According to the article, New York City restaurants are reducing jobs and raising prices due to the new hourly wage of $15 per hour. The executive director of the trade group also said there has been a loss of job of 1.6%. The restaurants said they have been reducing jobs and the hours of employees in 2018 and may make more adjustments in 2019 as well, which is naturally what they are assumed to do. This may get workers earn more money, but if the restaurants are raising the price, their cost of living would rise anyway. I think this will lead to reduced demands on restaurants and increase jobs and work hour loss more.
However the article seems to overstate the impact by using the word "killing", because it might not lead to major issues. But what I think of this $15 wage increase is it might not really benefit the people that work. Initially it might, but the reduced hours might negatively affect them. That depends on how the employer would adjust the times, but it will definitely reduce potential income.
https://nypost.com/2019/03/30/the-new-minimum-wage-is-killing-nycs-once-thriving-restaurant-scene/
3 comments:
Kyul, interesting article. This paradox and/or tradeoff between higher wages and less hours is one for the books. It is difficult because a minimum wage in NYC of $15 (I would think) still doesnt really get you anywhere. The cost of living is so high there anyway that $15 an hour may not cut it. One reason that NYC may be able to get away with this wage is because salaried employee's make much more in NYC than in other parts of the country, so more expensive food may just be a consequence of that. Then on the other hand, in terms of the hourly workers, some mom and pop restaurants may be forced to reduce their labor force as you mentioned. The way the economy looks right now, labor may continued to be cut in this area/industry for a bit of time, and until the market corrects and deflates a bit, this may be common.
I think Antonio brought up a good point. A lot of smaller restaurants may not be able to afford as much labor; especially with their rent and costs being notoriously high considering this is New York City. Studies have shown that raising the minimum wage can result in businesses leaving those areas, cutting labor hours and an increase in the cost of living. Given this knowledge, I would not be surprised if we saw more of these labor cuts for the restaurant business in the future.
The increase in minimum wage should help improve the workers productivity but may decrease individuals pay due to reduced hours (75% of restaurants). The increase in the minimum wage should also stimulate consumer spending and consumer demand, by restaurant workers, which will help the economy grow. However, this lead to increased prices in the restaurant business which may affect the overall willingness for all consumers to pay these higher prices.
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