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.
AND if there’s no compulsion to join the union.
I am always amazed about how surprised liberals are when things like this happen. There were any number of threads on FreeRepublic that predicted exactly what happened would happen. Oh, but we are crazy right-wing nuts around here.
Same in Oakland, CA — earlier today: “”It’s the Final Nail to the Coffin”: Chinatown Businesses Struggle Over Oakland’s New Minimum Wage”
The new $12.25, up from $9, went into effect on March 2 and was approved by 82 percent of voters. “With this minimum wage kicking in, it’s the final nail to the coffin,” said Carl Chan, a board member for the Chinatown Chamber of Commerce.
The new minimum wage forced owner of the Legendary Palace restaurant to close its doors on Feb. 26. Officials said four restaurants and six grocery stores have closed since January. Many business owners are blaming the 36 percent wage hike, while some said the businesses were already in financial distress.
“Business owners are angry,” said KC Lam, a business owner. “They can’t cope too much.”
The free food and parking - I wonder if they were paying taxes on those. I bet the IRS will be looking at their past tax returns.
As a retired police officer forced to pay union dues, I have a strong grievance against unions. On the two occasions when I needed union representation, it was suggested that I get civilian representation.
Gee, gosh ... my union dues at work ... unions suck.
Liberals are literally too stupid for words. It’s a wonder any of them can tie their own shoes.
” Like many liberal policies, it was passed by City Hall with the best of intentions. “
????
The intention was to make people dependent on the government. the results were blatantly predictable.
I don’t consider that “the best of intentions”.
Actually the minimum wage is what unions use as leverage for higher union wages.
Heh!!
I view politicians who vote to raise the minimum wage with disgust. They vote to raise wages and then expect to be patted on the back, yet THEY don’t have to make payroll. THEY don’t have to struggle to make ends meet.
Yes. That and any intimidation I meant to cover under the umbrella of thuggery.
They aren’t surprised. This works well for them.
Public union, right?
Taxpayers are hostage to public unions. I guess you were in a sense as well.
Stupid liberals - they just have no clue - if you raise wages too high, you take away all the profit to pay for the other things needed to keep the business running.
But then, you have to realize that most of these liberals who want the high wages - do not run a business.
So, instead of paying higher wages, the businesses have had to close. Now, all those people who were supposed to get a higher wage ARE WITHOUT A JOB.
SMOOTH MOVE SEATTLE.
Hell's Highway ain't just paved, it's multi-lane!
There is nothing in the article that comes from anyone in the city government, which shows that what is happening is a surprise. And I am not going to give them an excuse that they have the best of intentions.
The reason I won't let the "progressives" off the hook is that this is exactly the way they behave all the time. They want to drive people out of Seattle. Literally. They have decided it will be a lilly white refuge and they will drive out anyone else. Lilly whites talk a good game about helping the poor, but they certainly don't want to live around them. That's what trips to Africa are for, so they can take pictures of poor people and their quaint local customs. Or send a few bucks down Sally Struther's way. But they don't want to actually live around poor people.
Lilly white enclaves such as Boulder, Vail, Aspen, Carmel, San Francisco have all become monocultures by driving anyone else out with high real estate prices and costs of living. San Francisco used to be a lot more ethnically diverse, but blacks were driven over the bridge to Oakland by high real estate.
In 40 years of lilly white apartied policies, have they ever said, "oops, that's not what we wanted?" Raising Seattle's minimum wage does not raise the wages of people there, it forces anyone not worth $15 an hour to leave the city, leaving it to the lilly white gentry class, which gets their money directly or indirectly from taxpayer serfs, so who cares if the cost of living is high?
Wait until their chauffeurs, valets, maids, Nannys and yard boys tell them how much more they expect to be paid.
And then there are the barbers, hair dressers, nail techs, etc., etc.
In my business employees cost a little more than twice the hourly rate.
Yet you posted. Strange.
Wow you win the post of the day award. The same thing is happening all around the country and the same Lilly whites are distracting the ones losing with hands up go loot crap.
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