Activists for the $15Now! movement refuse to admit that the artificially high minimum wage is negatively impacting businesses. Rather, they brush off struggling businesses as a result of the $15 minimum wage policy with ignorant—and heartless—explanations.
The Washington Policy Center points to one far-left blogger who recently wrote that he is “sick of writing about Z Pizza” (a restaurant that failed due to the $15 minimum wage). He goes on to question whether or not the $15 minimum wage is the culprit, “blaming instead the closure on the ‘risky’ nature of the restaurant business and his opinion that Z Pizza is a ‘mediocre restaurant’ that offers up ‘bland’ pizza and a ‘less than desirable atmosphere.’”
Certainly, starting any business is risky. But, the far-left blogger’s refusal to recognize the reality that the $15 minimum wage “makes running restaurant a more risky, and increases the likelihood of people losing their jobs” reveals the reckless and blind support behind the artificial wage. Washington Policy Center,
“The minimum wage is a government-set price control on labor. Setting an artificially-high wage shuts younger and lower-skilled workers out of the legal work force, or forces them into the black market where, without workplace and civil rights protections, they are more likely to be exploited…
“The $15 wage law forces up prices and raises the cost of living for everyone, which of course falls hardest on the poor. For some small businesses, the relentless price and labor cost increases force them to close, like Z Pizza in Seattle, or the Legendary Palace in Oakland’s Chinatown, and all the employees, including the highest-paid, lose their jobs.
“Sure, strict $15 wage laws hit small businesses, especially neighborhood restaurants and small manufacturers, but the pain falls hardest on those least able to afford it, the poor, the marginalized, the young, the jobless. For workers whose skill level or experience does not equal or exceed the economic value of the government-set price, their wage is zero.”
There is, at least, one liberal political blogger that admits the truth. Columnist Kevin Drum acknowledges that the $15 minimum wage will not relieve poverty. But, he does think the $15 minimum wage in Seattle and San Francisco “gives us a great set of natural experiments to figure out what happens when you raise the minimum wage a lot.” The Washington Policy Center,
“Of course, Drum acknowledges the laws of economics make the outcome of those experiments pretty predictable—he supports a higher minimum wage, but believes the $15 wage mandate is “too high” and will have “devastating” effects on most industries.
“Drum thinks restaurants and other service industries, such as retail stores, will probably fare okay. Their customers, on the other hand, won’t fare as well, because he says they will simply raise prices and pass those costs to consumers. He speculates manufacturing in those cities will be crippled, as they either “evaporate completely…or perhaps migrate just across borders [to cities without $15 wage mandates].” And Drum theorizes the high wage will encourage fast food employers to cut back on jobs in favor of increased automation.
“Drum’s conclusions aren’t just speculation. They are already happening in the cities that are serving as the guinea pigs for a $15 minimum wage.”
A disturbing number of $15Now! activists dismiss the struggles of businesses and workers—struggles brought on by their policy—“because their political narrative requires that $15 wage laws have only an upside, no downside.” $15Now! activists argue that the artificially high minimum wage helps the poor. Yet, writes the Washington Policy Center, stories of the poor and the unemployed brought on by their policy “don’t fit the narrative, so their voices are not heard.”
Z Pizza is located in the same block of Broadway as the main campus of Seattle Central Community College. A business which can’t make money selling pizza to college students (!) has bigger problems than a small increase in the local minimum wage.
Bradley Whaley says
If you are going to say something, PLEASE make it intelligent.
Sure! Bloomberg Business News reports that the San Francisco and Seattle areas have the largest numbers of eateries, per capita, in the United States. Have you any idea why the very places with high minimum wages have so many options for dining out?
a small increase in the local minimum wage
Let’s take a hypothetical small company of 12 employees. All earn under $15 an hour. Five are at minimum wage ($9.47); five more make 10% more than minimum ($10.42); and the final two earn 35% more than minimum ($12.78). In this scenario, they all work only about 33 hours per week (1700 per year).
When the new law goes into effect, all of these employees will earn $15.
Including the increased employer contributions to Social Security and Medicare, plus a minor 1% for some state taxes, the employer would have a labor cost increase of just over $100,000 dollars per year. A 40% increase.
To be really “fair” the formerly higher paid employees probably should earn proportionately more. If the employer did this, then the annual labor cost increase would exceed $175,000 per year. A 70% increase.
The above doesn’t include other mandates that increase expenses (healthcare, other paid time off, property tax increases, RTA tax increases, etc.)
What can this employer do to account for the added expenses?
Increase revenue (sell more – lots more)
Raise product/service prices
Decrease work force size
Decrease or eliminate other benefits
Tensor doesn’t do well with math and logic, he’s way more about emotions and feelings
Eastside Sanity says
Hamster Brains liberal Hope & Change president has left him on his wheel to continually spin with no place to go.
Let’s take a hypothetical small company of 12 employees.
How about we look at the actual books of Seattle’s Z Pizza? Oh, right, the owner won’t let us do that. (And why should she? She knows you people will easily accept her story as truth, no questions asked — and even simply *make up* whatever numbers you need!)
Let’s take the hypothetical example of a Z Pizza franchise in San Francisco which is doing well. Oh, wait, that really exists!
Great gluten free vegan cheese pizza 🙂 Had to use all my self control not to order another right away! Would recommend to any 🙂 Easy to find (for travellers) and the staff are really friendly which helps too 🙂
Perhaps San Francisco isn’t a liberal city with a high minimum wage, then?
(Just speaking hypothetically…)
As usual, you missed the point. You seem to believe that unsustainable overhead cost increases, some mandated by government, are not a justifiable reason for a business closing – at least not until the government (or you) looks at their books and approves.
Faced with very large annual labor cost increases, business will be forced to look at ways to compensate for the increased overhead. I laid out a sketch of what the $15 minimum would look like in a small scale example. Ignoring any other government mandates, just the move to take 12 employees making less than $15 up to $15 would add $100k to their overhead costs. Typically a small business can’t just absorb this cost so they must make changes. Sometimes they just can’t make enough of the changes in the available timeframe to make things work and they close. Happens all the time in the free market and can be severely exacerbated with government mandates.
As usual, you missed the point.
Here’s the only point worth considering. San Francisco and Seattle have the largest numbers of restaurants, per capita, in the country. These cities are each in a state with a high minimum wage, and each city has a higher minimum wage than the state in which it sits. Now, either explain how this came to be, or concede that your economic “theory” can’t explain the very thing you say it can explain.
… unsustainable overhead cost increases…
Your saying that does not make it so. Either tell us why SF and Seattle lead the nation in restaurants, or stop claiming you understand economics. Nobody cares about the numbers you pulled out of your arse.
tensor, you are so much of an idiot, but you’re too stupid to know it. You know nothing of the overhead costs of either. You know nothing of their actual taxes, you only know generic information about where they are situated. But we should bow down to you because you linked to a Yelp review page for one S.F. restaurant to bolster your contention that a specific Seattle store has no reason to go out of business.
Nobody cares about the numbers you pulled out of your arse.
How do you know it’s a “small increase in the minimum wage“? What numbers did you pull out of your arse to determine that?
As of April 1st, the minimum in Seattle increased 16% – $9.47 (state) to $11.
The current minimum is $11. A move to $15 is a 36% increase. What size increase would it take before it was no longer “small increase in the minimum wage“?
If all 12 of zpizza’s employees make the current minimum of $11 an hour and they work 34 hours a week, how much does that cost today?
If all 12 of zpizza’s employees are moved up to $15 an hour and they still work 34 hours a week, what would that cost be? What would be the difference between the two?
Perhaps the SF store is run by geniuses and the Seattle one isn’t. Maybe the customer base for the location is better in SF, but you think the Seattle location has a good enough customer base. Maybe the SF store started after the mandates and thus built that into their business plan from the start. I looked at their prices and they are mostly higher than the Seattle store, so they addressed part of the higher minimum wages with product price increases. Maybe they have lower lease costs. The point is that the Seattle store was in less of a position – by the numbers they pulled out of their arses – to adapt to a government mandate, making their overhead cost unsustainable to the point of closing the business. Without the mandate, they may have been able to adjust and make it work, but it was their call, not mine and certainly not yours.
By the way, what are your marketing numbers on how often do college students actually go out and buy $30 pizza’s?
How do you know it’s a “small increase in the minimum wage”?
By comparison to Seatac’s increase, from $9.19/hour (state) in 2013 to $15/hour in 2014. That’s a 63% increase, which has had no discernible negative impact there at all.
When Z Pizza’s franchise owner in Seattle calls it quits, you immediately cite one, and only one, deciding factor for it. Informed (by me) that the Z Pizza franchise in SF seems to be doing fine with a higher minimum wage (on May Day, it went from $11.05/hour to $12.25/hour), suddenly all is confusion for you:
Perhaps the SF store is run by geniuses and the Seattle one isn’t. Maybe the customer base for the location is better in SF, but you think the Seattle location has a good enough customer base. Maybe the SF store started after the mandates and thus built that into their business plan from the start.
Yes, maybe there are many factors involved.
But we should bow down to you because you linked to a Yelp review page for one S.F. restaurant…
That’s rich, coming from someone who cites one Seattle restaurant owner’s self-serving claim as proof the minimum wage is a job-killer.
…your contention that a specific Seattle store has no reason to go out of business.
Wrong. I cast doubt on the claim that the increase in the minimum wage was the deciding factor, and no one has yet provided any evidence at all to support that claim. Since the same company’s franchise is still operating in a place with an even higher minimum wage, that’s further indication the minimum wage increase here was not of decisive importance.
Maybe they have lower lease costs. The point is that the Seattle store was in less of a position – by the numbers they pulled out of their arses …
And have yet to share with anyone. You simply don’t know what their books said; you’re just accepting their self-serving claim without question.
If all 12 of zpizza’s employees are moved up to $15 an hour and they still work 34 hours a week,
Once more, with special emphasis for your special needs: no one cares about your made-up numbers. Here are some numbers people do care about: the unemployment rate during December 2013 in the Seattle-Bellevue-Tacoma region was 5.2 percent, when the minimum wage across that region was a uniform $9.19/hour. The same figure for April 2015 is 3.9 percent, when the minimum wage across that same region ranges from $9.47/hour to $15/hour. Let us know when you’d like to try explaining those numbers.
‘Ignorant and heartless.’ In other words, Lib – itis 101.
Seattle’s rising minimum wage sure is killing good jobs:
The company began the year with eight production lines and now has 14. By year’s end, it will have 16 lines.
That means the company’s 432-person staff is growing too, but Filson’s marketing manager Amy Terai couldn’t say exactly how many employees will come on board this year. Of the current staff, 330 are in Seattle.
Of course, no credible economic survey would ever make a big deal over one local business decision, but I’m sure all of the people who pointed to Cascade Designs will consider Filson to be of at least equal importance, correct?