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
Pretzel logic…gotta love it.
” 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. ”
Not exactly. That is best case scenario territory. Lunch shifts suck, I would never make $20-30 an hour on a lunch shift. For a 4 hour lunch shift I typically made $30-40 dollars.Most restaurants have lunch menus that are cheaper, so my tips would be lower. I only averaged the $20-30 figure on Friday and Saturday nights and it was only during a certain time frame. Realistically, I would average $10 an hour which would (a 25 hour work week I would typically earn 200-300 per week).
Don’t cry for the poor serving staff, the writing has been on the wall for some time. The restaurant business has been declining for some time. The old model just isn’t working anymore.
I already see a decline in tipping for services rendered. As people feel poorer or they sense a recessionary environment, they hold back and are not so generous with their money. People will still want to treat themselves in an extra special way, but their money will be spent on themselves because they’ve less disposable income.
The consequences of a ms-managed nation is the gradual wind down of available goods and services.
All this legislation, commanding the ‘tides to recede’ will prove just as fruitless in making thing right. Impotent politicians passing impotent legislation with bad consequences. There’s reality and then there’s the way we wish things were.
I’m betting on reality, what ever that is.
I’m thinking the government is smart enough to mandate that restaurants can not close.
Fixed.
Next problem?
Hells bells, If $15 dollars an hour is good for the goose, why not $20 or $30 an hour. Heavens know that the poor could sure use it. We’d be doing God’s work. Raising the disadvantaged, building their confidence, and giving them a chance to live the American dream.
Wait a minute, of course, you’d be willing to pay $100 for breakfast at Denny’s or IHOP. Just think how the nations GDP would explode upward. Obama would sure talk that up.
I see nothing but good here!
60 grand in tools, and 23 years experience, and I make exactly 15 an hour as a mechanic in a busy shop.
card802–Kinda like the French not allowing companies to layoff employes or close their doors. Haha.
You could see the same rational in NY with their rent control. Landlords just got up and abandoned their buildings. NYC looked, in part, like East Berlin 50 yrs ago. Someone always pays, either the lender or the borrower, in this case, the landlords and the city with their reduced taxes collections
Government policy aims to do several things at one time. This will help speed all of those things up. Close small business. Hamper start ups. Put the boomers out to pasture early, they with the memories of an america past. No coincidence most of the participants on this site fall into the same age bracket.
Hey the Japanese are already working on a robot that will take your order and bring you your food.
And the best part– ‘NO TIPPING’.
Jobs that are not economical will cease to exist. So, all you waiters and waitress in Seattle save your money because you are about to be displaced. Maybe by then, Obama will come up with perpetual unemployment insurance.
WOW! What a country.
Here’s your future. All products and services are provided by publicly traded monopolies. All publicly traded monopolies are owned by the money printers. You get a card every month, spend until it’s empty, rinse and repeat every month. We will become ferguson
Homer, don’t worry about technology and automation. I got displaced by technology in 1984, it happens, but it’s not a big deal. There will never be robot waiters. Slave labor is the job killer, there are 5 or 6 billion people offshore willing to work for a sandwich. Making you compete with them is treason.
Someone suggested robots will put everybody out of work. Who’s going to buy the shit then?
Homer says, “The consequences of a ms-managed nation is the gradual wind down of available goods and services.”
What I should have said is–“…gradual wind down of available goods and services.” and an increase in laws and regulation and a outward totalitarian change in government with repression and capital controls.
starfcker–Competition is a bitch. Not only do you have to work harder, you have to work for less.
Well you are 90% right. I’m just saying open your eyes to the fact that this is by design, not ineptitude.
Homer, you’re brainwashed. It’s not competition when I have to pay wages and taxes and deal with a never ending stream of government dweebs fussing over some aspect of my operation, while someone who takes their shop abroad doesn’t, yet still has access to our markets which are priced for those costs. Why do I pay taxes so the navy keeps shipping lanes safe for apple and walmart? Those businesses only work if guys like me subsidize their actual costs
Stephanie
Not best case scenario. That is Avalon’s normal lunch shift numbers. Either you worked at the wrong restaurant or you weren’t so nice to your customers. I wonder which it was. 🙂
To put it in terms you’ll understand, Homer, it’s like they make you dig your own grave before shooting you in the back.
Homer, the 3:20 post is a fake. Not me
Admin- The southern economy is different. The average household median is much lower than in the north. Along with a lower cost of living. While I don’t doubt Avalon makes those wages consistently, your region is entirely different than mine. Each reason in the U.S. is different and central planning does not work.
Homer, why do you think we ALLOWED the somali pirates to operate the way they did? To a globalist, oil companies paying million dollar ransoms was a great way to send some more first world bucks into the somali ‘economy’. A couple of 50 cals bow and stern would have been much cheaper, and certainly would have deterred that practice immediately. Think, homer. Put the pieces together.
I can remember when the future looked bright, there were plenty of jobs, and people knew what ethics and personal responsibility were. We were proud of our country and what our ancestors had accomplished. That was before the Libs took over the schools, churches, government, media, military, and all the other institutions. Now we’re ruled by lying cheats and people who are ethical and work hard are viewed as chumps. Can you believe that people were actually happy then? What a bizarre thought. How could anyone be happy without being able to openly practice gay sex, watch nonstop sex on TV and see women twerking?
Yeah! More people joining the FSA. More people to crash and burn when those free goodies stop.
Admin ,you make your wife work at some cheesy restaurant for little money. You should be a millionaire by now with all your knowledge.Just an observation.
bb
I don’t make my wife do anything. Your comment may explain why you don’t have a wife.
I am not a millionaire.
Why didn’t the dumbass ‘ government of consent” just raise the minimum wage to a million dollars an hour…It ain’t like the service jobs are gonna’ be available at $15 per hour anyway.
It is okay for the Pharmaceutical, Banking, and Insurance industries (to name a few) to loot us. When it comes to raising wages it is somehow abominable. . Maybe if the industries listed were not allowed to continue on their parasitical existence, those people would not need a raise. Just a thought
The Pharmaceutical, Banking, and Insurance industries have nothing to do with this issue. Companies pay wages commensurate wit the value added by the employees they hire. The people making minimum wages total 4% of all workers. They are usually teenagers or very low skill workers. Government mandating $15 per hour for these jobs ends up reducing jobs, making small businesses close, raising prices, and not helping anyone.
Admin , the reason I’m not married is :*I’m kinda overweight , kinda of going bald ,almost 53 and I drive a truck for a living. Almost forgot … teeth are falling out.Other then all this I am really cute as a button.
bb
I’m overweight and going bald and almost 52.
Admin – look at Avalon, look at Clam. Look at Avalon, look at Clam. Think about what Avalin says, think about what Clam says.
Who do you want as a waitress? Who is going to do well in tips? A beautiful, well-spoken, vivacious woman with sense, or….. Clam, who at a glance would make you wonder what is in your salad.
Re the $15, what a clusterfuck. Everyone knew it. We all know how well price controls work.
But hey, at least it is not my problem!
🙂
Llpoh
The drachmas arrived. Thank you for the generous donation. I’ll be sitting in a TD Bank for an hour trying to get them converted tomorrow.
Bb – hang a 2 inch stack of Benjamins around your neck and women will think you are a young Robert Redford.
No Bens? Better loose weight and get a rug.
Your welcome. I was starting to think a Postal worker was standing in line!
If the wage becomes $15/hr, and that is a decent, livable wage there, then restaurant prices have to go up to accommodate the new higher cost structure, granted. But two things stand out that haven’t been addressed.
1) Wages are itemized as 1/3 (33% of total) restaurant costs, but the server portion of that cost is not broken out. Server labor is typically surge labor – they come in just ahead of the meal time and are the first to be scaled back as the meal rush declines. Cooks, other kitchen help, bartenders and others constitute the bulk of labor hours and costs. Thus, the ratio of server wage to total wages is smaller than it first appears and the total dollar impact would be commensurately less. The 1/3 (33%) amount of cost in the comments above might actually be closer to 1/3 of 1/3, or 11% of the total restaurant costs. This is just a guess on my part, it could be higher, but I think the breakout of server time paid vs overall time paid is a valid and necessary part of the calculation.
2) If meal prices rise by 11%, or 15% or even 20%, what happens is the act of tipping comes to a screeching halt. Simple. No more tipping. Tips that made up for a low wage paid a server in the past are no longer needed since that wage is no longer low. There is no need to tip nor is there room in the customer’s budget since I will now be paying up to 20% or so more for my meal.
Most people tip 15-25%, I generally leave 20%. It won’t cost us any more to eat than before. The server gets her living wage and the restaurant stays open.
For the record, I am adamantly opposed to any governmental entity setting any wage, anywhere, anytime. Nor do I think this is some new socialist virtue that will “save” the underpaid from the vagaries of a competitive and dynamic marketplace. But I do think this shows there is a way for restaurants to stay open without having to increase prices exhorbitantly.
Bon Apetit!
The labor impact would be across the board. You would now be paying dishwashers, barbacks, busboys, and floor moppers $15 per hour. The profits would take a huge hit on the expense side. The price increases would result in a hit on the revenue side. The 4% profit margin is gone for mom and pop restaurants. Result: no more restaurant, no more jobs, no more tax revenue for the idiots in the government who mandated the $15.
Bone us up the ass!
Lipoh , I need to do something . I am about 30 pounds overweight. I went to the gym the last couple of days . Hurt all over. It usually takes me a few weeks in the gym just to get over the hurt. I got another month off so I’ll lose a few pounds.
El Doggy said that Security tops Looks but Money tops Security. Therefore, bb, the Benjies are you best bet, a rug will only make you look like a lounge lizard. And if you happen on a zorra who puts money before the security you can offer, she will run your ass and wallet into the ground and you will certainly lose the love handles.
Already too late for us, we almost never eat out because prices have just gotten too high. $60-80 for a modest dinner and a couple of drinks + tip? Can’t afford it. We eat at home.
Plus most restaurant food is fairly crappy and disappointing.
We’re having tacos for dinner tonight, I make kick ass fajita tacos. Ten bucks to feed the whole family.
Sorry restaurants, I don’t need you. And yes, you’re screwed.
Admin- Most chain restaurants are barely hanging on. Their stock prices are just hiding the damage, no different than retail’s buybacks.
Steph
The chain restaurants are not doing well, but they have access to debt and can hang on for years by closing locations and announcing restructuring plans, etc.
The small family owned restaurants have access to nothing. They will close overnight.
Mike – most folks are not smart enough to understand the tip/wage/price relationship.
Burger went from $10 to $12, that is all their reptilian minds will grasp.
Seattle better allow owner-operated food stands because that looks to be their only eat away food option going forward.
Admin – btw, having three hairs left on your head ain’t “going bald”. You done passed going bald and now are well into cueball territory.
At least the three hairs aren’t grey. I have that going for me.
A lists of reasons I am not waiting tables anymore. The financial reward isn’t there for me anymore. Also, I live in a university area where there is no cheap labor shortage.
$15/hr x 40 = 600/ wk which = $2600/ month.
There are probably a lot more retired people living on less than that per month. Don’t they deserve to have a livable income after having worked all their lives? So now you need to raise their SS checks to $2600/month.
When they go grey a magic marker will do the trick in your case. No need to use GrecianFormula.
Asig – that is being discussed. And 74% of the recipients say the “rich” should pay for it.
0.0% say that they themselves should be responsible for saving up during their working years to pay for it.
By the time you get EVERYONE up to the “livable wage” of $2600 a month, the livable wage will have become $5000 a month. So go ahead and raise everyone up to $5000 a month (it’s only FAIR after all) and guess what? Yea now you’re off to the races!!
Jim, you are absolutely right. Mom and pop have been successfully exterminated in seattle. It now costs almost 35 grand to have a minimum wage employee. The success of that model will spread through all the major cities. The counterfeiters have just assured that they will be getting all the profits and a swipe fee from every transaction in a major metro. Well done, boys.
Star – it costs a lot more than that.
Once again the heavy Visible Hand of the government intervenes in the marketplace, to ill effect.
Work a lifetime, save money. Over your lifetime, the Federal Reserve will cause inflation by overprinting to empower to politicians to spend beyond their (the country’s means). Over your lifetime the rising inflation will eat away your savings (in effect, mechanically devaluing your life and efforts) to zero eventually; how are you supposed to afford eating out, again?
The government and Federal Reserve are screwing us all. My employer and I agreed what my labors were worth in my youth, but the .gov and Fed disagreed, and devalued what I worked for; the net result is that anything not saved in gold, silver, art, real estate (some places, but note property taxes) is made less valuable each year. If enough young people understood that inflation is a hidden tax on THEIR LIFE SAVINGS we might stand a chance at a new (old) system. It would take blood, sweat and tears, but what is the alternative?
Llpoh, depends on your state and nature of your operations, I guess. Florida is pretty good, we don’t have state taxes, and since my mothership is ag, there are lots of exemptions for property taxes and WC. Our biggie is liablilty
I don’t know how to embed….
Llpoh’s right. A guy with a food cart – hotdogs, tamales, gyros, etc. could clean up in downtown Seattle if he keeps the price right. Reminds me of Ignatius Reilly in “Confederacy of Dunces” selling hotdogs from a cart labeled “12 inches of Paradise”.
If you want to be a waiter/waitress … get a job at a FINE restaurant.
I gave a link to the French restaurant Ms Freud took me to for my birthday. Place is booked solid 6 days a week from 5PM until 10PM. Need to make reservations about a week in advance. It’s a small place, about 15 tables. Our waitress worked about 5 or 6 tables. We arrived at 5PM, left at 6:30PM. Ms Freud left a $25 tip. I’m guessing that waitress makes $500 day, easily.
Working at a chain restaurant is for suckers. Go to a FINE restaurant …. they are everywhere … and if not, move to a place that has them. Just quit bitching and complaining.
“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.
Stucky- You are absolutely right about the fine dining. When it comes to dining out I think quality is going to really start to push chain restaurants out of competition.