“We lost control of our largest controllable expense”
A new law in New York City which took effect at the start of the year, requires businesses with eleven or more employees to pay them a minimum of $15 an hour. It’s not working out too well for restaurants.
Chalk this up to good intentions and unintended consequences.
Megan Cerullo of CBS News reports:
NYC restaurants cutting staff hours as minimum wage hits $15
The legal minimum wage for New York City employers with 11 or more workers rose more than 15 percent on Dec. 31, 2018, to $15 per hour from $13, giving fast-food, retail and other employees a bump in pay. But some New York City restaurant owners say the latest minimum wage hike is forcing them to cut workers’ hours just to stay afloat.
It’s the third rise in the city’s base wage since Dec. 31, 2016, when it went to $11 an hour. The latest increase is part of a plan that phases in minimum wage hikes across New York state, with amounts and effective dates varying by region and industry. It’s not just a New York phenomenon, however: Minimum wages rose in 20 states with the new year, forcing businesses across the country to grapple with higher payrolls — and compete for workers with giants like Amazon that are already offering $15 an hour.
Jon Bloostein operates six New York City restaurants that employ between 50 and 110 people each. The owner of Heartland Brewery and Houston Hall, Bloostein said the effect of the higher minimum wage on payroll across locations represents “an immense cost” to his business.
“We lost control of our largest controllable expense,” he told CBS MoneyWatch. “So in order to live with that and stay in business, we’re cutting hours.”
Bloostein said he has scaled back on employee hours and no longer uses hosts and hostesses during lunch on light traffic days. Customers instead are greeted with a sign that reads, “Kindly select a table.” He also staggers employees’ start times. “These fewer hours add up to a lot of money in restaurants,” he said.
Bloostein said he has increased menu prices, too.
This is what happens when professional activists and legislators, many of whom have never owned or operated a business, make decisions for job creators.
Speaking of jobs, do you think this situation will result in more entry level jobs or less?
Susannah Koteen, who opened Lido Restaurant in Harlem in 2011, said she has already started combining jobs to reduce workers’ hours. She relies on servers to bus their own tables, eliminating one of the lowest-paying customer-facing jobs.
She explained her rationale: “A server can bus their own table, but you can’t ask a busboy to open a bottle of wine and talk about what it can be paired with,” she said.
Koteen said she’s loath to cut these kinds of positions in a community she cares about and from which she has in the past promoted low-wage workers to management positions. “Our current general manager started as a busser the day we opened. English is not his first language, he has his GED. He is smart, hardworking and cares about customer service.”
If only someone had predicted this sort of thing:
- Big Robot welcomes your $15 per hr minimum wage
- Seattle Minimum Wage Hike Backfires Hurting Low Income Workers
- San Diego Restaurants Serve “Dining Surcharge” After Minimum Wage Hikes
The ink on the new law in New York is barely dry, but some people want to keep going.
Ginia Bellafante writes at the New York Times:
The $15 Minimum Wage Is Here. Why We Need $33 an Hour.
On Jan. 1, the new minimum wage, set at $15 an hour, went into effect in New York City, and most companies employing more than 10 people have to pay it. The increase, considered a crucial step in the fight against poverty, is the result of a hard-fought grass-roots organizing effort begun seven years ago and championed as a great victory by liberal politicians, even those who were initially not liberal enough to embrace it. But how much will the new standard do to alleviate some of the most punishing aspects of the city’s affordability crisis?…
You begin to understand some of the animosity directed at Amazon around its impending move to Queens, for example, when you see how much money is actually required to live there already, before housing prices are destined to be driven up even further by the company’s expansion. A single parent with two school-age children, for example would need to make nearly $69,427 a year, according to City Harvest’s Self-Sufficiency calculator. That amounts to an hourly wage of just under $33.
Why stop at $33? Why not go for $100?
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