          Originally posted by Carrikature View Post
          I read through that article and the other two it referenced. They don't seem to really have a case other than "owners are worried". It's a phased increase to $15, and different business sizes have different timelines. Meanwhile, the author acknowledges there's no clear link to the cost increase causing the closings:

          Though none of our local departing/transitioning restaurateurs who announced their plans last month have elaborated on the issue, another major factor affecting restaurant futures in our city is the impending minimum wage hike to $15 per hour.
          You are quite good at cherry picking, aren't you?

          Oh well, others can go and read the entire article, including the part that comes after your cherry-picked quote.
          Restaurant owners seldom cite the minimum wage mandate directly as a reason for closing. Restaurateurs are business people, not politicians, and angering the Mayor over the law he signed is not a smart business move. A spokesman for the Washington Restaurant Association is more blunt, however. “Every [restaurant] operator I’m talking to is in panic mode, trying to figure out what the new world will look like.” He added, “Seattle is the first city in this thing and everyone’s watching, asking how is this going to change?”
          The other articles that were linked were written a year ago. Also it is not just about being "worried" - actual restaurants have closed because of the impending wage hike. Restaurants typically only have a 4% profit margin, and When you increase labor cost by nearly 300% - that leaves no profit at all. They can raise the cost of the food, or add service charges, in order to get their profit back, but all that will do is cause a lack of business as people decide to eat at home rather than pay the exorbitant prices.

          End result? The restaurants will close. Not all, but many of the cheaper ones will. And the workers will be out of any wage at all.

          Comment


          • #6
            Source: http://www.locusmag.com/News/2015/02/borderlands-books-to-close/

            San Francisco specialty bookshop Borderlands Books is going out of business. The store will close its doors no later than March 31, 2015, but may close earlier, depending on how quickly the inventory can be sold. Owner Alan Beatts explains:

            The recent change in San Francisco minimum wage law will prevent the store from being financially viable no later than July of 2018 (at which point our payroll will have increased by roughly 39%). It is quite possible that the store would lack viability before that date, as wages will increase incrementally between now and then. Rather than wait, we have chosen to close now to allow us to get the most value from the businesses. Though all of us at Borderlands support the concept of a living wage in principle, the minimum wage law passed in San Francisco makes it very difficult, if not impossible, to run a viable business when retail pricing is set by publishers and our main competitors are companies such as Amazon.com.

            © Copyright Original Source



            At least the unemployed will be given lots of handouts

            Comment


            • #7
              Originally posted by Sparko View Post
              You are quite good at cherry picking, aren't you?


              Oh well, others can go and read the entire article, including the part that comes after your cherry-picked quote.


              The other articles that were linked were written a year ago. Also it is not just about being "worried" - actual restaurants have closed because of the impending wage hike. Restaurants typically only have a 4% profit margin, and When you increase labor cost by nearly 300% - that leaves no profit at all. They can raise the cost of the food, or add service charges, in order to get their profit back, but all that will do is cause a lack of business as people decide to eat at home rather than pay the exorbitant prices.

              End result? The restaurants will close. Not all, but many of the cheaper ones will. And the workers will be out of any wage at all.
              Right, so your counter to my 'cherry pick' is another bit showing the wage hikes as "seldom cited" with the author's justification for why it's not more commonly cited. You almost had something. Almost.

              By all means, read all of the articles. I did. I noticed, for example that a lot of their food costs are "ethical food quality" issues that they refuse to bend on, issues that are predominantly made up in the first place. Some of their food costs are because they're including relatively rare food types in a region that already has higher general food costs. The (significantly) higher cost of food is one of the first things we noticed when we moved up here. Suffice to say, the typical 4% margin is self-inflicted.

              There's not a single case in any of those articles of a restaurant actually closing due to the wage hikes. In fact, the announcement for one closing included a statement that a new restaurant would be taking its place. If you want to show the downside to the rising minimum wage in this manner, you've got more work to do.
              I'm not here anymore.

              Comment


              • #8
                Originally posted by Paprika View Post
                Source: http://www.locusmag.com/News/2015/02/borderlands-books-to-close/

                San Francisco specialty bookshop Borderlands Books is going out of business. The store will close its doors no later than March 31, 2015, but may close earlier, depending on how quickly the inventory can be sold. Owner Alan Beatts explains:

                The recent change in San Francisco minimum wage law will prevent the store from being financially viable no later than July of 2018 (at which point our payroll will have increased by roughly 39%). It is quite possible that the store would lack viability before that date, as wages will increase incrementally between now and then. Rather than wait, we have chosen to close now to allow us to get the most value from the businesses. Though all of us at Borderlands support the concept of a living wage in principle, the minimum wage law passed in San Francisco makes it very difficult, if not impossible, to run a viable business when retail pricing is set by publishers and our main competitors are companies such as Amazon.com.

                © Copyright Original Source



                At least the unemployed will be given lots of handouts
                This doesn't really surprise me, to be honest. With the advent of the e-book (and Amazon), brick-and-mortar bookstores are increasingly at a disadvantage. It makes sense that a higher wage would be the killing blow, though their fall strikes me as akin to Blockbuster's. I've been fairly surprised at the number of bookstores here, but they tend to be pretty small and lightly staffed (with the exception of Powell's).
                I'm not here anymore.

                Comment


                • #9
                  Washington Restaurant Survey if $15 min. wage increased:

                  80% of full service respondents said they would either lay off employees, close their business, declare bankruptcy or close a location.
                  69% of Full Service Restaurants said they would lay off employees.
                  49% of Quick Service Restaurants said they would lay off employees.
                  45% of both Full and Quick Service Restaurants said they would close or close a location.
                  Due to labor costs alone, restaurants will effectively turn into non-profits.
                  http://blog.seattlepi.com/capitolhil...tating-impact/

                  Comment


                  • #10
                    Originally posted by Sparko View Post
                    Washington Restaurant Survey if $15 min. wage increased:

                    80% of full service respondents said they would either lay off employees, close their business, declare bankruptcy or close a location.
                    69% of Full Service Restaurants said they would lay off employees.
                    49% of Quick Service Restaurants said they would lay off employees.
                    45% of both Full and Quick Service Restaurants said they would close or close a location.
                    Due to labor costs alone, restaurants will effectively turn into non-profits.
                    http://blog.seattlepi.com/capitolhil...tating-impact/
                    This is getting better, but it still falls way short. In reality, these answers are the common responses to the following question: “What are your five most likely business changes if Seattle adopts a $15 minimum wage?" It's telling that the MOST common answer at 82% (raise prices) isn't even listed here. It's telling that the 80% number claimed is an aggregate of businesses that included one of those four options among their five responses. It's telling that three of those four (close business/location or declare bankruptcy) are combined in the survey results, and even then it's only 45% of businesses that listed it. This survey doesn't say what you think it does.
                    I'm not here anymore.

                    Comment


                    • #11
                      Yeah because raising prices is really going to work. People will just eat out less. Which will cause the restaurants to close due to lack of business. No matter how you look at it, it will end up with unemployed workers instead of everyone chomping the $15 per hour cake.

                      Comment


                      • #12
                        Originally posted by Sparko View Post
                        Yeah because raising prices is really going to work. People will just eat out less. Which will cause the restaurants to close due to lack of business. No matter how you look at it, it will end up with unemployed workers instead of everyone chomping the $15 per hour cake.
                        So when you run out of data, just insist you're still right. Good idea. We've heard the same thing for years (read: most of my life) about rising gas prices. Some people drive less, and some people look for higher fuel efficiencies. More often, the concept of 'normal' is replaced without much more than minor wobbles in the existing trends. In the end, people generally complain without an attendant change in behavior. Welcome to humanity.
                        I'm not here anymore.

                        Comment


                        • #13
                          Originally posted by Carrikature View Post
                          So when you run out of data, just insist you're still right. Good idea. We've heard the same thing for years (read: most of my life) about rising gas prices. Some people drive less, and some people look for higher fuel efficiencies. More often, the concept of 'normal' is replaced without much more than minor wobbles in the existing trends. In the end, people generally complain without an attendant change in behavior. Welcome to humanity.
                          Gas prices are not comparable to food prices. For the most part, gas prices are flat across an area, so the option to go elsewhere isn't as realistic as it is for a food establishment.
                          That's what
                          - She

                          Without a clear-cut definition of sin, morality becomes a mere argument over the best way to train animals
                          - Manya the Holy Szin (The Quintara Marathon)

                          I may not be as old as dirt, but me and dirt are starting to have an awful lot in common
                          Stephen R. Donaldson

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                          • #14
                            Originally posted by Bill the Cat View Post
                            Gas prices are not comparable to food prices. For the most part, gas prices are flat across an area, so the option to go elsewhere isn't as realistic as it is for a food establishment.
                            Food prices are reasonably flat across an area, too, with the caveat that we don't have quality/service ratings like we have octane ratings to clearly delineate things. Generally speaking, competition forces prices down until most people are offering comparable service for comparable price.

                            The difference between gas and food isn't that prices aren't flat. Rather, it's that people aren't forced to consume from restaurants the way they are from gas stations. This is certainly a factor, but it doesn't counter what I said about people complaining without an attendant change in behavior.
                            I'm not here anymore.

                            Comment


                            • #15
                              Originally posted by Sparko View Post
                              Washington Restaurant Survey if $15 min. wage increased:

                              80% of full service respondents said they would either lay off employees, close their business, declare bankruptcy or close a location.
                              69% of Full Service Restaurants said they would lay off employees.
                              49% of Quick Service Restaurants said they would lay off employees.
                              45% of both Full and Quick Service Restaurants said they would close or close a location.
                              Due to labor costs alone, restaurants will effectively turn into non-profits.
                              http://blog.seattlepi.com/capitolhil...tating-impact/

                              Is this the bar that's being set? If the minimum wage law is in effect for, say, half a year, should we be looking for 80% of full-service respondents to have fired employees, closed a location or the entire business, or declared bankruptcy? What part of your position would you change if this wasn't at least close to the case?

                              To the OP, the liberals here weren't arguing that no business would close ever, even over wage issues. What was argued, if memory serves, is that minimum wage increases in aggregate do not appear to lower employment:

                              Source: Proposal to Strengthen Minimum Wage Would Help Low-Wage Workers, With Little Impact on Employment. Bernstein & Parrot. CPBB.org. 2014.01.07

                              In a review of over 60 studies that look for statistical linkages between minimum-wage increases and job losses, economist John Schmitt reports that the most accurately measured results cluster around zero: some studies find that raising the minimum wage has a small negative effect on employment, a smaller number find that it has a small positive effect, and most find no significant effect.[10] “The weight of the evidence points to little or no employment response to modest increases in the minimum wage,” Schmitt concludes.

                              It is important to stress that some high quality research finds job losses and reduced hours for affected workers. In other words, there are some cases where employers do “buy less” labor when its price goes up. But even in these studies, the impacts are small enough so that the net result for the vast majority of low-wage workers is a net gain in earnings. That is, there would be relatively few job losses compared to the number of workers who would remain at work with higher wages, and some workers whose hours were reduced would still see increases in their weekly earnings. As economist Arin Dube recently stated, “[t]he academic disagreements are over no job losses or small job losses for highly impacted groups.”[11]

                              © Copyright Original Source



                              Anecdotal evidence of some stores closing because of increased labor costs will definitely come up now and again. Empirically, however, these appear to be a drop in the ocean and the benefits of increasing the minimum wage vastly outweigh the losses.

                              --Sam
                              "I wonder about the trees. / Why do we wish to bear / Forever the noise of these / More than another noise / So close to our dwelling place?" — Robert Frost, "The Sound of Trees"

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