The stories of small NYC restaurants cutting staff and closing their doors because of the city’s $15 minimum wage are beginning to stack up.
This not just “churn” or the natural business cycle of restaurants opening and closing, but the impact of rising labor costs that put employers out of business and their employees out of work.
Take a look at these hard-working Americans whose small business dreams have been dashed by poor public policy:
Liz and Nate Milner, the owners of Upper West Side restaurant Gabriela’s Restuarant and Tequila Bar detail their difficult decision to close their doors after 25 years in business. They tried everything including cutting staff from 60 to 45.
The New York Post captured their experience:
“We started by having to let go of the ladies who hand-made our tortillas. It’s certainly better when you can make your tortillas fresh for every taco,” Nat Milner said. “It made sense at $8 an hour but not at $15.”
Gabriela’s was then forced to lay off “two overnight cleaners, a whole level of middle management, the general manager, the extra servers we’d keep on in case it got busy — and then we started cutting hours.”
“I’m not against people making more money,” Milner added. “These people have worked for me for 20 years. But taxes, groceries, everything is going up and people have a little less money to spend on guacamole and tequila.”
Another CEO described cutting hours for all 180 of his employees along with cutting back on staff-education events like wine seminars. Enrichment and educational programs may seem unnecessary but provide staff with the enrichment they need to provide better service to customers which hopefully keeps those customers coming back.
The impacts of a $15 minimum wage are not isolated to a handful of restaurants. The pain of reduced hours, reduced paychecks, and layoffs are widespread.
Of hundreds of members of the restaurant association, the New York City Hospitality Alliance, three-quarters (76.5 percent) said they reduced employee hours and over one third (36.3 percent) eliminated jobs in 2018 because of mandated wage increases. Even scarier, nearly half (47 percent) said they plan to cut jobs in 2019 for the same reason. The association disputes questionable reports that claim the increased minimum wage will have no negative impact on the industry’s employment.
Wages rise when a strong economy generates ample jobs. Employers have to compete for talent and offer pay better pay and benefits. While wage growth during the current recession was slow to increase, it has begun to accelerate and the lowest-paid workers are seeing their paychecks increase most.
Forcing wage increases by mandating a $15 minimum wage or higher in the future is unsustainable. The workers who think they benefit from higher wages are getting a lesson in economics as their paychecks shrink from fewer working hours. Worse, those who have lost their jobs when their employers shut down are the best evidence of the folly of the $15 minimum wage.