On January 5, New York City Mayor Bill de Blasio announced an increase of the city’s minimum wage.
“This week the minimum wage in New York City increased to $15 an hour,” Hizzoner tweeted, adding, “and it wouldn't have happened without the working people who make this city run every single day demanding a raise they deserve.”
Although it sounds like a huge upgrade to folks in most parts of the country, to native New Yorkers it was actually somewhat modest. The minimum wage jumped about 15 percent, giving retail employees and restaurant workers — including those working at fast food eateries — a $2 bump from $13 an hour.
But even that small nudge had a huge effect —and it didn’t take long.
Less than two weeks later, CBS News reported that restauranteurs in the Big Apple considered this a final straw, and were cutting down employee hours.
In short, the move ended up hurting the very “working people who make this city run every single day” that de Blasio championed in his tweet.
Just as employees want larger wages and salaries, so do business owners and entrepreneurs.
Assuming a restaurant that employs 10 cooks, servers, bartenders, bussers, and dishwashers at any given time, that “modest” $2 bump translates to an added $20 hourly expense for the restaurant owner. If he’s open 10 hours a day, that's $200 daily expense that has to come from somewhere.
Restauranteur Jon Bloostein operates on something of a grander scale than the example above, running six New York establishments, with each employing between 50 and 110 workers. He said the wage hike represents an "an immense cost" to his operations.
"We lost control of our largest controllable expense," he told CBS MoneyWatch. "So in order to live with that and stay in business, we're cutting hours."
Contributing to the problem, this is the third such raise just within the last two years. At the end of calendar year 2016, the city’s minimum was $11 per hour, so the new rate represents a 36 percent hike.
Andrew Rigie, executive director of the New York City Hospitality Alliance, said that Bloostein’s story is typical throughout the industry.
"The money has to come from somewhere, and we found that unfortunately, as a result, businesses are making some really tough decisions which don't only impact them, but have a negative impact on their workers as well as their diners, too," he told CBS News.
Running counter to this is the “living wage” argument advanced by workers — that a typical minimum wage provides insufficient income to buy a home, raise a family, and attain the American dream.
But that concept misses the point.
Drive-ins, fast food restaurants, and neighborhood grills provide excellent training for the newly-employed and can put a few extra bucks in the pockets of those on Social Security. But bussing tables and washing dishes was never meant to be a career goal.
Factor in that restaurants are especially hard-hit, because they typically operate on a razor-thin profit margin. For example, CNBC reported that as of March 2016, approximately 60 percent of new restaurants close within the first year, 80 percent within five years.
And it’s not just New York City. Plans are afoot to bump up the minimum wage nationwide.
Last week Democrats on Capitol Hill announced their intention to boost the federal minimum wage by more than 106 percent — from $7.25 to the magical $15 an hour.
The bill was introduced by Rep. Bobby Scott of Virginia, and attracted more than 100 fellow Democratic lawmakers as co-sponsors, using the same “living wage” argument.
"No person working full-time in America should be living in poverty," said Scott, House Committee on Education and Labor chairman, according to CBS News.
"Raising the minimum wage is not only good for workers, it is good for businesses, and good for the economy. When we put money in the pockets of American workers, they will spend that money in their communities. This bill is a stimulus for Main Street America."
If New York is any indication, raising the minimum wage — especially by more than double — would hurt both employees and businesses, making them each equally miserable, just like socialism was designed to work.
And with that, the economy would take a tumble as well.
Michael Dorstewitz is a retired lawyer and has been a frequent contributor to BizPac Review and Liberty Unyielding. He’s also a former U.S. Merchant Marine officer and an enthusiastic Second Amendment supporter, who can often be found honing his skills at the range. To read more of his reports - Click Here.
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