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Pyke writes: "As Seattle prepares for the April launch of the highest minimum wage law in America, conservatives are warning that businesses are already shuttering under the pressure of higher labor costs and pointing to a recent report of a rash of restaurant closures as evidence."

The $15 minimum wage has not been hurting small businesses. (photo: AP)
The $15 minimum wage has not been hurting small businesses. (photo: AP)


Why Conservatives Who Say $15 Minimum Wage Kills Businesses Are Wrong

By Alan Pyke, ThinkProgress

23 March 15

 

s Seattle prepares for the April launch of the highest minimum wage law in America, conservatives are warning that businesses are already shuttering under the pressure of higher labor costs and pointing to a recent report of a rash of restaurant closures as evidence. The problem is, the actual owners of those restaurants say that they’re not closing because of wages, and the city seems to be enjoying robust growth in that industry.

The New York Post editorial board, American Enterprise Institute scholar Mark Perry, Forbes contributor Tim Worstall, and Rush Limbaugh all cited a Seattle Magazine article from March 4 that claimed a “rash of shutterings” was afoot in the Seattle restaurant world. The magazine suggested that the minimum wage law might be a contributing factor in the closures of the Boat Street Cafe, Little Uncle, Grub, and Shanik.

“That’s weird,” Boat Street Cafe owner Renee Erickson told the Seattle Times when fact-checkers emailed to confirm the Seattle Magazine story. “No, that’s not why I’m closing Boat Street.” Erickson’s three other restaurants remain open, and two brand new ones are in the works in Seattle. “Opening more businesses would not be smart if I felt it was going to hinder my success,” said Erickson, who described herself as “totally on board with the $15 min.”

Poncharee Koungpunchart and Wiley Frank of Little Uncle “were never interviewed for these articles,” they told the paper. They are closing one of their two locations, “but pre-emptively closing a restaurant seven years before the full effect of the law takes place seems preposterous to us.” Frank reportedly asked one conservative writer who had picked up the wage-menace red herring to “not make assumptions about our business to promote your political values.”

The owner of Shanik told the Times that closing has “nothing to do with wages,” and Grub’s owner explained that they’re being bought out and rebranded by new ownership because the breakfast and sandwich bistro has been “a huge success.”

The Seattle Magazine article itself notes that new restaurants are opening at a healthy clip around the city, and that the Capitol Hill neighborhood is in the middle of “an unprecedented dining boom.” And while numbers compiled by data wonk Evan Soltas offer only an imprecise snapshot of restaurant employment in the Seattle area, the empirical evidence shows “no sign of a minimum-wage hit to employment.” These details did not make it into the punditry that initially swirled around the article’s suggestion that some closures might relate to the wage law. Forbes’ Worstall published a follow-up piece insisting that his point stands despite the crumbling narrative of specific Seattle restaurant closures. AEI’s Price has not yet responded to an request for comment.

Worstall, Price, and the other conservative economists and pundits who latched onto the overblown narrative from Seattle Magazine argue that minimum wage hikes reduce job growth, but many other studies and analysts have challenged the assumptions about business behavior that underlie the opponents’ claims. A recent academic analysis of how fast food companies would adapt to a law very similar to Seattle’s found that the industry would not have to fire anyone to cover the jump to $15. And states that increased their minimum wages in 2014 experienced faster overall job growth than states that did not.

All of this is happening weeks before anyone in Seattle has been forced to change anything about how they pay workers, and about six years before small restaurants like these will have to pay $15 per hour. The first tier of the city’s wage increase law goes active on April 1. From there, businesses will have between three and seven years to gradually step up to $15, depending on both the total number of people a firm employs and the health care benefits they offer workers.

Seattle’s business community was heavily involved in crafting graduated wage hike schedules that provide deferential treatment to employers who are already offering workers some non-cash compensation. The law’s complexity and flexibility owes in large part to the business community’s fierce negotiating in months of meetings with labor officials and local politicians. All sides left “a little bit of blood on the floor and some deeply held principles,” the business community’s lead negotiator told ThinkProgress last summer.

With time and data on what Seattle’s economy actually experiences as the wage hike phases in, the spread of the $15 idea seems almost inevitable to another key negotiator. “When we enact this law and our state does not slide into the ocean,” venture capitalist Nick Hanauer told ThinkProgress in the summer, “that will make it easier for people to be like, ‘well, fuck, why shouldn’t we do that?'”


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+15 # caphillprof 2015-03-23 09:45
The opening and closing of restaurants is a fact of life in dynamic urban environments.

Some folk never let the facts get in the way of any political argument.
 
 
+4 # ronnewmexico 2015-03-23 09:58
Hey birdbrains…we did this more than ten years ago in Santa Fe, Albuquerque followed about 5 or so years later…..

why did they follow…nothing bad happened.

A quote on it, Wash Post….…"Since the rollout of a living wage in The City Different, not a whole lot is. At least not in the big picture. The unemployment rate stays where it always stays, lower than the rest of New Mexico. Gross sales tax receipts have climbed back out of the trough of recession. The number of new business licenses issued rises and falls, rises and falls, never far from about 600 a year. The number of people working in the area’s leisure and hospitality sector, where the bulk of low-wage workers are employed, remains steady. No one has done a recent study to see what’s happened with food stamp and public assistance caseloads, but early data seemed to indicate mixed results — none of which could be directly tied to an increase in minimum wage."

Santa Fe was one of three cities nationwide at the time to initiate this. The wage is not up to 15 per hour but this is after all New Mexico. It is ited to the cost of living index last I checked.

Really it is old news on this not workng Studies were produced right after it clearly showing it did not work….know what….the actuality of it proved them absolutely completely wrong….nothing bad happened. It was junk science based on junk statistics..
 
 
+5 # jon 2015-03-23 10:40
".nothing bad happened. It was junk science based on junk statistics.."

Stand-by. Roland or Waa-Doo will be along shortly with more junk statistics mixed with outrage.
 
 
-15 # lnason@umassd.edu 2015-03-23 12:03
Jon,

Some minimum wage hikes do little or no damage when the cost of labor is already largely above the new minimum wage.

But surely you cannot deny the millions of jobs that have been lost to minimum wage hikes. Just to name a few examples: virtually all Appalachian homecraft jobs were lost when the feds decided to enforce the minimum wage on women earning a few bucks selling homemade brooms and other tourist souvenirs; virtually all elevator operator jobs were lost when it became cheaper to automate the elevators; virtually all gas station attendant jobs were lost when it became cheaper to automate gas pumps and eliminate window-washing and oil checks.

These were all low skill jobs but important to the disabled people and/or teenagers who often held them since there were no low skill jobs to take their places.

All minimum wages can do is prevent some employment opportunities from existing -- it cannot force employers to hire people who cannot be productive enough to earn a high wage.

Minimum wage increase proponents are thoughtless oppressors of marginal people who need a chance to develop basic job skills -- like showering, or showing up to work on time, or interacting with customers with a smile and a "thank you, maam." They'd rather feel good about themselves and their "moral" ideals than about the poor people that they claim they wish to help.

Lee Nason
New Bedford, Massachusetts
 
 
+3 # ronnewmexico 2015-03-23 12:32
Comical…belive you me…this is not the case in New Mexico….

"Some minimum wage hikes do little or no damage when the cost of labor is already largely above the new minimum wage."

It is one of the lowest paying states in the nation, expecially exempting government employment.

So I ask again….Santa Fe…..if it didn't work and all those bad things happened why did Albuquerque follow it and why has no one repealed it in Santa Fe????
 
 
+8 # jon 2015-03-23 13:57
Lee,

"virtually all gas station attendant jobs were lost when it became cheaper to automate gas pumps"

You left out the fact that buggy whip makers all lost their jobs when the Model "T" came along. But Henry Ford paid the ex-whip makers well, and we became a nation of auto drivers, on a highway system that Republicans fight to prevent maintenance funding for.

I have been hearing your kind of "let them eat cake" talk from Republicans every time minimum wage is increased; and none of their dire predictions have ever resulted. None.

As an economic system moves along over time, there must be fine-tuning adjustments to keep things running smoothly. To ignore these requirements is backward, and destructive to those who can least afford it.

This is not the 19th century, anymore.
 
 
+2 # ronnewmexico 2015-03-23 16:09
As a aside…NJ one is not supposed to pump their own gas, attendents still do it by state law…and they have a minimum wage as well of 8.38 per hour...

JUst to add a furthur bit of comedy to Lee's argument.
A man name Scott did a study on the increase in price due to the state law and found the per gallon price quite small. Much lower than the industry claim of 5-7 cents per gallon.

By minimim wage advocates rational….way way less gas stations are doing business in NJ due to such draconian requirements of government such as that…..everyone in NJ actually buys their gas in Pennsylvania and NY…..not.
All companies do it, it is the same in NJ everywhere, And no businesses are out of business because of it…

Does that provide jobs…I would guess quite a few.
Hey Lee…take your minimum wage hike and change it to a bring back the gas station attendant argument….you may actually have a point.
 
 
+10 # pbbrodie 2015-03-23 15:24
Jobs lost to automation have absolutely nothing to do with minimum wage hikes. That is ludicrous and moronic. Also, how do you enforce the minimum wage on people working for themselves selling home made brooms and tourist souvenirs.

lnason,
As usual, you make all sorts of ridiculous unsubstantiated claims with no supporting documents or links to such. You just make things up as you go along. Then, you have the audacity to impugn the motives of those wishing to raise the minimum wage.

Aren't you embarrassed at all making these absurd comments?
 
 
-11 # Roland 2015-03-23 17:16
Lee,
Thank you for pointing out that a rise in the min. wage hurts the most unskilled amoung us. It can keep them permanently out of the labor marker by not giving them a chance, for that first starter job.
 
 
+1 # ronnewmexico 2015-03-23 17:41
Starter jobs…you want starter jobs…bring back CETA I guess..


Starter jobs…..seems kids here are still working at burger kings McDees and all the rest. Our employment level sucks but that is as it pretty much has been statewide. No change is due to minimum wage increases..Sant a Fe and Albuquerque actually do better than most of the rest of the state. Los Alamos excepted as they have so many fed employes.

That is total nonsense. Some paid off economist somewhere is stateing that I am sure….the real…nonsense.
 
 
+3 # jon 2015-03-23 18:19
Thank-you, Roland, for providing evidence that you only read the "thumbs down" comments.
 
 
-6 # Roland 2015-03-23 20:53
How is that?

I didn't see that comment anywhere else. Did you? Did I miss it? If so where?
 
 
-13 # lnason@umassd.edu 2015-03-23 11:47
This is pretty biased reporting.

The original article in an apolitical local magazine said that the minimum wage hike was a "major factor" in the decisions to close so many restaurants in the city recently. No one has claimed that all the closures were due to the minimum wage hike.

Follow on articles by actual conservatives did interview a number of restaurateurs who were worried about how they would cope with the wage increases and they presented the very unfavorable financial analyses for their restaurants. Some small restaurant owners seemed to say they will fire some workers and work more hours themselves.
Others are considering reducing portions, reducing food quality, increasing prices, reducing hours of operation, and/or reducing menu offerings. And a fair number of restaurateurs were interviewed.

Seattle's foodie scene will surely survive but there will be a cost to pay with consumers and the lowest skilled restaurant employees paying the price one way or the other.

There ain't no such thing as a free lunch.

Lee Nason
New Bedford, Massachusetts
 
 
+5 # ronnewmexico 2015-03-23 11:55
This from the Employment policies institute..a notfor profit one will find to be one of Rick Berman's think tanks, with no real address other than Rick Berman's offices…. subject to investigation by the IRS subject to that relationship…

"Dr. Yelowitz
Conclusion
This paper finds that Santa Fe's living wage increase led to significant and negative consequences for employees in the city-particular ly the least skilled employees. The increased likelihood of unemployment and a decreased number of hours worked were all highest for low-skill employees. Furthermore, there is significant evidence to suggest the displacement of adult employees by unmarried high school age employees. These are all unintended consequences that should give pause to any claims of success of the ordinance."

Curiously…this quote from above Lee's quote here…"by actual conservatives did interview a number of restaurateurs who were worried about how they would cope with the wage increases and they presented the very unfavorable financial analyses for their restaurants."

Bermans think tanks used the same review of actual restaurateurs subsequent to the california ban on smoking in the nineties which found it decreased patronage by 24% in California…..

A number found by gross receipts to be totally completely bogus….

I can only guess they figured in 20 years or so we forgot that tactic.

Berman is a paid lobbyist for various corporation groups against tobacco and minimum wage increase.
 
 
+3 # ronnewmexico 2015-03-23 12:00
To repeat Dr Yelowitz's comments now some 10 years later..found completely bogus..
If it had his bad bad effects..why would the people in Albuquerque, right next door to Santa Fe….overwhelemi ngly support it when it came up on their ballot several years later?????

Wake up people it was the product of a paid lobbyist for the industry who directly benefits from keeping the minimum wage low or removing it entirely. Berman and his various groups of not for pofits did the same to stop tobacco legislation in the nineties…

I of couse call for no action, nor violence, against this man Berman, but it may be stated... he fools so many.

If one wants to see a picture of evil personified it is Berman. So look at a picture of him to see if one may see how evil looks at times.

Poor peoples like Lee…they are fooled by this evil and do not have the means to see the subtrafuge Berman employes.
 
 
+2 # ronnewmexico 2015-03-23 12:17
Here is a recent list of the renown Dr Yelowitz's issues. He is a Asst. Prof at Univ of Kentucky, but also as well as doing work for the Berman lobbying group, does work for the Cato Institute…

We will find he is also quite surprisingly, a health care insurance expert as per his commentary...

"MORE FROM AARON YELOWITZ
Commentary
Obama’s Other Massachusetts Problem
Washington Times. January 21, 2010.

Why Would Congress Compel Young Adults to Buy Health Insurance They Don’t Need?
New York Daily News. November 8, 2009.

Blog Posts
ObamaCare: Still a Bad Deal for Young Adults
March 30, 2010.

Cato Studies

The Massachusetts Health Plan: Much Pain, Little Gain
Policy Analysis No. 657. January 19, 2010.

ObamaCare: A Bad Deal for Young Adults
Briefing Paper No. 115. November 5, 2009."

You could replace Mr Yelowitz's with any number of comparables, people who do this same sort of thing…take the time to do the research on their ties and their funding sources….and you always come to this end.

Against minimum wage ……this is your side.
Yelowitz's renown comments on the Santa Fe issue published in 2005 before the ink had already dried on the law establishing it…

Now ten years later…..it worked birdbrains. Geeze louise..do some homework..don't just believe whatever you see because it appears to favor your ideology. .Both side right and left have to do this…it is our responsibility as humans particularly in democracies.
 
 
-11 # Roland 2015-03-23 14:32
I posted this once before. Michigan’s minimum wage rose in September to $8.15 an hour from $7.40 (the minimum wage for tipped employees rose 17%, to $3.10 an hour). The wage will rise to $9.25 by January 2018. According to the owner, this small increase was the final straw that caused him to close the business. This restaurant was run as a charity to turn around recovering addicts, recently incarcerated individuals and others who would have a hard time landing a job elsewhere. It was a nonprofit with the goal of breaking even and it had to close. For those with access to the WSJ— http://www.wsj.com/articles/michael-saltsman-a-nonprofit-restaurant-falls-to-the-minimum-wage-1420412563

There are many different businesses with many earning results. There are businesses failing all the time. To increase costs would cause the companies on the cusp to close. To believe all companies are profitable enough to double wages (7.27 to 15.00) is strangely naïve.
 
 
-8 # Roland 2015-03-23 14:34
The wage hike hasn’t taken affect as yet in Seattle and I couldn’t tell how much of the hike takes place in the first year. The $15.00 wage doesn’t kick in for another 6 years. It seems a little early. If the cost of living doesn’t increase enough in Seattle to cover the added costs for the restaurant business then jobs will be lost. If any company is producing anything and shipping it outside the immediate area they stand a good chance of being hurt.

The economy seems to be good in Seattle. If their cost of living is high the effects of a slight rise in the minimum wage may be minimal.

The argument in the article is tantamount to saying that if the average temperature in NJ stayed the same last year, then global warming doesn’t exist.
 
 
+1 # ronnewmexico 2015-03-23 15:09
Companies on the cusp, marginally profitable..per haps they would close….to be replaced by other catering to the same market who do so at a better profit. the market doesn't disappear because the business that serves it goes out of business….that is capitalism..it is replaced by one who does.
And those replacements have to comply with the law.

Starbucks is a good example. They raised their prices just last year due to coffee prices and are going to again…but their store by store sales in america…..highe r prices and all…better than ever.

You think a market disappears because any singular business that serves it does….that defies basic economic principal.
The market exists someone will provide it….that is economic principal.

You must show these companies you reference, to add even the slightest it of logic to your argument…"f any company is producing anything and shipping it outside the immediate area they stand a good chance of being hurt. "

Not that companies are producing such things, as they certainly are. But that they employee minimum wage employees that do. Generally even your simplest of manufactureing assembly jobs pay more than minimum wage….if..

And this is the big if…..the company is complying with immigraton law. If they are not..likley they will not comply with minimum wage law as well, so the point is nonexistant.

I
 
 
+2 # ronnewmexico 2015-03-23 15:21
In California after the initiation of the smoking ban in restaurants the owners were quarried and they stated their business declined 24%……lobbyists referenced this number in opposition to it in other places.

A year went by and gross receipts are accounted for in the purposes of taxation…..know what…there was no decline.

Owners are not above politics as we are,they all hold view. A company going out of business…sure they may say it is for this reason or that that supports their ideology….

They are human, we are inclined to do such things.Someone is telling them to do a thing they may not want to do…it is their business….so they dislike the intrusion. Telling things to peoples by survey or individually is one way to do that.

Stastically there is no support for any mass bankruptcies of businesses due to minimum wage increases. There are "managed" statistics as I menioned earlier. Santa Fe due to duration is quite the example of that. But many more places now suffer the same result.Albuquer que it is the same….nothing happened.

I know one business owner who refused to pay. Said he would go out of business. We picketed his business…know what….he is still there.
Everyone is stil here. Some come and go…

Where is the charge to repeal the minimum wage laws in Albuquerque and Santa Fe….…they must be happening….not. They are both complete successes to public perception. Show me one place that is repealing existent minimum wage, … anywhere by popular vote..
 

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