Quote: "During this period, New York City has seen a strong economic expansion of the restaurant industry, outpacing national growth in employment, annual wages, and the number of both limited- and full-service restaurant establishments."
Perhaps the disagreement you see is because this study focuses on the workers, instead of the business owners. Food service worker wages and employment rates are up relative to overall growth. This article is dispelling the notion that increasing worker wages will lead to worse outcomes for those workers, which is a common objection to increasing the minimum wage.
The minimum wage hike occurred in late 2018.
> Roughly 77 percent of NYC restaurants have slashed employee hours. Thirty-six percent said they had to layoff employees and 90 percent had to increase prices following the minimum wage hike, according to a NYC Hospitality Alliance survey taken just one month after the bill took effect.
> Only about 4 percent of survey respondents indicated that none of the above changes took place in their restaurants.
https://nationalinterest.org/blog/buzz/new-york-city’s-15-mi...
Typically, in a restaurant in Philly or places with similarly lower-than-minimum service wages (which still has the $2.75 or whatever minimum for service workers), you'll be scheduled excessively for hours when the restaurant definitely isn't going to have any business. For example, coming in at 330/4 to start prep for the dinner shift.
When labor costs basically nothing, there's no reason not to overschedule them.
This reduced the amount of time I could spend outside of work learning to program (for example... since it's what I did hah) or others could spend improving their skills for basically no money. It's a huge detriment to the employees. You'd stand around cleaning for some nitpicky manager making 0/hour effectively, doing untipped cleaning and prep work. Your paychecks will be $0 if you get even a modest amount of tips for the night (it's all taxed).
Now restaurants will be more particular about how they schedule employees, and the untipped work actually costs money to have done (if a janitor would have to be paid minimum+ to do it, why should a server do it for $2.75/hr)?
I worked in some of the largest (non fast food) groups to single owner restaurants.
It’s so rare in the $2 an hour states. I worked at Chili’s during the worst parts of the recession and never made a paycheck. Once the economy picked up I went to greener pastures.
The survey you cite seems low quality anecdata compared to actual industry numbers shown in the study being discussed.
As to your first point, no, "the minimum wage hike" did not occur in late 2018. The final increase ($13.50 to $15.00) did indeed take place near the end of this study period, but the overall increase from 2013 to 2018 (from $7.25 in 2013 to $13.50 by late 2018 to $15.00 by end of 2018) reflects a more than doubling of the minimum wage over the study period, so I think it is still a valid reflection of the impact of such a dramatic increase.
[1] https://thenycalliance.org/assets/documents/informationitems...
http://www.centernyc.org/new-york-citys-15-minimum-wage
actual report:
https://static1.squarespace.com/static/53ee4f0be4b015b9c3690...
At least talking about restaurants with tipped employees, the $15/hr includes a $5/hr tip wage! If a server makes enough in tips, the min wage the restaurant pays is only $10/hr. See appendix figure 1, page 22 of the pdf.
Why should I trust the data?
There have been too many times of selective definitions, selective measurements, selective polling, selective measurements... all for reaching an agreed upon conclusion. For example, the CDC used a specific definition of rape (excluding forced penetration, counting it as general sexual assault instead) that excluded the majority of male victims of domestic rape, and then used the now biased results to give high level summary data that was greatly misleading.
If I can't trust the CDC's reporting on an issues as serious as domestic sexual violence, then how can I trust anyone's data? Maybe peer reviewed science in the hard sciences, but social science (including economics) has a similar issue of selective measurements, ignored replication, and biased publishing.
So I guess to start with, what peer review has this undergone? To what extent has it been replicated? What criticisms does it have (and none is a very bad sign)? What is the biases of the group(s) that did the work involved? What is the biases of the group(s) that provided funding?
Yes, it is odd I'm at the point where anecdotes seem to have as much weight as data because anecdotes are understood to be inherently biased whereas data is treated as pure, reliable, and free of bias when it isn't.
Also, please note that someone has already posted a criticism of this data.
The problem is that there is not much verification going on.
The minimum wage might well have led to a worse outcome for those workers that is being masked by some other effect. In theory a minimum wage rise will have no impact (good or bad) if the equilibrium wage is high enough.
It strains credulity to think that New York's restaurant scene is thriving because of the minimum wage. There is clearly something else going on.
And the explanation is easy, trivial even: people who eat at restaurants have more money to do so.
US's overall economic picture is so heavily tilted in favor of the wealthy that literally anything that puts money in the hands of the poor is going to cause an economic boost.
^_~ You might not have researched that. There are studies that suggest net-positive impact, but there are also studies that suggest change for the worse.
> And the explanation is easy, trivial even: people who eat at restaurants have more money to do so.
Minimum wage earners aren't going to be investing in increased production capacity. Best case scenario, something that was going to be consumed by the rich gets consumed by a minimum wage earner instead. Middling case scenario, something that was going to be consumed by the middle class isn't produced. Worst case scenario, less investment and we have a little bit less to go around in 10/20 years.
None of those 3 is catastrophic, but it is very unlikely that minimum wage rises are a big-picture win. The idea that even with a minimum wage increase a poor person could out-compete a member of the middle class for any good or service is optimistic.
There aren't. The literature is surprisingly uniform. I mean, I'm sure you can find something funded by a libertarian thinktank that says otherwise, but nothing by credible researchers doing honest research. Universally and without exception, areas that increase the minimum wage experience economic boosts compared to similar areas that don't.
> Minimum wage earners aren't going to be investing in increased production capacity.
Nobody said they would, or would have to. Restaurant owners do the investing; wage earners do the consuming. Investment follows demand, obviously.
> very unlikely that minimum wage rises are a big-picture win.
Oddly, the literature says the exact opposite.
You seem to think that there's a fixed supply of restaurant meals - only 100 meals, no more, and if Sue wants to eat then Larry doesn't get to. This is... not the case.
Well, if they were hurt with such a raise, perhaps they were not viable businesses and are better closed.
The employees might lose a crappy near-subsistence job, but both the employees and owners can then concentrate their efforts into something better...
Somehow Europe manages to have viable restaurants despite decent minimum wage and not tips-oriented compensation...
They have a social safety net for all the people who aren't employable at that high wage. That's the difference. You can't massively increase minimum wage without a social safety net to go with it. And if your goal is both you need to start with the safety net, not the minimum wage increase.
Before the hike, both the employee and owners could do that... yet they didn't. Is the existence of a lower paid job make it harder to create something better? That seems really backward, because there will always be lower paying job.
> Somehow Europe manages to have viable restaurants despite decent minimum wage and not tips-oriented compensation...
Where does Europe has an higher minimum wage than $15 USD? That's excluding tipping which can bring that wage MUCH higher.
You can't really compare viability when the wage is actually lower....
[0] https://en.wikipedia.org/wiki/List_of_European_countries_by_... [1] https://stats.oecd.org/Index.aspx?DataSetCode=RMW
My experience in both the UK and Germany was the service is utterly terrible. Some people believe this is a worthy trade-off. I disagree ,and I reject the notion that the only acceptable answer is higher guaranteed wages.
Back home I went to an equivalent size burger joint that had 6 people on staff that I could see.
With good design and prep a curry restaurant was able to serve the same amount of food with 1/3 the staff. They could double the wage of the staff and still have money left over with better prep and design.
In which case you should take a long hard look at what's wrong with it instead of using semi-employment under horrible wages as a band aid...
Also, not all countries in Europe have a minimum wage - there's no official minimum wage in Norway (although the de facto minimum wage is a lot higher than in the US).
Really? Really? You think the unemployment in Spain and France is because of the minimum wage? They had the minimum wage decades before they had high unemployment (and inversely for the US).
Not to mention unemployment rate doesn't say much, since in the US it includes all kinds of subsistence semi-jobs that would qualify more like colonial deals in other countries -- among other manipulations:
"The answer lies in the measurement of unemployment. If you have not looked for a job in the last four weeks, you are not counted as being unemployed, because you are not counted as being part of the work force. When there are no jobs to be found, job seekers become discouraged and cease looking for jobs. In other words, the 4.1 percent unemployment rate does not count discouraged workers who cannot find jobs. (...) The US Bureau of Labor Statistics has a second measure of unemployment that includes workers who have been discouraged and out of the labor force for less than one year. This rate of unemployment is 8.2 percent, double the 4.1 percent reported rate. (...) The US government no longer tracks unemployment among discouraged workers who have been out of the work force for more than one year. However, John Williams of shadowstats.com continues to estimate this rate and places it at 22 or 23 percent, a far cry from 4.1 percent. In other words, the 4.1 percent unemployment rate does not count the unemployed who do show up in the declining labor force participation rate." [1]
In any case, even with the given "unemployment rate" as the metric, the US is well below Cambodia, Laos, Thailand, Vietnam, Guatemala, and other places, the same way it is, itself, ahead of France. Does that tell you much?
[1] https://www.foreignpolicyjournal.com/2018/03/08/make-believe...
The relatively high unemployment rate in Spain is not related to the minimum wage, but has been linked to their economy being driven mainly by tourism and construction. In fact, the minimum wage in Spain is neither very high nor very low compared to other European countries.
Are you blaming the higher unemployment ratios in those countries on the minimum wage?
The minimum wages per hour in the UK are:
* Apprentices: £3.90
* Under 18: £4.35
* 18 to 20: £6.15
* 21 to 24: £7.70
* 25 and over: £8.21
This isn't exactly the same type of minimum wage most other countries use. This would probably be considered age discrimination in some countries.
This is true in just about every market in the US, including all the ones without minimum wage increases.
> The price of everything on the menu has gone up
You could say this most years about any restaurant and most years you'd be right. The other years, you'd see smaller servings.
> A number of lower-cost restaurants have closed completely
The average person eats at fewer restaurants in their entire life than the number of restaurants that close in NYC in any given year. Anecdotes aren't a data point.
Nonsense means without logic or sense. I made an argument, amounting to that the source has a conflict of interest. You might disagree with it, and it might even not be the case, but it's perfectly logical. Hardly "nonsense". In fact, I find it irrefutable (There is a conflict of interest between the host of study and showing negative results from the smoking bank on businesses. Whether it affected the work is another matter).
It seems that for some reason you expect me to bother debunking it tp provide "deeper criticism", but I have no such intention and have better uses of my time. For me, as I wrote, it is enough of a filter to avoid sources with conflicts of interest. YMMV.
Do you really believe one cannot (or shouldn't) point to a potential conflict of interest, if they don't at the same time give "deeper criticism"?
Note that I didn't even claim that the report is wrong. I literally only wrote who hosts it, and argued that it's "hardly the best source" regarding pro-smoking business interests.
Is that controversial?
Seems to me that a reasonable, limited, and (I'd argue) true, point, was met with hostility and unrelated demands, not to mention the rude "nonsense". Maybe you ought to think about it?
Why not look at the actual data and try to address that? It would be a much stronger argument.
I feel like that is more of a side effect of delivery apps getting popular.
But in my opinion if your restaurant cant afford to pay $15 an hour, which still isn't really a livable wage in NYC, then maybe it shouldn't be operating.
I am from Europe and I always find it confusing to deal with prices in the US. First the prices don't contain the taxes, and then I have to add tipping. The price of a meal shows up on the menu as 9.95 and I end up paying around 15.
At some point, it morphed into passing part of the service staff wage to the customer and pretending this was somehow a good thing. It's so entrenched in culture now people just assume even for crap service you tip. At the end of the day, it really gives management an easy out by putting the customer against the service staff for labor rates while the restaurant decides fixed meal costs.
I almost always tip 20%. I even tip 15% for poor service--I figure that there are likely things going on in the kitchen or with other service staff that I'm not aware of, and that tips are often split between everyone so the my tip for poor service is help the other employees busing tables too. My wife often tips 25% or more.
Why can't restaurants charge us more, pay their staff better, and then the staff could treat us like we were customers of the restaurant and not expecting us to directly compensate them. For the answer, see my last paragraph.
Even for pick up service, say when I place a to-go order for cup of coffee with my Starbucks app and then pick it up from a bin on the counter myself, the app prompts for a tip. At other server-less restaurants, I'm forced to make the choice of tip when I place the order.
So why the culture around tipping here in the US. I believe that it's related to why movie theaters can charge so much for popcorn. From Stanford.edu:
"The findings empirically answer the age-old question of whether it's better to charge more for a primary product (in this case, the movie ticket) or a secondary product (the popcorn). Putting the premium on the "frill" items, it turns out, indeed opens up the possibility for price-sensitive people to see films. That means more customers coming to theaters in general, and a nice profit from those who are willing to fork it over for the Gummy Bears." [1]
In the case of tipping in restaurants, the restaurants are naturally willing to charge more to customers like myself and my wife for the wine+food+service while still making a profit from price sensitive customers that pay less by tipping less for the same wine+food+service.
[1] https://www.gsb.stanford.edu/insights/why-does-movie-popcorn...
Restaurants have long been subsidized by workers stuck in a position where they will work for _any_ wage. As that changes, which is demonstrably a good thing, so will prices rise to match costs.
It’s similar to the way Uber/Lyft prices will need to rise when their subsidies change terms.
It has already gone up to compensate. I still go out and eat for a few dollars more and people get paid better.
Go explore some rent prices in NYC and you will understand why it is necessary.
Remember, making food at home in a nice kitchen is a luxury.
I'm lucky that I'm in a place now where I can make nice food from relatively raw ingredients and much of that stems from my (relative) wealth.
Having some one else prepare and serve you food is a luxury, they deserve to be paid for their work.
If you disagree then do the work yourself no one is stopping you.
likely because profit = revenue - expenses and expenses (in the form of wages) have gone up more than revenue.
Raising the minimum wage has always been bad for margins. That's why those restaurants (and economists indirectly on their payroll) try to convince us that it's bad for workers too.
https://nypost.com/2019/09/29/15-minimum-wage-hike-is-hittin...
> Gabriela’s isn’t alone. In a survey of 324 full-service restaurants, the New York City Hospitality Alliance found that 76.5 percent of respondents cut staff hours and 36.3 percent eliminated jobs, including whole layers of middle management, in response to mandated wage increases.
> To cope, restaurateurs like the Milners are moving from large-scale restaurants to small spaces. The Milners have Gabriela’s Taqueria at West 44th Street and Eighth Avenue.
It seems unlikely the original article is telling the full story.
I would say that from my experience with the restaurant industry here, it definitely puts pressure on restauranteurs with marginal businesses. If you have a labor-intensive restaurant with thin margins, it hurts you. However, the restaurants with strong businesses, it's not really affecting.
A far greater impact on the typical restaurant is delivery, which is an increasing percentage of their business with a lower margin for many traditional restaurants, given the cut that Grubhub/Seamless/etc. take.
* "massive layoffs in the restaurant industry are unlikely," but the survey indicated that a large number of restaurants have eliminated jobs or cut hours
* "...because owners need a certain number of staff to operate a full-service kitchen," but at least in the anecdotes from the interview in the NYPost article, restaurant owners are moving to smaller venues that require less staff or moving to "common space" layouts.
That seems to indicate that worker pay isn’t really the issue here.
And it’s well known the reason restaurants are closing shop is almost because of outrageous rents.
From my personal experience in nyc, and from talking to neighbors who own restaurants, small and family owned businesses are absolutely hurting. They’ve reduced staff, and owners are making up lost hours themselves. Delivery has been mostly outsourced. The price of everything on the menu has gone up. A number of lower-cost restaurants have closed completely. Whatever reported numbers the author based this upon do not tell a complete story.