The Minimum Wage Eats Restaurants

[Dashinka 23,195]

San Francisco’s ever-rising minimum wage—set to hit $15 next year—has restaurant owners asking for the check. “At Least 60 Bay Area Restaurants Have Closed Since September,” read a January headline at the website SFist, which partly blamed “the especially high cost of doing business in SF, with a mandated, rising minimum wage that does not exempt tipped employees.” Another publication, Eater, described the rash of recent closures as a “death march.”

Perhaps the highest-profile closure in San Francisco this year was AQ, which in 2012 was a James Beard Award finalist for the best new restaurant in America. Rising costs chipped away at the restaurant’s profitability, according to a report by Thrillist, driving down the profit margin from 8.5% in 2012 to 1.5% by 2015.

When San Francisco added its own municipal minimum wage in 2004—one of the first in the country—the operating assumption was that tourists and techies would pay the higher prices necessary to offset the cost of the city’s generosity. Last year the San Francisco Chronicle looked at 20 years’ of menus from top restaurants and reported that prices had jumped 52% since 2005, twice the rate of inflation. But increasing prices isn’t a panacea for restaurant owners. “There’s only so much you can charge for tamales,” the owner of a small eatery said in 2015 to explain one reason he was closing.

 

For some empirical backup, consider an April study from Michael Luca at Harvard Business School and Dara Lee Luca at Mathematica Policy Research. They used Bay Area data from the review website Yelp to estimate that a $1 minimum-wage hike leads to a 14% increase in “the likelihood of exit for a 3.5-star restaurant.”

 

https://www.wsj.com/articles/the-minimum-wage-eats-restaurants-1494369579

[IAMX 3,055]

They're gonna need the 9th circuit to try and help them keep as much federal dollars as they can. Productive people are vacating that craphole. Pretty soon it's just going to be illegals.

Edited May 15, 2017 by IAMX

[Amica Nostra 4,803]

2 hours ago, Bill & Katya said:

San Francisco’s ever-rising minimum wage—set to hit $15 next year—has restaurant owners asking for the check. “At Least 60 Bay Area Restaurants Have Closed Since September,” read a January headline at the website SFist, which partly blamed “the especially high cost of doing business in SF, with a mandated, rising minimum wage that does not exempt tipped employees.” Another publication, Eater, described the rash of recent closures as a “death march.”

Perhaps the highest-profile closure in San Francisco this year was AQ, which in 2012 was a James Beard Award finalist for the best new restaurant in America. Rising costs chipped away at the restaurant’s profitability, according to a report by Thrillist, driving down the profit margin from 8.5% in 2012 to 1.5% by 2015.

When San Francisco added its own municipal minimum wage in 2004—one of the first in the country—the operating assumption was that tourists and techies would pay the higher prices necessary to offset the cost of the city’s generosity. Last year the San Francisco Chronicle looked at 20 years’ of menus from top restaurants and reported that prices had jumped 52% since 2005, twice the rate of inflation. But increasing prices isn’t a panacea for restaurant owners. “There’s only so much you can charge for tamales,” the owner of a small eatery said in 2015 to explain one reason he was closing.

 

For some empirical backup, consider an April study from Michael Luca at Harvard Business School and Dara Lee Luca at Mathematica Policy Research. They used Bay Area data from the review website Yelp to estimate that a $1 minimum-wage hike leads to a 14% increase in “the likelihood of exit for a 3.5-star restaurant.”

 

https://www.wsj.com/articles/the-minimum-wage-eats-restaurants-1494369579

The people waiting on me should be entitled to a living wage. I try to tip 20%. I rationalize that if I cannot afford to pay a decent wage for my dinner, I should fix it at home. Some restaurants are experimenting with a no tip policy and a 20% increase in the menu to bring up wages. 

I am surprised only 60 (240) restaurants moved on in a quarter with the spike in rents. Sf has more restaurants or capital with 39 per 10, 000 people so 120 a year sounds like. Natural turnovre should make this number larger r. http://www.huffingtonpost.com/jed-kolko/eating-towns-drinking-towns_b_1729283.html?utm_hp_ref=food

SF, Portland , Seattle, Vancouver LA...these are great food destinations.

Edited May 15, 2017 by ccneat

[Cyberfx1024 7,978]

59 minutes ago, ccneat said:

The people waiting on me should be entitled to a living wage. I try to tip 20%. I rationalize that if I cannot afford to pay a decent wage for my dinner, I should fix it at home. Some restaurants are experimenting with a no tip policy and a 20% increase in the menu to bring up wages. 

I am surprised only 60 (240) restaurants moved on in a quarter with the spike in rents. Sf has more restaurants or capital with 39 per 10, 000 people so 120 a year sounds like. Natural turnovre should make this number larger r. http://www.huffingtonpost.com/jed-kolko/eating-towns-drinking-towns_b_1729283.html?utm_hp_ref=food

SF, Portland , Seattle, Vancouver LA...these are great food destinations.

That's the thing a number of people I talk that work in that industry do not want any sort of Minimum Wage at all. This is all because they make more in tips on average than they ever will from Minimum Wage. Also there is a study that says if the minimum wage is higher for a particular area for restaurant employees then people tend to tip lower. 

 

Also tips on average are not reported thus not taxable by the IRS. My best friend used to just use the money that he "officially earned" from the restaurant he worked in to just pay gas for his car. The other money he made unofficially(Tips) he would spend on everything else. He told me one year he made over $50k in tips alone. 

Edited May 15, 2017 by cyberfx1024

[Amica Nostra 4,803]

3 minutes ago, cyberfx1024 said:

That's the thing a number of people I talk that work in that industry do not want any sort of Minimum Wage at all. This is all because they make more in tips on average than they ever will from Minimum Wage. Also there is a study that says if the minimum wage is higher for a particular area for restaurant employees then people tend to tip lower. 

I have not seen these numbers. 

[bcking 3,157]

Last I checked other Western countries require wait staff to be paid a "living wage". I'm not 100% sure, but I could ask my wife since she worked as a waitress for awhile when she was at University. They add a "table service" charge to a bill to cover if, if I recall. And then tipping is truly discretionary. That is the best system IMO.

 

The problem I have with tips right now is that people somehow "expect" a tip of a certain percentage. That isn't how tips should work.

[jg121783 3,907]

$15 an hour for a burger flipper is just ridiculous. There are some skilled factory jobs out there that pay little more than that. No wonder why some fast food restaurants are experimenting with using robotic systems instead of people.

[IAMX 3,055]

17 minutes ago, jg121783 said:

$15 an hour for a burger flipper is just ridiculous. There are some skilled factory jobs out there that pay little more than that. No wonder why some fast food restaurants are experimenting with using robotic systems instead of people.

Those are the corporations who can handle the overhead by switching to that kind of system.

 

The small businesses are the ones that are going to have the most difficulty surviving. They're the ones that hire the most employees.

 

The left have no concept of economics.. this is why moving back to the states I'd never move back to where social justice is their economic platform.

 

[Amica Nostra 4,803]

 

1 hour ago, jg121783 said:

$15 an hour for a burger flipper is just ridiculous. There are some skilled factory jobs out there that pay little more than that. No wonder why some fast food restaurants are experimenting with using robotic systems instead of people.

What is ridiculous is other people telling me that my burgers are not worth $15 an hour in San Francisco.    

 

If folks want to pay less than poverty wages they can, just not in San Francisco. 

 

 

[IAMX 3,055]

17 minutes ago, ccneat said:

 

What is ridiculous is other people telling me that my burgers are not worth $15 an hour in San Francisco.    

 

If folks want to pay less than poverty wages they can, just not in San Francisco. 

 

 

Or just drive a few mins to another city and get the same for much less, since hiking min wages means hiking prices for consumers. Even those burger flippers making $15 an hour are going to want/need to go where it's cheaper.

[bcking 3,157]

1 minute ago, IAMX said:

Or just drive a few mins to another city and get the same for much less, since hiking min wages means hiking prices for consumers. Even those burger flippers making $15 an hour are going to want/need to go where it's cheaper.

Maybe it's just me but I'd much rather spend a little more for a meal and know that the people who work there are "guaranteed" a standard minimum wage. That's why I prefer the European system where there is a "table charge" when you sit down for a meal, and then the tip is completely discretionary.

[IAMX 3,055]

9 minutes ago, bcking said:

Maybe it's just me but I'd much rather spend a little more for a meal and know that the people who work there are "guaranteed" a standard minimum wage. That's why I prefer the European system where there is a "table charge" when you sit down for a meal, and then the tip is completely discretionary.

That's good for me, or even possibly you, if you have plenty of disposable income like I do, but the problems with this idea concerning fast food wages being "livable":

 

- Everyone making higher wages means higher prices, also means less unskilled jobs (due to reduction of labor demand)

- The min wage worker doesn't have the disposable income to pay more, especially in a state like California, and especially in an urban area of California like SF

- Higher prices means they're back to being poorer (negating the social justice intention of hiking their wages)

- When they're shopping/eating, they're going to look for what's more affordable, investing money elsewhere (further reduces local economy distribution) to survive, instead of in this high price utopia

 

- It doesn't make them not low income

- It doesn't make them any less reliant on government (especially welfare/food stamps)

- It's clearly a superficial change to make leftists feel like they've done something good, when in fact they're destroying a labor market

Edited May 15, 2017 by IAMX

[bcking 3,157]

10 minutes ago, IAMX said:

That's good for me, or even possibly you, if you have plenty of disposable income like I do, but the problems with this idea concerning fast food wages being "livable":

 

- Everyone making higher wages means higher prices, also means less unskilled jobs (due to reduction of labor demand)

- The min wage worker doesn't have the disposable income to pay more, especially in a state like California, and especially in an urban area of California like SF

- Higher prices means they're back to being poorer (negating the social justice intention of hiking their wages)

- When they're shopping/eating, they're going to look for what's more affordable, investing money elsewhere (further reduces local economy distribution) to survive, instead of in this high price utopia

 

- It doesn't make them not low income

- It doesn't make them any less reliant on government (especially welfare/food stamps)

- It's clearly a superficial change to make leftists feel like they've done something good, when in fact they're destroying a labor market

I'll admit economy is not my forte.

 

I don't see other countries' restaurant scenes imploding and to my knowledge places like the UK pay wait staff a minimum living wage. Now I don't think it's the equivalent of 15 dollars an hour, but it is the same living wage as any other field. Wait staff dont' need to earn it in tips while other jobs get it up front.

 

I'm not saying I want the minimum wage to be 15 dollars, I just think if you have a minimum wage you shouldn't allow some fields to force their employees to "make it up" in tips, while other fields have to pay it up front. If a restaurant needs the tips to make up the wages for its employees, they need to either improve their service, move to a cheaper location, or cut costs inother ways in my opinion.

 

In places like San Francisco I would also say that restaurant closures shouldn't just be blamed on paying employees a fair wage. Rents are extremely high in SF/NYC and similar places, and perhaps losing 30 restaurants in the span of the year will make landlords change their renting habits so that things are more affordable. 

Edited May 15, 2017 by bcking

[IAMX 3,055]

9 minutes ago, bcking said:

I'll admit economy is not my forte.

 

I don't see other countries imploding and to my knowledge places like the UK pay wait staff a minimum living wage. Now I don't think it's the equivalent of 15 dollars an hour, but it is the same living wage as any other field. Wait staff dont' need to earn it in tips while other jobs get it up front.

 

I'm not saying I want the minimum wage to be 15 dollars, I just think if you have a minimum wage you shouldn't allow some fields to force their employees to "make it up" in tips, while other fields have to pay it up front. If a restaurant needs the tips to make up the wages for its employees, they need to either improve their service, move to a cheaper location, or cut costs inother ways in my opinion.

Issues I've seen first hand with the UK:

 

- Higher prices everywhere

- Extremely high taxes

- Significantly high portion of welfare beneficiaries, resulting in squalor and entitlement 

 

Hence why they were forced to make a choice.. hammer the GBP, or go the route of austerity. They made the right choice and went to austerity. 

 

The US needs to make this choice too, not only reducing the amount of welfare programs but consolidating them so they're more fiscally sound. 

 

Entitlement is rife in areas like SF, and likewise taxes are ridiculous there. That's why I moved out. It's a dump full of entitled, lazy, useless people, created by the welfare state (California, city and county). Handing them more free stuff (that's what giving people a raise for doing nothing is) solves absolutely nothing.

Edited May 15, 2017 by IAMX

[bcking 3,157]

Just now, IAMX said:

Issues I've seen first hand with the UK:

 

- Higher prices everywhere

- Extremely high taxes

- Significantly high portion of welfare beneficiaries, resulting in squalor and entitlement 

 

Hence why they were forced to make a choice.. hammer the GBP, or go the route of austerity. They made the right choice and went to austerity. 

 

The US needs to make this choice too, not only reducing the amount of welfare programs but consolidating them so they're more fiscally sound.

1. Restaurant prices aren't significantly different, having lived there and now live with a citizen from there

2. I paid more taxes in New York State than they do in the UK, here in Texas a pay less. It's a bit in the middle.

3. I don't see much squalor in the UK when I've been there, and I've travelled all around. Yes there are a lot of "welfare beneficiaries" but that is because they are a partly socialized system where everyone benefits from the government. Everyone has healthcare from the government, so everyone is a beneficiary. Heck even my Uncle who is a US citizen was a "beneficiary" when he needed healthcare there. He never got a bill. (Hit his head the day before my wedding, needed several stitches).

Only the first point really has anything to do with this topic. We are talking about how restaurants choose to pay their employees. In the UK, like in other European countires, you are generally charged a "table charge" (Like 5 euros/pounds or something) when you eat at a sit down restaurant. You aren't charged it for take away, and you aren't charged it at truly "fast food" places like McDonalds. That "table charge", to my knowledge, allows them to pay their wait staff fairly. Your tip is then "discretionary", and most local people I've eaten out with will tip very little (extra change) or none at all, unless there was exceptional service.

 

With that system I don't see a paucity of restaurants in London, Paris etc... Restaurants seem to be doing well enough, and I don't see a huge difference in the cost of dining out. Why can't we do that? It seems more fair to me.