New York City’s $15 minimum wage slashes restaurant employment

Well, duh…

On December 31, 2018, New York City raised the minimum wage to $15 per hour, which represents a 36.4 percent increase from two years ago.

Of course, the consequences are already happening: price hikes, reduction in hours, cut services, boosting workload for current staff, and job losses.

The American Enterprise Institute (AEI) put together this chart, using the Bureau of Labor Statistics (BLS), to show that restaurant employment opportunities fell nearly two percent in just one month.

Here is the chart:

New York Eater provided one scenario of a New York restaurant:

At Lalito, a small restaurant in Chinatown, they used to roster two servers on the floor, but post wage increases, there’s only one, who is armed with a handheld POS (point of sale) system, according to co-owner Mateusz Lilpop. Having fewer people working was the only way for him to reduce costs, he says. Since the hike, labor costs at Lalito have risen about 10 percent — from 30 to 35 percent to 40 to 45 percent of sales, he says.

These changes get passed onto the diner, some restaurateurs argue. Service can suffer due to fewer people on the floor, or more and more restaurateurs will explore the fast-casual format over full-service ones. Some restaurants are also raising prices for customers. According to the NYC Hospitality Alliance’s survey, close to 90 percent of respondents expect to raise menu prices this year.

Lalito’s menu prices have increased by 10 to 15 percent, Lilpop says, and it’s not just the cost of paying his staff driving prices up — it’s a ripple effect from New York-based food purveyors’ own labor cost increases.

“If you have a farmer that has employees that are picking fruit, he has to increase his labor costs, which means he has to increase his fruit prices,” he says. “I have to buy that fruit from him at a higher rate, and it goes down the chain.”

Just another example of the failure of the minimum wage.