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Small business owners across the country are beginning to feel the effects as more and more states are moving toward a minimum wage of $ 15.
Although the proposals to raise wages are aimed at helping workers, many family-owned restaurants and cafes are responding by cutting down on work hours, cutting jobs or shutting down altogether because they can not keep up with work. wage increase provided by law.
THE GOVERNOR OF ILLINOIS SIGNS MEASURE AT THE MINIMUM WAGE OF THE STATE OF HIKING AT $ 15
Economists say it's the ugly side of much-touted wage hikes, adding that these difficulties can trigger a "tsunami on wages" for small businesses already under-exploited by rising rents and soaring health costs .
"For some of these companies, minimum wage increases tilt the balance between bankruptcy and bankruptcy," writes Panos Mourdoukoutas, an economics professor at the LIU Post in New York.
Boston's iconic restaurant, Durgin-Park, at Faneuil Hall, was forced to close in January after nearly two centuries of activity. Homeowners said they could not keep up with rising wages and health care premiums.
"We thought [closing] for last year, "Michael Weinstein, CEO of Ark Restaurants, who bought Durgin-Park in 2007, told Boston.com." First of all, our owners are great. It is an expense problem that we face. we [own] several places across the country that face an increase in the minimum wage. In this context, we are facing an increase in liability, property and health insurance. "
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After winning her home-based home race last year, New York representative Alexandria Ocasio-Cortez, D-N.Y., "Rocked" to say goodbye to the Union Square café where she was working.
She tweeted: "The restaurant I was working in closed its doors, I swung out today to say hello one last time, and I had fun with friends like the good old days."
What she did not say, it is that the popular cafe was closing because it could not afford the increase in salary increase of $ 15 that Ocasio-Cortez has firmly supported.
"Times have changed in our industry," said co-owner Charles Milite at the New York Post. "The rents are very high and now the minimum wage is going up and we have a huge number of employees."
The American Action Forum estimates that minimum wage increases are cutting 261,000 jobs – with the largest losses concentrated in New York and California.
In the last three months of last year, 4,000 workers lost their jobs in full-service restaurants, according to data from the Bureau of Labor Statistics. By the end of last year, there were fewer restaurant workers in New York than in November 2016, according to Investor's Business Daily.
Last month, Maryland became the sixth state in the country to approve a gradual increase in the minimum wage, which drops to $ 15 an hour. The American Action Forum predicts that the move would cost 94,600 jobs in the state.
"For us, this equates to eliminating nearly 50% of projected employment growth between 2016 and 2026," wrote Ben Gitis, director of labor market policy at American Action Forum. "Maryland is not well positioned to absorb this shock as it continued to record below average employment growth as the state implemented its previous minimum wage hike. from 2014 to 2018. "
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Proponents, however, believe that increases are needed to address income inequality and to keep up with inflation. The issue was widely adopted by Democratic candidates during the presidential campaign, many of them supporting a bill aimed at raising the salary to 15 US dollars at the federal level.
Senator Bernie Sanders, a sponsor, described the current minimum wage as a "starvation wage".
California, Illinois, Massachusetts, New Jersey and New York all approved a minimum wage of $ 15, as did the District of Columbia. Phoenix employees are on track for higher hourly pay on May 1st. In all, 20 states have or will be moving towards a salary of $ 15.
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