Not just Seattle. NYC feeling the heat from minimum wage hikes

Yesterday, Ed Morrissey looked at the “controversial” (not really) figures coming out of Seattle showing the downward pressure on employment and wages experienced there since the minimum wage suddenly spiked upward. This is unwelcome news in the Fight For 15 community and they’re pushing back on it as hard as possible. But the figures don’t lie and this result was entirely predictable in a free market economy.

Seattle, however, isn’t the only place this effect is being seen. The minimum wage has been jumping upward in New York City also and similar effects are being felt. Nowhere is this more true than in the restaurant business, traditionally a market segment where people with minimal education and experience can get an entry level job. But now that’s beginning to change. (NY Post)

The New York restaurant industry is slowing down, adding fewer jobs and shedding eateries amidst recent hikes in the minimum wage.

The Empire State lost 1,000 restaurants last year and the number of jobs as cooks, servers and dishwashers grew by an anemic 1.4 percent. That’s a far cry from the 4.4 percent annual growth the state’s eateries enjoyed from 2010 to 2015, according to the Employment Policies Institute, a nonprofit research group.

The Big Apple accounts for the lion’s share of the state’s growth — and the slowdowns in the city are more dramatic.

Employment growth at fast-food restaurants in the city — which are required to pay $12 an hour, or $1 more than other employers — shriveled to 3.4 percent last year compared with 7 percent growth from 2010 to 2015. The spiral has continued into 2017, which has generated just 2 percent growth through May.

This is simply too much to lay off on coincidence, even if an in-depth study into all the nooks and crannies similar to the one done in Seattle hasn’t been completed. We’re supposedly in the midst of an economic recovery that’s been well underway since last year and accelerating in 2017. Unemployment is approaching historic lows for the modern era. The restaurant industry is one which rises and falls with the tides of the economy. When people are out of work they can’t afford to go out for fancy dinners as often so business slows. When everyone is employed, the eateries do much better. So how else do you explain this?

The full service restaurants (which employ the most people) are showing only an anemic 1.3% growth as compared to the average 6.5% growth they experienced over the past five years. Michael Saltsman, managing director of the Employment Policies Institute, is quoted in the Post article as saying that this drop-off in growth is something, “that didn’t even show up during the great recession.”

Restaurant owners are reporting that, in order to remain profitable they’ve had to cut their staffing by up to 10% and reduce hours for the workers. They’ve also raised their prices to accommodate the surge in labor costs. This means fewer customers, particularly in an area where they have so many options.

Remind me again who the Fight For 15 was supposed to help? Because it certainly doesn’t sound like it’s doing the lower skill workers any favors.