Only a government drone, liberal moron, or union douchebag couldn’t see this coming from a mile away. Instituting a mandatory $15 minimum wage is about the dumbest government enforced idea ever. When Seattle announced it, Obama and his liberal minion hordes applauded and declared victory in the war against greedy capitalists. Now it goes live in two weeks. The impact in the real world is already being felt and will really sink in after more small businesses close up shop, more workers lose jobs, and prices jump for everything in the socialist paradise of Seattle.
Of course restaurants were going to close. All restaurants operate on very thin margins. That’s why very few survive over the long-term in the first place. Family owned restaurants are always living on the edge. This is how it works in the real world. Waitresses at restaurants are paid approximately $2.83 per hour. Oh the horror!!! A waitress working a 4 hour lunch shift or dinner shift at a moderately priced bar/restaurant can generally make between $80 and $120 in tips. That is $20 to $30 per hour, along with their $2.83 pay. According to the IRS, 10% of their total sales must be declared as tip income.
The restaurant only incurs $11.32 of expense for the 4 hour shift for each waitress. They incur huge costs for food, liquor, equipment, utilities, and the avalanche of taxes, fees, and regulatory expenses weighing them down from government drones. With profit margins of 5% or less, a mandatory $15 minimum wage for every waitress increases that labor cost by more than 500%. Their choice is to raise prices drastically, which will drive patrons away, or shut down. Consumers will not accept menu prices going up 25%. The restaurant is forced to close by government mandate.
It’s the same with mandatory sick days. Philadelphia just passed a law requiring small businesses to give every worker 10 sick days. In the restaurant industry, if you are sick you call a fellow worker to take your shift. It’s rarely a problem. Now the restaurant is stuck with the drastically higher expense of owing sick days to dozens of workers.
The control freak liberals act like they are helping the poor and disadvantaged, when all of their laws, regulations and taxes do is make more people poor and disadvantaged. What a fucked up country.
Seattle restaurants going dark as $15 an hour minimum wage goes into effect
Guest Post by Rick Moran
Seattle is about to embark on a civic experiment that most experts predict will be an economic disaster; a $15 an hour minimum wage is set to go into effect on April 1st. And some restuarants in the city have already shuttered their doors and are either going out of business or moving to friendlier climes.
This was entirely predictable – and was predicted when the measure passed the Seattle city council. Restuarants are particularly sensitive to this sort of increase in wages since most of their employees are paid at the minimum, and such a large percentage of their operating costs go to labor.
“Washington Restaurant Association’s Anthony Anton puts it this way: “It’s not a political problem; it’s a math problem.”
“He estimates that a common budget breakdown among sustaining Seattle restaurants so far has been the following: 36 percent of funds are devoted to labor, 30 percent to food costs and 30 percent go to everything else (all other operational costs). The remaining 4 percent has been the profit margin, and as a result, in a $700,000 restaurant, he estimates that the average restauranteur in Seattle has been making $28,000 a year.
“With the minimum wage spike, however, he says that if restaurant owners made no changes, the labor cost in quick service restaurants would rise to 42 percent and in full service restaurants to 47 percent.”
Restaurant owners, expecting to operate on thinner margins, have tried to adapt in several ways including “higher menu prices, cheaper, lower-quality ingredients, reduced opening times, and cutting work hours and firing workers,” according to The Seattle Times and Seattle Eater magazine. As the Washington Policy Center points out, when these strategies are not enough, businesses close, “workers lose their jobs and the neighborhood loses a prized amenity.”
A spokesman for the Washington Restaurant Association told the Washington Policy Center, “Every [restaurant] operator I’m talking to is in panic mode, trying to figure out what the new world will look like… Seattle is the first city in this thing and everyone’s watching, asking how is this going to change?” The Washington Policy Center,
Oakland is seeing similar problems as it has raised its minimum wage from $9 to $12.25:
For 27 years, Sandy Vuong has supplied towering cakes and fluffy Vietnamese pastries to residents of Oakland Chinatown. Now she might shut her doors.
Vuong’s Delicieuse Princesse Bakery isn’t the only business that’s foundering after a new law raised the hourly minimum wage in Oakland from $9 to $12.25 — pushing the bakery’s payroll costs up by 36 percent overnight. According to Carl Chan, a board member of Oakland Chinatown Chamber of Commerce, four restaurants and six grocery stores in and around Chinatown have already shuttered since January, at least partly for fear that the wage increase was going to put them over budget.
Among them is Legendary Palace, one of two banquet restaurants in the neighborhood.
“If it doesn’t reopen, then a lot of business in Chinatown is gonna go back to San Francisco, or down the 680 corridor to Milpitas and Fremont,” said George Ong, an attorney representing Legendary Palace’s landlord. Legendary Palace closed for a variety of reasons, not solely the wage hike, said Ong. Another reason had to do with internal disputes among the old owners. Now, Ong worries that higher labor costs might inhibit a new owner from coming in.
“There’s no question it’s gonna have an effect,” Ong said. “The question is how much.”
There is a method to this madness. Labor unions and far left activists don’t care how many restaurants are forced to close, or how many workers lose their jobs. As long as there are some workers who make the “living wage” and some businesses willing to raise prices and try to make a go of it, they think their point is proved and the drive for a $15 minimum wage will sweep the country.
Urban centers are in danger of becoming vast wastelands. Many smaller businesses will not be able to jack their prices up high enough to pay the new wage. So the rich get richer and the poor simply disappear.
Meanwhile, the people least able to afford it are losing their jobs. I guess that’s the price we pay to enact “progressive” policies.
Read more: http://www.americanthinker.com/blog/2015
Wage and price controls:
And what are the unintended consequences? You cannot foresee them all. Sometimes they turn out to be something totally unexpected.
As an example of completely unexpected unintended consequences take the case of rent control. You wouldn’t have guessed that because of rent control I’m pretty much forced to raise the rents on my tenants every opportunity I can. That doesn’t on the surface make any sense does it?
In the past (before rent control) even when the market rates were rising, if I had a good tenant that I was happy with, one that always paid the rent on time and never caused any problem and was easy to deal with, I would ignore opportunities to raise their rent even though the rent I was collecting from them was below the market I would consider their being a good tenant as having a value in itself. If I felt the rents were falling too far below the market I could raise them any amount at any time. No worries, no hurry. So as a result many times or I should say most of the time my rents were below market rates.
But now I have to deal with rent control. Each year when I have the opportunity to raise the rents I need to do so because if I fall below market rates I can never make up for the lost opportunity. My rents will stay below market forever. So because of rent control I would be crazy not to stay tight in line with market rates.
So rent control forces me to raise the rent…..(unintended consequence) Not what its intended purpose was is it.
I actually told one young lady (she comes across as a hardcore liberal as best I can tell) that the reason her rent was going up was because rent control gave me no choice.
Stucky says:
“A guy with a food cart – hotdogs, tamales, gyros, etc. could clean up …” —– Iska
I once did a mortgage for a guy with two little hot dog carts in NYC. He made $150k a year … no bullshit.
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and his rent was 100k/yr unless he wanted to spend an hour getting to his carts.
“They incur huge costs for food, liquor, equipment, utilities, and the avalanche of taxes, fees, and regulatory expenses weighing them down from government drones.”
Interesting you don’t mention the biggest cost component; rent. The payment of money to a person who sits on his ass with hand outstretched making an endless grasping motion.
Anyone who does not want to pay rent is free to buy their own land and building or go live under a tree.
For fuck sake, it is not a damn sin to make money.
Too many losers now believe it is. “Anyone who makes money is a criminal, evil mofo!”
Fuck that shit. Making money is good. I recommend everyone do it.
And I said make it, which means produce or supply something of value, in return for profit. Providing a building and charging rent generally qualifies.
To make legitimate money you need to produce something or provide something whose value (ie what people will pay for it) exceeds the cost of its provision.
Try to fuck with that, and disaster eventually strikes. Seattle is fucking with that. They are increasing the cost of labor beyond its value.
Amen, dude. I used to hire high school kids to do clean up and support stuff, they were feral, not employee material at all. We didn’t give them schedules, they could come in anytime they wanted, and we would work them. I think I paid them 7 bucks an hour, debatable whether they were always worth it. But the value I got out of them was I could keep my production guys on production. Little by little, most of them cleaned up their act, and became employable.
That kind of situation won’t happen at 15 bucks. I used to have to visit the ladies at the state attorneys office to try to get those kids out of the scrapes those kind of kids get into. They were so impressed by my little training scheme they offered me grants. I had to decline, they wanted to pick the kids. You can guess. Seattle just cut off something beautiful, the opportunity for kids to learn how to become employable. They came for beer money, but they always learned how to hold a job, if they stuck around.
As a business owner, payroll is my largest expense. Although I only have 3 employees they all make more than 15 dollars per hour. If I was forced to double or triple that expense, that would be game over. The local market couldn’t adjust quickly enough upwards to cover expenses. In other words, hyper-inflate all of us out of work.
I am looking at another cause- effect bonus. Imagine the increase in tax revenue? Not only would it increase by magnitudes of order, the servers etc would still be taxed at10% of non existing or severely reduced gratuity rate.
Central planning , sounds about right.
Praise the Lord and Fuck all Politicians, and Bankers and Psychopath Corporate Fucktards in the ass.
” … and his rent was 100k/yr unless he wanted to spend an hour getting to his carts.” — Zara
Nope. The mortgage was for a home in Parsippany, NJ. He hauled his hotdog carts to NYC every day in his pickup.
BTW, he never did get his mortgage. All cash business … and he only reported half of it …. not enough income shown for about a, iirc, $500k mortgage. And he couldn’t qualify for a “liars loan” because he didn’t pay his bills, and his credit sucked. I wasted a month on that a-hole.
I know it seems crazy.But look at the cost of living. Wages suck for many jobs.And many jobs are now 29 hour a week gigs. If you work and yet cant afford a place to live? To eat?
starfcker–If you want to get money into a 3rd world country like Somalia, just fly a cargo plane over it and push the money out the back.
Competition is competition whether it is fair or not. So, you’re saddled with gov regs, etc and your competitors have a freer hand in keeping their cost down. It has never been different because that is the way the world works. Paternalism is rampant in our US economy. Corps get laws passed all the time limiting upstarts and competition. They use their leverage to pressure banks into not making loans to the upstarts and competition and pressure congress for favorable legislation.
Look at Tucker automobile company for example. Tucker was an innovative car company, in direct competition with the established Big 3. Their inability to get funding was a direct reason for their failure.
Guess who dried up their funding?
By the way, I have some Tucker stock, do you think it will come back?
This has really been a very good blog. Many intelligent, thoughtful comments and I enjoyed your points of view.
One things for certain, we are in a hellva fix. We would have a better chance at the Gordian Knot.
yahsure–So who in the hell do you blame for that? It just didn’t happen out of thin air. Does ya’ think that Obama Care, aka ACA, mighten have something to do with it?
Look at it this way, yahsure, now you get to go down to the beach and play your guitar with all your free time. There are two sides to each coin. Eating is highly over rated anyway. If it gets too cold in Milwaukee in the winter, jump a freight heading South and spend the winter in Arizona. One of these days, I will tell you about the time I was ‘riding the rails’.
Llpoh–It is only a sin to make money if nobody else is. It’s called envy. And that pretty much sums up the American culture, today.
The problem is that we just don’t stop with envy. We back it up with justified stealing. Justified stealing goes under the term ‘Socialism’.
True concern for the welfare of our fellow man is the antithesis of ‘Socialism’ where the benefits accrue to a small minority and misery is shared by the rest.
Don’t wait too long, Homer, I love trains. Let us in on your Emperor of the North story.
I feel bad for the mom and pops I Seattle but chain restaurants in are failing not just Seattle but all over because they deserve to fail — their food is terrible and I’m not a fancy or picky eater. Many chains where the food was once good or at least tolerable is almost inedible and you feel disgusted with your self for wasting so much money on essentially TV dinners. The food is better at Chinese/Tai/Indian takeout or the Panera/Five Guys etc. version of fast food and costs so much less.
Atlas Shrugged is becoming a true story.
Stucky, “fine” restaurants attract “fine” diners, I worked dive bars and the place where the cream of society frequented, I’d make more money in fewer hours without being treated like dirt in the dive bars.
I’d rather slug in out with the blue collar, then suck the privileged asses of wealthy. That’s just me.
Wonder if Microsoft is going to raise wages on their entry level programmers? They have already imported most of them (made the old ‘murkin’s train their own replacements, same as everyone else from GE to Ford), and cut beginning wages. Last I knew they were not much above $15 an hour.
When this happens I won’t be able to increase my employees wages to put them back where decades of training has them.
I can’t increase my products costs, I’m competing with China and thanks to government at all levels, my costs have already far outpaced my sales.
At some point you have to look at this and SEE that ALL governments, from town councils, state legislators to WDC, want you to shut your small doors and “go to work for the big guys.” The jobs that are gone overseas, or just gone.
Or, my favorite, got into a discussion with a city of De’toilet worker, and her solution was that we should just all get “union, government” jobs. Uh, yeah.
Whatever, if you are a small guy the writing is on the wall, your business and taxes are not wanted, nor needed.
The smart ones (Llpoh) will get while there is something left to gain, and run like hell.
Most of the rest will continue to believe that some magical thinking will sweep the country and their value – as the makers of the American Way and Middle Class – will return.
It won’t, and the vast majority will end up hanging on, amassing debt with hope, and losing it all.
We, the American employer, are not wanted, nor welcome, here anymore.
Good freaking luck to all those that want training jobs to have high skill wages.
The desolation and eventual hunger still won’t convince them of the errors of their envy and thinking.
Re fine dining establishments, all is not as rosy at it would appear at first blush, but it is far better to work there than in Olive Garden.
Fine dining places work on very thin margins. A lot of world famous paces actually lose money. The owner makes up the loss on book sales, personal appearance money, and by owning associated but lesser quality establishments. Heston Blumenthal and Gordon Ramsay are examples of this.
As with many restaurants, fine dining places make their money, if any, on beverage sales – ie on 300% mark-ups on wine and drinks. Many times bottles of wine worth several hundred dollars are served. Sometimes several thousand dollars. I was at one place where the sommelier told me a Russian with his entourage had recently ordered 10 bottles of $25,000 each Romanee Conti burgundy.
Fine dining establishments often have more employees than customers at any given time. Very top end establishments almost certainly do.
Say the bill for 2 people is $500, and so the tip is say $100. The meal can take three hours, or a total of 6 hours of dining for the 2 people. There is an equivalent 6 man-hours of work done during that time – waiters, chefs, sommeliers, maitre d’, busboys (I think they are called something else), pastry chefs, sauciers, the sous chef, and even coffee and tea specialists at some places.
Generally, in these places, the tips are split between the overall staff. The tip left is shared around – I do not know how it is split. I have occasionally wanted to tip an individual sommelier/busboy/whatever for exceptional service, but am advised that it is not possible – gratuities are shared.
So it is not as clean as thinking the waitress gets $100 for serving at the table for 3 hours.
TE – thanks for the compliment!
Re folks that eat at “fine diners”, my experience is somewhat different than that you express.
I have been fortunate to have eaten at a number of the world’s top 100 restaurants/3 Michelin star restaurants, and a great many 1 and 2 Michelin starred restaurants or equivalent.
The majority of folks at these places seem to be folks splurging on “once in a lifetime” experiences.
They are on holiday in Paris, London, NY, etc. They are largely common, everyday folks out having an incredible experience, for many never to be repeated. I cannot say I have ever seen any customers behave badly or rudely or presumptuously in one of these places.
Asians do tend to spend a lot of time on their idevices, a lot of which is spent taking dozens of pics of their food. They are not being intentionally rude, they just do not know any better. Of course there are some rich folks, too, which can be spotted generally by their selection of wine, but otherwise there is little difference between any of the diners. In my experience.
@Llpoh, if you live in a “destination” or place with masses of “rich” people, then that is true.
For the rest of us, there are places in our areas that serve the creme, and then the rest.
Big dogs in little burgs often bite because they can.
College towns – like Stephanie lives in – means the “upper” class establishments will likely be filled with academics and local Big Dogs.
That was exactly the type place I worked at, and I could make more cash working Friday morning bar rush (3rd shifters for brew, breakfast and cash their checks before their wives could), then an eight hour shift at our local country club on Saturday night.
I don’t have experience working in a big city/destination fine dining, and thanks to a different path (and tons of learned skills) I hope to never have.
If I were to go into the food business, I’d open small coney island types (what most call diners), serving the 70% of society that makes less than $50k a year.
Mike in GA – If folks was rational about money, many of these issues wouldn’t be issues.
The psychological angle:
Tipping is voluntary, so you get to feel like Jimmy Megabux bestowing a few nice trinkets upon the those chained in squalorous servitude.
Prices going up even 5% is some greedy-ass sumbitch gouging you for your hard-earned.
TE – great explanation. And it sounds right, for sure. I love diners, BTW. When you open yours, let us know! Make sure you have a good chili dog. Yum!
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Why rob a bank? That’s where the money is. I worked at a restaurant/nightclub at the pier 66 hotel in ft. Lauderdale for a little over a year, and bought a decent house with my tip money. Don’t think you can do that at a dive bar or olive garden.
A kid who worked for me had a night gig barbacking at liquid nightclub on the beach, maybe 1995. Met a lot of the right people, has been a well compensated artist ever since. BTW, his boss chris, nice enough guy, had the best stable of girlfriends I’ve ever seen in my life, maddonna, nikki taylor, jennifer lopez, and a 21 year old sophia vergara. Don’t ask me how that works
Everything looks full of despair right now because the palpably unreal seems to be working.
I think this is an illusion. The bubble is near to popping, and my suspicion is that the denouement is going to be both not as bad and much, much worse than we imagine.
What happens when a brittle system is hit with a hammer?
@star, yep, destination/tourist, great gig if you can get it.
As for the dive bar, one guy I knew sent his kid to Harvard and paid for it with his dive bar. Another one, much smaller town and bar, the guy started working there at 18, bought a storage unit at 21, the town’s golf course at 30 and now owns the course and the dive bar and all the land in between.
All from the right decisions and dive bar (in a tiny town) wages.
A bad cook can take a gourmet steak and make it inedible.
A great cook can take dog scraps and produce an unforgettable gourmet spread.
Life is funny that way, and our government is doing its best to regulate nature out of existence.
TE, I agree with you completely. I spent my teenage years in food service and construction, don’t know if there is better life training, wherever you are. If you happen to be in a destination city, it can be life changing, particularly if you’re an attractive female. But as a man, those trades gave me three of the best skillsets, ability to deal with people quickly, efficiently and pleasantly, knowing how things are put together, and a window into the mindset of people with enormous wealth, and how they react to things.
Admn and Steph: My daughter until fairly recently worked at a decent Louisville restaurant and her numbers were similar to Steph’s and she is a good server, works hard, etc. You had to work at the trendy booming restaurant to make the figures Admin sites). Of course, if you wrere one of those working in the top tier trendy restaurants yo made a lot more than that but those wait job are few and far between.
Avalon does not work at a trendy restaurant. It is a family owned sports bar/restaurant that has developed a devoted following over the years from the community. The food is good and the atmosphere is friendly, but there is nothing trendy or upscale about it. She is the only waitress during those lunch shifts and usually has sales of $400 to $600 during a 4 or 5 hour shift. She ends up averaging 20% in tips. That equals $80 to $120.
Riddle me this: Why does Wellington, New Zealand have a booming restaurant scene with many long established highly successful establishments and a $14.50 minimum wage? After you take into account sales tax and tip in the U.S., prices in NZ are close to U.S. prices and the food is better quality overall. Also, wait staff generally are NOT tipped and the service and attitude is better than the U.S. average.
And if you want to eat cheap there are plenty of restaurants with $7-$8 breakfasts, $10-$12 lunches (how about a nice sirloin, fires and salad for $12 total bill for lunch and it not being an antibiotic and hormone laden CAFO piece of beef?) Want to eat ultra cheap? Go ahead and go for the junk food, McD’s stlil has $1 and $2 items and Dominoes will sell their large pizza for $5.
It could have to do with overall low small business interference (NZ is considered one of the top countries to start a business in). Could also have to do with the smaller portions. Not too small as we got used to them but smaller than Muricans are used too, in a good way as we found out as we acclimated. No, NZ is not the land of the super mega big gulp.
@Didius, I don’t know, how about a more upwardly mobile middle class that hasn’t completely sold out to unions and pharmaceuticals?
How on God’s green earth do you really expect that a bureaucrat deciding on some magic number, that is more than DOUBLE the current, is somehow, going to assist a country that has been bleeding family supporting jobs for decades?
How is further demoralizing, and handcuffing, the few non-government-contracted employers, going to FIX anything?
How is deciding, that the very youth we berate as being lazy and ill equipped for real work, no longer need entry level jobs going to help this country?
You know what? At the upscale restaurants in India, China and Mexico that wait staff makes “higher” wages than other food workers. SO FREAKING WHAT?
Instead of raising our wages, how much longer you think it is before our controllers decides that the MAJORITY of the world is right, and we Westerners, are wrong? (already happening, btw, you just haven’t noticed)
Whatever. People amuse the freak out of me. NEVER has government bettered that which they control.
If you turn the sowing of wheat over to the government, you will soon want for bread.
Franklin said that, nothing has changed.
Hi TE – To your first point, yes, I think that is the case. NZ is 20 to 50 years behind the U.S. on most of the negative trends (not all though, unfortunately).
Agree with your other points. Always interested in hearing what you have to say.
Admin – What are the top two or so food items where she works?
They have a pretty big menu, but just your basics: burgers, chicken sandwiches, salads, buffalo wings, cheesesteaks. The alcohol will drive the bill higher. There are a lot of businesses around the restaurant so they have a busy lunch.
On one of the negative trends for the NZ Zombies:
Yes, the NZ version of “The Bachelor” is starting!!!!!! Oh my god!!!! Non stop adverts, bill boards, etc!!!! NZ is FINALLY getting its OWN Bachelor!!!!! Who will be the lucky woman!!!!
Vomit.
Admin – Sounds tasty have not found a cheese steak sandwich over here yet!
When I was younger and visiting the nightlife scene I had a friend who was a “beer bath girl.” Her job was to stand near the entry of a nightclub in a bikini and sell bottles of beers out of a big ice tub. She stood up on a box and leaned over to dig out the bottle showing off her “assets” right at eye level and hopefully garnering a bigger tip.
She worked Thr, Fri & Sat nights. At most she worked 30 hours total per week and was sharing tips with the entire staff – bouncers, bartenders, etc. Even with tip sharing she was clearing over $1000/week. Tips were always paid in cash at the end of night and nobody ever claims 100% of that on their taxes. Those workers were doing pretty well for not a ton of work. This was also 15-20 years ago where $50k would go a lot further. Hourly wage was minimum, of course.
Not bad, right? She was making way more than I was at the time. Oh, and the “assets” were quite nice too…
Great article. One of the best I’ve read on this subject. Just imagine in 20 years when the USD is not worth anything… https://libertymetals.com/2012/12/the-coming-isolation-of-usdollar/
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