Friday, June 23, 2017

The New York restaurant industry is slowing down, adding fewer jobs and shedding eateries amidst recent hikes in the minimum wage

Restaurant workers feeling the pinch in New York by Lisa Fickenscher of the NY Post. 
"The New York restaurant industry is slowing down, adding fewer jobs and shedding eateries amidst recent hikes in the minimum wage.

The Empire State lost 1,000 restaurants last year and the number of jobs as cooks, servers and dishwashers grew by an anemic 1.4 percent. That’s a far cry from the 4.4 percent annual growth the state’s eateries enjoyed from 2010 to 2015, according to the Employment Policies Institute, a nonprofit research group.

The Big Apple accounts for the lion’s share of the state’s growth — and the slowdowns in the city are more dramatic.

Employment growth at fast-food restaurants in the city — which are required to pay $12 an hour, or $1 more than other employers — shriveled to 3.4 percent last year compared with 7 percent growth from 2010 to 2015. The spiral has continued into 2017, which has generated just 2 percent growth through May.

Full-service restaurants in the city are adding even fewer jobs, with growth at just 1.3 percent last year compared to 6.5 percent over the previous five years. This year it’s down to 1.2 percent through May.
“This is a drop-off in restaurant growth that didn’t even show up during the great recession,” said Michael Saltsman, managing director of the Employment Policies Institute. “It’s compelling evidence that something big is going on.”

Some economists point to a rise in pay that began in 2016 when the state began implementing a series of minimum wage increases that will bring the hourly rate to $15 by 2019 for some employers in the city and more gradually in other parts of the state.

On Dec. 31, 2015, the minimum wage for tipped restaurant employees rose by 50 percent, from $5 an hour to $7.50 an hour. For fast food workers, it rose by as much as 20 percent, from $8.75 to $10.50 depending on business size and location.

And on Dec. 31, the minimum wage for fast food employees rose as high as $12 in New York City, Saltsman notes. Meanwhile, the statewide minimum wage rose to between $9.70 and $11 an hour for non-fast food, non-tipped employees.

“It’s a miserable business at the moment,” said Andrew Schnipper, who owns five burger joints in Manhattan called Schnipper’s Quality Kitchen. “Most restaurateurs are far less profitable than they were a year ago.”

Other experts point to high rents and oversaturation in the foodie capital of the world where nearly every growing restaurant chain wants to plant a flag and become the next Shake Shack.

Restaurant employment across the country has been slowing down this year, but not by the same steep declines as in New York, say experts.

“It’s not unusual for growth like that to be sustained forever,” said James Parrott, an expert on city and state economics, who recently left the Fiscal Policy Institute. “Restaurant employment [in New York] overall is still increasing and average wages grew about 6 percent in 2016.”
But at what cost, ask some restaurateurs.

Schnipper’s, for example, has 10 percent fewer employees than it did a year ago and many of its current workers have reduced hours. The chain raised its menu prices by up to 4 percent last year and is planning another hike this summer and another one in January when the minimum wage in the city rises to $13. Meanwhile, sales have slipped this year.

Still, “It’s hard to know whether customers are scared off by higher prices,” Schnipper said."

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