Some restaurants face pressure to trim menus and staffs under California's wage hike

[Svnla]

Selwyn Yosslowitz said that minimum wage hikes add increased pressure to restaurants, which already operate on very slim margins. With the minimum wage going up, Yosslowitz said he's going to have to rethink his menu and what dishes his restaurants serve.

"First, you have to raise prices, otherwise you'll be out of business," said Yosslowitz, president of the Marmalade Café, which operates seven Southland restaurants and an outlet at LAX. Restaurant owners also have to think about "re-engineering the menu" to require fewer kitchen workers.

"We will try to re-engineer the labor force," he said. "Maybe try to reduce the number of bus boys and ask servers to bus tables."

http://www.latimes.com/politics/la-...neer-labor-force-some-say-20160327-story.html

Get ready Cali folks, open your wallets out to pay more and get less choices on the menus.

Edit: Another article from LA Times.

Last year, L.A. County commissioned a survey of 1,000 businesses around the county as part of a larger report on a minimum wage boost.

The economists concluded that as a result of the wage increase, "many prices will increase, including those that lower-income households commonly face; wages will rise for those in minimum wage jobs that remain employed; employment opportunities for those at the bottom of the skills ladder will be diminished" and "employment growth will slow."

A majority of businesses surveyed -- and 96% of those have minimum wage employees -- said they would likely raise their prices to make up for the increased labor costs.

Only 6% of the businesses overall said it was likely they would reduce the number of minimum-wage workers they employ as a result of the increased wage, but 19% of businesses with minimum wage workers said it was likely they would.

http://www.latimes.com/local/lanow/...sks-and-potential-rewards-20160328-story.html

 

[Sonikku]

There's basically no reason to ever hike the minimum wage if the cost of rent/utilities/food etc. remains the same year from year. It's the same reason why restaurants never need to hike their prices in areas where the minimum wage hasn't budged in half a decade.

 

[Moonbeam]

It's not safe to eat in restaurants in expensive cities in California because they can't keep knowledgable cooking staff on hand. Trained people can't afford to work and live there. Cities need a government a owned utility to pump food paste to feeding stations placed throughout them in strategic places.

 

[fskimospy]

http://www.latimes.com/politics/la-...neer-labor-force-some-say-20160327-story.html

Get ready Cali folks, open your wallets out to pay more and get less choices on the menus.

You can also get ready to stop having government indirectly subsidizing the business model of these people who pay their workers less than a minimum wage who then get public assistance.

At least in this case the customers of these restaurants are choosing to engage with the business and bear the costs of their choice. Under the old model everyone's taxes paid to subsidize these restaurants whether you wanted to or not.

 

[Texashiker]

There's basically no reason to ever hike the minimum wage if the cost of rent/utilities/food etc. remains the same year from year.

In your world inflation does not exist?

 

[UglyCasanova]

You can also get ready to stop having government indirectly subsidizing the business model of these people who pay their workers less than a minimum wage who then get public assistance.

At least in this case the customers of these restaurants are choosing to engage with the business and bear the costs of their choice. Under the old model everyone's taxes paid to subsidize these restaurants whether you wanted to or not.

When the businesses fold the government is having to support those people 100% rather than just 20%(or whatever the number works out to be). Not good in either case.

And since they are going to be paid a "living wage" does this mean they no longer qualify for government support like SNAP or Medicaid?

 

[s0me0nesmind1]

You know how everyone is talking about fast food workers being replaced with machines? The same can be done at the restaurant level to a certain extent.

Chili's is already experimenting with the concept by having a tablet at the table that you can put orders directly into. The only thing left is for them to cook it in the back and for someone to bring it out to you. Pick your poison in life folks, either way, in the end with things like this you're just screwing over yourselves.

 

[Brovane]

Everybody in California will be operating under the same regulations. The solution is to simply raise menu prices to cover the increased cost of labor.

 

[Cozarkian]

You can also get ready to stop having government indirectly subsidizing the business model of these people who pay their workers less than a minimum wage who then get public assistance.

At least in this case the customers of these restaurants are choosing to engage with the business and bear the costs of their choice. Under the old model everyone's taxes paid to subsidize these restaurants whether you wanted to or not.

The high school students working at the local ice cream parlor / restaurant are not on public assistance. They neither need nor deserve $15 per hour.

 

[fskimospy]

When the businesses fold the government is having to support those people 100% rather than just 20%(or whatever the number works out to be). Not good in either case.

Except of course there's little to no empirical evidence for minimum wage increases leading to increased business failure. In fact if anything the economics literature finds better business growth after minimum wage increases.

And since they are going to be paid a "living wage" does this mean they no longer qualify for government support like SNAP or Medicaid?

Fewer of them will. Isn't that great??

 

[UglyCasanova]

Everybody in California will be operating under the same regulations. The solution is to simply raise menu prices to cover the increased cost of labor.

Raise menu prices and people will eat out less (not necessarily a bad thing from a public health perspective). People eat out less and businesses have to cover increased cost with potentially less revenue. I agree that the government shouldn't be subsidizing low pay, but I also understand that there isn't an easy answer to this and having the government rather than supply/demand dictate what labor is worth is no solution.

 

[Subyman]

The high school students working at the local ice cream parlor / restaurant are not on public assistance. They neither need nor deserve $15 per hour.

So you take one impossibly small portion of the minimum wage population (HSers working at an ice cream parlor, parlor??, really?) and then determine how much money they do or don't deserve without ever meeting them. Yeah, maybe stick to ranting about your cold grits to the geriatric staff.

 

[Sheik Yerbouti]

Everybody in California will be operating under the same regulations. The solution is to simply raise menu prices to cover the increased cost of labor.

:thumbsup:

Not everyone working minimum wage jobs is a teenager or deadbeat, no sense in them needing to work 2/3 jobs just to make ends meet. Not everyone can be an astrophysicist/neurosurgeon/hacker extraordinaire like they are here on anandtech.

 

[ivwshane]

The high school students working at the local ice cream parlor / restaurant are not on public assistance. They neither need nor deserve $15 per hour.

Says who? Some idiot on the Internet?

 

[UglyCasanova]

:thumbsup:

Not everyone working minimum wage jobs is a teenager or deadbeat, no sense in them needing to work 2/3 jobs just to make ends meet. Not everyone can be an astrophysicist/neurosurgeon/hacker extraordinaire like they are here on anandtech.

Why not?

 

[rudder]

:thumbsup:

Not everyone working minimum wage jobs is a teenager or deadbeat, no sense in them needing to work 2/3 jobs just to make ends meet. Not everyone can be an astrophysicist/neurosurgeon/hacker extraordinaire like they are here on anandtech.

And businesses simply can't pay $15/hour to someone who does not bring that much value to the business. Most businesses exist to make money not to provide a good living to a worker. I say most because there are companies, who through no government intervention whatsoever, choose to pay their workers above market wage. My guess is these companies attract the better workers.

 

[ivwshane]

Raise menu prices and people will eat out less (not necessarily a bad thing from a public health perspective). People eat out less and businesses have to cover increased cost with potentially less revenue. I agree that the government shouldn't be subsidizing low pay, but I also understand that there isn't an easy answer to this and having the government rather than supply/demand dictate what labor is worth is no solution.

Do you think people who make more money will also likely spend more money or eat out more? You've highlighted the possible negative effects (although the data would be against you) but you failed to mention any of the positive outcomes.

 

[fskimospy]

Raise menu prices and people will eat out less (not necessarily a bad thing from a public health perspective). People eat out less and businesses have to cover increased cost with potentially less revenue. I agree that the government shouldn't be subsidizing low pay, but I also understand that there isn't an easy answer to this and having the government rather than supply/demand dictate what labor is worth is no solution.

But the market ISN'T determining what their labor are worth. These businesses are paying their employees less than what it takes to live in their communities in a lot of cases. That would mean in a purely market based negotiation these people would in many cases not be able to work for so little as they would become homeless, starve, whatever.

If you really want to find out what the market says then you would have to eliminate all means based government assistance. Until that happens what you really have is taxpayers subsidizing the business model of these businesses that rely on minimum wage labor.

 

[ivwshane]

And businesses simply can't pay $15/hour to someone who does not bring that much value to the business. Most businesses exist to make money not to provide a good living to a worker. I say most because there are companies, who through no government intervention whatsoever, choose to pay their workers above market wage. My guess is these companies attract the better workers.

This is based off of what data?

 

[Spungo]

This is based off of what data?

The fact that governments have special minimum wages specifically for handicapped people? The government is fully aware that handicapped people are unemployable at $10/h. If hiring you is a net loss for the company, you will not be hired. It's that simple.
Of course, we wouldn't need to keep raising the minimum wage if our stupid federal reserve would just stop inflating the shit out of our currency.

 

[Cozarkian]

So you take one impossibly small portion of the minimum wage population (HSers working at an ice cream parlor, parlor??, really?) and then determine how much money they do or don't deserve without ever meeting them. Yeah, maybe stick to ranting about your cold grits to the geriatric staff.

I gave a legitimate example of a business model inside the limited population of this topic (restaurants) to show the proposed solution to underpaid workers is overbroad.

If you want to go beyond restaurants and expand into the entire food, retail and entertainment industries, you will find a significant job population of high school students and some college students who benefit from having below living wage jobs available that allow them to earn valuable work experience and build their resume without competing with adults looking for careers.

Another population of people that don't rely on government subsidies in minimum wage jobs are families with two earners.

A state EITC would be a better method because it would reduce the overall cost to society by excluding the above classes of workers.

It is a fiction that taxpayers (particularly middle class) aren't going to bear the cost of increased minimum wage in the long run. Businesses will pass the bulk of the cost on through a combination of higher prices, reduced benefits/raises/wages for salaried or above-minimum wage employees, and fewer jobs.

 

[fskimospy]

The fact that governments have special minimum wages specifically for handicapped people? The government is fully aware that handicapped people are unemployable at $10/h. If hiring you is a net loss for the company, you will not be hired. It's that simple.
Of course, we wouldn't need to keep raising the minimum wage if our stupid federal reserve would just stop inflating the shit out of our currency.

Inflation has averaged less than 2% over the last 10 years, which is below target. We need MORE inflation, not less.

Inflating the shit out of our currency? What nonsense is this?

 

[Sheik Yerbouti]

Why not?

so working 2 or 3 jobs to make ends meet is acceptable to you?
you're a good little republican. You should get a treat.

 

[stlc8tr]

The high school students working at the local ice cream parlor / restaurant are not on public assistance. They neither need nor deserve $15 per hour.

Yeah, raising the minimum wage is the wrong tool in the fight against poverty/inequality. They should have focused on expanding the EIC instead.

 

[fskimospy]

I gave a legitimate example of a business model inside the limited population of this topic (restaurants) to show the proposed solution to underpaid workers is overbroad.

If you want to go beyond restaurants and expand into the entire food, retail and entertainment industries, you will find a significant job population of high school students and some college students who benefit from having below living wage jobs available that allow them to earn valuable work experience and build their resume without competing with adults looking for careers.

Another population of people that don't rely on government subsidies in minimum wage jobs are families with two earners.

A state EITC would be a better method because it would reduce the overall cost to society by excluding the above classes of workers.

It is a fiction that taxpayers (particularly middle class) aren't going to bear the cost of increased minimum wage in the long run. Businesses will pass the bulk of the cost on through a combination of higher prices, reduced benefits/raises/wages for salaried or above-minimum wage employees, and fewer jobs.

1. EITC would not be a better method as it would simply offload the cost of employing low wage workers onto the rest of society. Why should the rest of society subsidize their business model? The better way to do it is through a combination of higher minimum wage and an expanded EITC, that way all the bases are covered.

2. The taxpayers most certainly won't be bearing the cost of increased minimum wage, the people who patronize businesses that employ primarily minimum wage workers will. That's in fact the whole point as again, why should we subsidize their business model? There are plenty of restaurants and other businesses that don't rely on primarily minimum wage workers that compete with ones that do. In-N-Out, for example, is a fast food place that pays its workers dramatically more than minimum wage. In this case we are simply removing the government subsidies for businesses that employ primarily low cost workers.

3. The economics literature finds small to zero effect on the number of jobs available by minimum wage hikes.