Legal Insurrection has often chronicled the unintended consequences of minimum wage hikes across the country, from worker struggles in Seattle, automation replacing service personnel, the closing of a popular eatery in New York, and the loss of jobs at UC Berkeley.

Now, in my home town of San Diego, diners are being served-up a surprise along with their bills as a result of voters approving a minimum wage hike in last June: A dining surcharge.

Girding for the second minimum wage hike in six months and the fourth in 2-½ years, many of San Diego’s full-service restaurants are introducing for the first time an average surcharge of 3 percent of the meal’s cost to help cover increased labor expenses that some operators say amount to hundreds of thousands of dollars in a single year.

…Hoping to preserve what restaurateurs insist are already thin profit margins, owners say they’ve tried trimming expenses and cutting hours, as well as raising prices. They ultimately concluded that the dining public would better tolerate a charge at the end of the bill than continued price hikes on the menu.

“I can’t get to sleep at night wondering where in the heck am I going to get the dollars I need to pay all my employees,” said Rick DiRienzo, owner of Rockin’ Baja, which operates three restaurants in San Diego County, is about to open a fourth in Mira Mesa, and also has one in Newport Beach.

Some eateries plan to increase menu prices, and one study published by News 10 San Diego shows that when the state minimum wage phases up to $15/hour in 20121, the difference per month would make for a nice meal.

…The study says the average San Diegan spends about $254 a month eating out. When minimum wage hits $12 an hour, their bills will rise an extra $12 a month. When minimum wage reaches $15, they’ll be spending an extra $31.20 each month at restaurants to cover the increase in labor costs.

“It’s definitely pretty expensive, especially when we have to pay for rent already, and the extra taxes we pay in California; it’s ridiculous how high these prices are going up,” said San Diegan Moises Hernandez, who has cut back on eating out over the last two years.

That’s assuming that people chose to eat out at the same frequency in the same location. Experience indicates otherwise.

The minimum wage is impacting employer decisions for other industries as well. Houman Salem, the founder and CEO of ARGYLE Haus of Apparel in the Los Angeles area, is moving his business to Las Vegas and the wage hike is the sole reason.

…[I]f not for the $15 minimum wage, I’d have zero interest in leaving California. In some ways, it’s an ideal time to make clothing here. There’s a huge demand for American-made apparel, and the industry infrastructure that exists in Los Angeles — from garment makers to sewing machine repairmen — is difficult to find elsewhere. But businesses can’t operate at a loss.

…We need more stable, blue-collar jobs in places like the San Fernando Valley — the kind I thought I was helping create. California, however, has put up a giant “Go Away” sign.

Salem provides some food for thought. Too bad many Californians have no stomach for business realities.


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