The Fight for $15 activists will not be fighting for a higher minimum wage anymore. They will be fighting for a job. It has only been six months since New York City introduced the new bottom dollar, but we are already seeing the disastrous effects of this feel-good, economically illiterate policy that could have been seen by Hellen Keller.
New York, New York
On New Year’s Eve, as the city sipped on champagne and sang Auld Lang Syne, small business owners spent the evening with a calculator and Microsoft Excel. The City That Never Sleeps instituted a $15 minimum wage for companies with more than 11 employees, increasing labor costs by 15% for many enterprises in the last two years.
These entrepreneurs needed a drink after all.
Since then, there have been three major consequences of this policy: job losses, a reduction in hours, and higher consumer prices. And, as the saying goes, you ain’t seen nothin’ yet. It will only get worse in 2020 because all businesses will be required to pay a $15 hourly wage.
Brother, Can You Spare a Job?
According to data from the Bureau of Labor Statistics (BLS) and the Federal Reserve Bank of St. Louis, employment at full-service restaurants in New York City declined by 4,000 from last May. Or, as the American Enterprise Institute (AEI) calculated, the city’s iconic restaurant scene has lost 11 jobs every day in the last year.
The bloodbath occurring in NYC is worse than what transpired following the September 11 terrorist attacks when food service jobs flatlined or during the last recession, which cost approximately 2,000 jobs.
Earlier this year, a survey by The NYC Hospitality Alliance discovered that 76% of full-service restaurant respondents and 75% of limited-service establishments planned to slash employee hours.
Jon Bloostein, who operates six NYC restaurants that employ as many as 110 people each, is one of these owners slashing hours, telling CBS News:
“We lost control of our largest controllable expense. So in order to live with that and stay in business, we’re cutting hours.
[It] will cost more to dine out. It’s not great for labor, it’s not great for the people who invest in or own restaurants, and it’s not great for the public.”
Rosa Mexicano, a Mexican food chain with four NYC locations, projects its costs will balloon $600,000 a year. In an industry where profit margins are anywhere between 1% and 4%, that is a major blow to the restaurant. How is it handling the increased personnel costs? Like other companies in the industry: It is raising menu prices. In addition to cutting hours and adjusting schedules, it is hiking its meals by as much as 15%, which appears to be the industry average, based on numerous media reports.
Mateusz Lilpop, co-owner of Lalito, made sense when he said:
“If you have a farmer that has employees that are picking fruit, he has to increase his labor costs, which means he has to increase his fruit prices. I have to buy that fruit from him at a higher rate, and it goes down the chain.”
Why can’t politicians ever think this way?
Incentivizing Insipience
The standard argument on the left is that if a company cannot afford to pay its employees a decent wage, then it shouldn’t be in business at all. The supposition is based on faulty reasoning because it implies that it is better to be unemployed at $15 an hour than to be employed at $10.
The $15 minimum wage is making everyone worse off. Studies have found that jurisdictions implementing this progressive cause du jour have caused employees to earn less than they did prior to the wage hike because companies are cutting hours or changing shifts – it is comparable to Obamacare. Nobody that is important is benefiting from this policy.
But do you know who benefits? Politicians. The parasitic Swamp creatures are incentivized to institute such horrific measures because it makes them look munificent and benevolent. Officials will grandstand inside of fast-food businesses in front of the cameras and use the typical leftist tropes to convey the message that they are ensuring cashiers and burger flippers are earning a living wage, not killing their livelihood. What these political opportunists will not do is tell the truth: The minimum wage is compulsory unemployment and that these politicians are doing more harm than good. Being honest might not win an election, but they will keep dignity intact. Who are we kidding? Politicians don’t have any dignity.
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