Allow me to admit up front that I am a closet supporter of a $15 minimum wage. I don’t think it is a smart policy, but I like the idea. Unfortunately, it has been tried in several locations, the report card is in, and the results are not good.
A good number of reliable sources prophesied that a $15 minimum wage would devastate the restaurant business whereat that wage is applicable to kitchen workers, bus boys, servers, and even some cooks.
Turns out those prophesies were correct. Let’s take a look at New York City restaurants. This chart comes from an American Enterprise Institute publication by Mark J Perry that was sent to me by my pal Jeff Carter.
As you can see, the recent impact on NYC restaurant employment is to mimic a recession wherein labor is jettisoned because of the economy. The same thing is happening in NYC. Ouch.
What’s the history, Big Red Car?
The history is as follows:
2013 – minimum wage $7.25/hour
2016 – minimum wage $11.00/hour — applies to employers with 11 or more employees
2018 – minimum wage $15.00/per hour — outside of NYC, the minimum wage is $11.10. This means that the NYC “premium” is $3.90/hour which is more than 35%
Results, Big Red Car?
The results have been as follows:
1. No overtime at these rates. Sorry.
2. Layoffs — 36% of NYC restaurants report they laid folks off
3. Reduced hours — 77% of NYC restaurants report they have reduced hours for workers
4. Increased prices — 90% of restaurants reported price increases tied directly to upward wage pressure
5. Zero job growth amongst employers in NYC — in fact, 6,000 jobs were lost
6. Zero new business starts amongst employers in NYC
7. Substantial closings amongst existing businesses. This is exacerbated by a general upward trend in retail rents in NYC.
Bottom line it, Big Red Car
The bottom line is this — for NYC when the minimum wage was increased restaurants began to close, restaurants cut back on staff, hours, and eliminated overtime while increasing prices to consumers.
Economists predicted a bad outcome — 84% of economists predicted a bad outcome. Actual data shows they were correct.
We currently have a $15/hour minimum wage bill that was approved by the US House of Representatives that is awaiting consideration in the US Senate.
So, dear reader, there you have it. A bad policy is a bad policy even when it is a popular policy.
But, hey, what the Hell do I really know anyway? I’m just a Big Red Car and I am still a wary supporter of a bigger minimum wage. We shall see. Have a great Thursday.