Some Cases Of Negative Consequences Of Higher Minimum Wages Around The Country

Leaving for Las Vegas: California's minimum wage law leaves businesses no choice By Houman Salem, founder and CEO of ARGYLE Haus of Apparel in San Fernando. Excerpt:

"When the $15 minimum wage is fully phased in, my company would be losing in excess of $200,000 a year (and far more if my workforce grows as anticipated). That may be a drop in the bucket for large corporations, but a small business cannot absorb such losses. I could try to charge more to offset that cost, but my customers —the companies that are looking for someone to produce their clothing line — wouldn’t pay it. The result would be layoffs.

 When Los Angeles County’s minimum wage ordinance was approved in July, I began looking at Ventura County, Orange County and other parts of the state. Then, when California embraced a $15 wage target, I realized that my company couldn’t continue to operate in the state. After considering Texas and North Carolina, I’ve settled on moving the business to Las Vegas, where I’m looking for the right facility.  About half of our employees will make the move with us.

Nevada’s minimum wage is only $8.25 right now, so I can keep my current pay structure or possibly increase wages. Even in the event that Nevada raises its minimum wage, I’ll still be better off with reduced regulations, no state taxes, and significantly less expensive worker compensation insurance. I have had the opportunity to meet with Las Vegas city officials (including the mayor) and I am confident that we are entering a very business-friendly environment."

Cultured Cafe in Arizona has just closed, citing min wage increase.


As minimum wage rises, some employers cut back. From The Boston Globe. Excerpt:

"For some small business owners in Massachusetts, however, the effect of the wage increases has been significant.

The owner of two family entertainment centers in Massachusetts said she has reduced her staff to 20 people, down from 50, over the past two years, to counteract rising payroll costs.

The employer, who asked not to be named because she feared repercussions from workers’ advocates, said she and her husband have cut their hours of operation, replaced their DJ with canned music, and are working more themselves to stay afloat. They have also stopped hiring teenagers in favor of more experienced workers.

At Winthrop Marketplace, Marc Wallerce estimates that his payroll will have risen $100,000 over the course of the three wage increases, which includes insurance and workers’ compensation costs tied to salaries. His older workers all make well over $11 an hour, so the raises have mostly been going to the students he employs at the grocery store.

Wallerce said he has not cut back on his nearly 60-person staff, as he initially feared he might have to do, nor has he scaled back bonuses. Still, the bottom line is smaller than it used to be.
“Are we feeling the pinch? Absolutely. Every day,” he said.

On Sundays and holidays, the pinch is even tighter, when retailers in Massachusetts have to pay their workers time-and-a-half.

That means 16-year-olds will now be making at least $16.50 an hour on Sundays. Massachusetts is one of only two states with this Sunday requirement, and one of 11 that don’t have lower wages for teenagers, according to the Retailers Association of Massachusetts.

The increase to $11 an hour is particularly difficult to absorb for business owners outside the Interstate 495 loop around Boston, where the economy is not as strong, said Bill Vernon, Massachusetts director of the National Federation of Independent Business. And an increase to $15 an hour could be disastrous.

“I just think $15 is just something the Massachusetts economy, even inside 495, can’t handle,” he said. “It will help some people, but it will cost jobs. . . . And it’s the young, unskilled workers who are going to get hurt by this.”"

AQ Closing After Five Years In SoMa. Excerpt"

"One more New Year's surprise in restaurant closing news: AQ is shutting down this month after five years in business and many accolades, both local and national. Thrillist broke the news in this piece, the third in a series about what writer Kevin Alexander describes as a nationwide restaurant bubble in which he asserts "America's Golden Age of Restaurants is coming to an end."

AQ was a great story of restaurant success in one of the country's most vibrant and competitive eating towns. Owner Matt Semmelhack, a first time restaurateur, partnered with a talented chef, Mark Liberman, and debuted the restaurant in late 2011 to immediate raves from Michael Bauer and many others, and a James Beard Award nomination for Best New Restaurant. The primary gimmick, which was quick to charm the restaurant's fans, was that the restaurant would change with each season, with the decor, menu, and the staff's uniforms all changing four times a year — with the menu actually shifting many more times than that in incremental ways, based on ingredient availability.

But Semmelhack tells a story that's now becoming all too familiar for restaurant owners — not only in San Francisco, however San Francisco stands apart for having the multiple burdens of a high minimum wage, high rents, and typically astronomical opening costs. Add to that the increased health care mandate for employers, and even a successful restaurant can see their profit margin shrink rapidly."

5 victims of the $15 minimum wage. From Acton:

"For Abbot’s Cellar, a newly founded restaurant in San Francisco, the recent wage hike made their start-up model unfeasible, even despite tremendous initial success."

"Running a diner is not easy,” says Larry, owner of Del Rio Diner in Brooklyn, NY. “Everyone thinks it is, but it’s not.” The neighborhood diner has a 40-year history in the community with a strong and loyal customer base, but amid mounting food costs and a tough economic environment, New York’s mandatory wage increase was “the straw that broke the camel’s back,”"

"Almost Perfect Bookstore once called itself “one of the largest new and used book stores on the West Coast.” Now, thanks to the $15 minimum wage, the 25-years-old store in Sacramento is closing, with the owner shifting to an online-only presence. “The reason that this particular business…is going out of business is because I can no longer afford to pay the ever-increasing minimum wage,” says owner Kelly Uimer."

"Sterling’s Family Childcare offers childcare for children in Oakland, CA, 98 percent of which come from low-income families. Due to the recent California law, the owner has had to lay off one longstanding employee, cut employee hours, and turn away children who required transportation."

And ARGYLEHaus of Apparel, mentioned above.