It’s a classic case of good intentions gone awry says Micahel Saltsman of the $15 minimum wage hikes. The increase in the minimum wage is resulting in fewer restaurants and fewer jobs said Saltsman, who is the managing director at the Employment Policies Institute.
Labor unions and their allies are cheering the policy change, but the evidence shows unreasonable wage floors are no cause for celebration. They are, in fact, destroying restaurant scenes in some of the best-known dining towns from coast to coast.
Just this week in Sacramento, popular Greek restaurant Opa! Opa! announced it would close its doors after 14 years in business, citing the city’s rapidly-rising minimum wage as the determining factor. More than a dozen employees will lose jobs right before Christmas, according to a report by Fox Business. The owner explained that prices were up 53 percent since he opened his door, and all it did was reduce his customer counts.
In New York City, Larry Georgeton, the former owner of the now-closed Del Rio Diner in Brooklyn, was frank: “The [$15] minimum wage, that’s what broke the camel’s back. It killed us.” He explained that his working-class clientele could not shoulder the price hikes necessary to offset the minimum wage increase, so he was forced to close down the business.
And are far from isolated events. In fact, restaurant closures are outpacing openings by a wide margin, while in some areas, like San Francisco, the city’s hostile business environment has small businesses “at a breaking point.” Golden Gate Restaurant Association member Laurie Thomas points to data from YELP that shows “restaurant closures [in the city] have begun to outpace openings by nine percent.” One business owner was blunt: “Just opening or trying to adapt your business [in San Francisco] … it puts the Soviet Union to shame.”
If restaurants can raise prices enough to stay open, they have to also trim costs, and that means laying off workers.