The result of the Fight for 15 movement in New York City has finally gone into effect. The minimum wage jumped by 15% in many cases, to $15 per hour this month. This mostly affects employers of lower skill level workers, particularly in the food service and beverage industries. And now that labor costs have risen, restaurants from fast food joints to upper-end fine dining establishments have raised their prices. As a result, some people have had to make adjustments in their budgets and lifestyles, going out to eat less often and bringing their own lunches to work.
As you might imagine, that’s not only been annoying for the customers. It’s impacting the restaurant business as well. (NY Post)
New York City’s hotly contested minimum wage increase to $15 — up from $13 or $13.50, depending on employer size — rolled out citywide at the start of the year. And although that’s good news for NYC restaurant servers, patrons are grumbling about its impact on menu prices at their favorite eateries.
Ahead of the wage hike, the NYC Hospitality Alliance conducted a survey of 574 local food establishments in late 2018. They found that 87 percent of respondents planned to increase menu prices this year to offset the minimum wage bump. True to their promise, the cost of food has risen at various spots around the city.
“Basically, the prices will have gone up at every restaurant in New York,” Jon Bloostein, CEO and founder of Manhattan chain Heartland Brewery, tells The Post. At his Midtown beer-and-burger joints, he says he’s now charging a dollar more for several entrees, 50 cents to a dollar more on appetizers and 50 cents more on pints of beer as a direct result of the wage shift. The changes will be even more dramatic at high-end spots, he adds: “At a tablecloth restaurant, a chicken dinner with a vegetable and a side [used to go] for $26 to $28, and now it’s $32 to $34,” he says, giving general estimates.
Holy cow. Who could have seen that coming? Well… pretty much everybody. And that includes the Democrats who passed the $15 per hour minimum wage bill. How did they plan on offsetting the significant bump in dinner bills? By eliminating tipping for the wait staff. That idea went over like a lead balloon and was quickly abandoned by a number of eateries that tried it.
None of this required an Ouija Board to figure out. If the government artificially drives up labor costs, the restaurants (who always operate on very thin margins) were going to have to make up for that surge in costs someplace. They could either fire some of the staff, reduce the hours they work, or raise prices. Usually, it was going to be some combination of all of them. But you can only operate a business with a skeleton crew for so long.
Sadly, the result is what they’re seeing in New York. Some customers are taking to brown bagging it or staying home and cooking for themselves. Fewer customers mean less profit and a need for fewer workers. Conversely, if you allow the minimum wage to rise naturally from market pressure, it happens when the economy is good, competition for employees increases, people are earning more money and can generally afford to spend a little more when dining out. This situation in New York City is a case of entirely self-inflicted wounds.