$15 wage hike causes pizza places to close

Dec 2013
31,537
18,840
Beware of watermelons
#1
Z Pizza and its employees aren’t the only ones facing the economic reality behind mandated minimum wage hikes based on emotions rather than math.

According to Seattle Magazine:

Anne’s Grub closed February 15. Pioneer Square’s Little Uncle shut down February 25. Shanik’s Meeru Dhalwala announced that it will close March 21. Renée Erickson’s Boat Street Café will shutter May 30 after 17 years with her at the helm…What the #*%&$* is going on? A variety of things, probably—and a good chance there is more change to come.

The magazine also named the impending minimum wage hike as a major factor affecting the futures of restaurants in Seattle. “It’s not a political problem; it’s a math problem,” said Anthony Anton, president and CEO of Washington Restaurant Association.

Anthony estimates that restaurants typically spend about 36 percent of the budget for labor, 30 percent for food costs, and 30 percent for other operational costs. That leaves roughly a 4 percent profit margin for restaurants. Obviously then, if labor costs jump to 42 percent, cuts must be made in other areas, and/or prices must rise. These actions restaurants must take in order to comply with the higher wages generate their own reactions from customers which can still result in lower revenues.

From the Washington Policy Center:

When prices rise consumers seek alternatives, a behavior economists call the “substitution effect,” which results in lower demand for the higher-priced product. In the case of restaurants, consumers have access to the ultimate substitution – they can stay home.

Earlier this year when Prop 1 was implemented in Seattle, which mandated a $15 minimum wage for workers in parking garages and hotels near Seattle-Tacoma International Airport, a reporter asked a pair of women who work at a hotel near SEATAC what they thought of the new wage law.

One of the women said “It sounds good, but it’s not good, I lost my 401k, health insurance, paid holiday, and vacation,” adding, “No more free food.” The hotel used to feed her, now she must bring her own lunch, she also has to pay for parking and no longer receives overtime pay. The other woman, a waitress at the hotel, reported that she receives less in tips now. Her hourly wage was $7 an hour but with tips, ended up making more than $15 an hour. She too has lost the free parking and food.

Higher minimum wages result in fewer jobs in a two-fold manner. Some jobs will be destroyed because businesses will need to cut staff, something that disproportionately affects low-skilled employees. But just as important, is that some jobs will never be created in the first place. The restaurant industry employs nearly half of all people making minimum wage and is an important step for students entering the workforce looking to gain work experience.

A higher minimum wage may bring up the standard of living for a lucky few who get to keep their jobs, but it will be devastating to everyone else who will have their positions cut and find themselves unemployed, and for those who won’t have the opportunity to find employment in the first place. It’s simple math, $7 an hour is higher than $0 an hour.

https://www.google.com/url?sa=t&rct...5MslDa-V_sVIOL45gHKsLg&bvm=bv.110151844,d.eWE
 
Last edited:
Likes: 2 people
Jul 2014
13,231
8,020
massachusetts
#2
Businesses also closed in areas not affected by the minimum wage increase.

When people won't spend enough in a place to keep it open, that's called "market forces"
 
Likes: 2 people
Dec 2013
31,537
18,840
Beware of watermelons
#3
Businesses also closed in areas not affected by the minimum wage increase.

When people won't spend enough in a place to keep it open, that's called "market forces"
what is it called when businesses are closed due to the state increasing their operating costs?


what happens to the large number of workers who are going to find themselves priced out of the job market?


do you understand how many people who earn minimum wage are working in the food service industry?

here restaurants are preemptively moving/closing and altering services. support staff will all be priced out of the equation.

lunch services, in-betweens and happy hours will also be a thing of the past. robots will work the counter at your movie theaters, fast food spots, convenient stores and mega markets.

this is a lot of people who previously were employed who will not be. the same people who figured it would increase the quality of life will then be begging for more revenue from the state to increase the welfare state. the inability to look at the big picture or the future is the major flaw in this philosophy.
 
Likes: 1 person
Nov 2012
10,217
8,382
nirvana
#4
what is it called when businesses are closed due to the state increasing their operating costs?


what happens to the large number of workers who are going to find themselves priced out of the job market?


do you understand how many people who earn minimum wage are working in the food service industry?

here restaurants are preemptively moving/closing and altering services. support staff will all be priced out of the equation.

lunch services, in-betweens and happy hours will also be a thing of the past. robots will work the counter at your movie theaters, fast food spots, convenient stores and mega markets.

this is a lot of people who previously were employed who will not be. the same people who figured it would increase the quality of life will then be begging for more revenue from the state to increase the welfare state. the inability to look at the big picture or the future is the major flaw in this philosophy.
what is it called when businesses are closed due to the state increasing their operating costs?
what happens to the large number of workers who are going to find themselves priced out of the job market?

You mean like Walmart, that has closed more local businesses, and with lower pay, than all of the minimum wage increases combined?

What does it cost when a Walmart uses much of a localities infrastructure, and pays such a low wage, many of it's employees are on government assistance?

Appreciate your concern for all of those mom and pop businesses that are no longer around though.

Hey, didn't Walmart just announce they are raising their wages to $10 an hour?

You might want to send them a letter expressing your concerns about what that might do to all of those mom and pop businesses....Oh, wait a minute.
 
Feb 2014
12,580
7,843
nunya
#5
You mean like Walmart, that has closed more local businesses, and with lower pay, than all of the minimum wage increases combined?

What does it cost when a Walmart uses much of a localities infrastructure, and pays such a low wage, many of it's employees are on government assistance?

Appreciate your concern for all of those mom and pop businesses that are no longer around though.

Hey, didn't Walmart just announce they are raising their wages to $10 an hour?

You might want to send them a letter expressing your concerns about what that might do to all of those mom and pop businesses....Oh, wait a minute.
I love that argument. So your saying that the mom and pop places were all paying great living wage salaries to their employees, and Wal-Mart is not? That is in fact your argument. So, lets think about this. Is Wal-Mart employing more people than main street? Did main street pay above and beyond Wal-Mart? You probably do not want to hear the answer to those questions.
 
Likes: 1 person
Jun 2012
41,942
15,150
Barsoom
#6
Walmart hasn't closed any mom and pop stores. Walmart can only go where the elected officials of any municipality allows them to go.
 
Sep 2015
9,280
5,181
Lehigh Valley Pa.,USA
#7
Minimum wage laws are a bad idea.....They were never meant to, and should never be set to create a "living wage".....First of all it does not affect only the lowest wage earners...When you raise the bottom it reflects on the higher paying jobs above it....raising them proportionately....and ultimately raising the entire payroll for the company and that will be reflected in the end price of the product or service....Thereby raising the cost of living on everybody.....necessitating raising the minimum wage again... A classic Wage-Cost-Push spiral...
 
Dec 2014
25,256
13,659
Memphis, Tn.
#8
Z Pizza and its employees aren’t the only ones facing the economic reality behind mandated minimum wage hikes based on emotions rather than math.

According to Seattle Magazine:

Anne’s Grub closed February 15. Pioneer Square’s Little Uncle shut down February 25. Shanik’s Meeru Dhalwala announced that it will close March 21. Renée Erickson’s Boat Street Café will shutter May 30 after 17 years with her at the helm…What the #*%&$* is going on? A variety of things, probably—and a good chance there is more change to come.

The magazine also named the impending minimum wage hike as a major factor affecting the futures of restaurants in Seattle. “It’s not a political problem; it’s a math problem,” said Anthony Anton, president and CEO of Washington Restaurant Association.
Sg
Anthony estimates that restaurants typically spend about 36 percent of the budget for labor, 30 percent for food costs, and 30 percent for other operational costs. That leaves roughly a 4 percent profit margin for restaurants. Obviously then, if labor costs jump to 42 percent, cuts must be made in other areas, and/or prices must rise. These actions restaurants must take in order to comply with the higher wages generate their own reactions from customers which can still result in lower revenues.

From the Washington Policy Center:

When prices rise consumers seek alternatives, a behavior economists call the “substitution effect,” which results in lower demand for the higher-priced product. In the case of restaurants, consumers have access to the ultimate substitution – they can stay home.

Earlier this year when Prop 1 was implemented in Seattle, which mandated a $15 minimum wage for workers in parking garages and hotels near Seattle-Tacoma International Airport, a reporter asked a pair of women who work at a hotel near SEATAC what they thought of the new wage law.

One of the women said “It sounds good, but it’s not good, I lost my 401k, health insurance, paid holiday, and vacation,” adding, “No more free food.” The hotel used to feed her, now she must bring her own lunch, she also has to pay for parking and no longer receives overtime pay. The other woman, a waitress at the hotel, reported that she receives less in tips now. Her hourly wage was $7 an hour but with tips, ended up making more than $15 an hour. She too has lost the free parking and food.

Higher minimum wages result in fewer jobs in a two-fold manner. Some jobs will be destroyed because businesses will need to cut staff, something that disproportionately affects low-skilled employees. But just as important, is that some jobs will never be created in the first place. The restaurant industry employs nearly half of all people making minimum wage and is an important step for students entering the workforce looking to gain work experience.

A higher minimum wage may bring up the standard of living for a lucky few who get to keep their jobs, but it will be devastating to everyone else who will have their positions cut and find themselves unemployed, and for those who won’t have the opportunity to find employment in the first place. It’s simple math, $7 an hour is higher than $0 an hour.

https://www.google.com/url?sa=t&rct...5MslDa-V_sVIOL45gHKsLg&bvm=bv.110151844,d.eWE
Shit happens, *shrug*
 
Jul 2014
13,231
8,020
massachusetts
#9
what is it called when businesses are closed due to the state increasing their operating costs?


what happens to the large number of workers who are going to find themselves priced out of the job market?


do you understand how many people who earn minimum wage are working in the food service industry?

here restaurants are preemptively moving/closing and altering services. support staff will all be priced out of the equation.

lunch services, in-betweens and happy hours will also be a thing of the past. robots will work the counter at your movie theaters, fast food spots, convenient stores and mega markets.

this is a lot of people who previously were employed who will not be. the same people who figured it would increase the quality of life will then be begging for more revenue from the state to increase the welfare state. the inability to look at the big picture or the future is the major flaw in this philosophy.
Did every pizza place close?
Or just the ones with bad tasting pizza?

On the bright side, the pizza places that make better pizza will be hiring, as they will be doing more business.
 
Likes: 3 people
Nov 2012
10,217
8,382
nirvana
#10
Did every pizza place close?
Or just the ones with bad tasting pizza?

On the bright side, the pizza places that make better pizza will be hiring, as they will be doing more business.
That would be the ones with bad business models.

The food business is the number one business model that fails more than any other.

It's also the number one business model with the highest turnover rate of any business model.
 
Likes: 2 people

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