Denver restaurants have to furlough workers when minimum wage goes up during COVID

On the first of the year, New York was one of many states that saw another increase in the minimum wage. Those increases are scheduled to continue until the entire state is at $15 per hour. The same thing happened in Colorado, but it’s having a completely predictable and negative side-effect in at least one industry. Restaurants and bars, already reeling from the impact of the shutdowns and fewer potential customers venturing out for dinner during the pandemic, suddenly have to come up with the money to pay higher wages. For some of them, it’s simply been too much. CBS Denver spoke to some restaurant owners who have taken the drastic step of furloughing many of their employees, and other “adjustments” will have to be made as well if they hope to survive.

About 50,000 Denver workers will receive larger paychecks as the city’s scheduled minimum wage increase took effect on Jan. 1. Struggling industries, like food and beverage, appreciate the employee raise. However, some restaurant owners would prefer the City of Denver delay the increase.

“I had to furlough everybody with the exception of one,” said Brian Murphy, owner and Executive Chef at The 9th Door. “Increases should happen. It just came at a horrible time given the circumstances.”

The Colorado Restaurant Association says staff at many restaurants have been cut during the pandemic.

Even if you are a supporter of a higher minimum wage, you have to recognize that this is coming as a double whammy for owners of restaurants and bars. They’ve alternately been either shut down entirely or restricted to outdoor service or take-out for months on end. Those who fail to comply are hit with tens of thousands of dollars in fines and the potential to lose their liquor licenses. Turning a profit is an impossibility for many of them and they’re just trying to hang on until things return to some semblance of normality.

Now, just as what little holiday traffic they might have seen is subsiding, they’ve suddenly run headlong into a hike in their labor costs. That turned out to be a bridge too far for some, such as the owners interviewed in the linked article. None of them are happy about having to send even more of their employees to the unemployment lines, but what other options are there? If the establishment goes under entirely, nobody will have a job.

As one owner went on to point out, it’s not just the wait staff and the bartenders who have to be paid more. There are people on the kitchen staff, drivers who pick up and deliver produce and assorted vendors. All of those costs increased at the same time. It adds up quickly.

It’s clearly within the power of the state legislatures to enact emergency measures to delay the next wage hike until these businesses are back on their feet. Many of them have delayed many other things in response to the pandemic. But just as we’ve seen happen to landlords during the eviction moratoriums, these legislators haven’t paid any attention to the impact their decisions are having on employers. And when you do damage to the employers, you do damage to the workers who rely on them for jobs.

Wasn’t that the whole reason for these wage hikes in the first place? To help out the workers? Those efforts at “help” are probably cold comfort at this point to the people who are out of a job and may never get their old positions back if their employer closes down permanently. And the worst part of all of this, as I mentioned above, is that this situation should have been entirely predictable. The state governments knew the next round of wage hikes was coming months or even years in advance. When the industry went to its knees because of the shutdowns and the virus, they could have headed this crisis off at the pass. But they did nothing.