The left achieved what it considers a major victory in New York when the minimum wage was raised to $15 an hour. In the aftermath of this victory, however, New York City has experienced its worst decline in restaurant employment since 9/11. So reports the Foundation for Economic Education (FEE).
It doesn’t take much economic education to understand what has happened. As FEE explains:
Restaurants tend to operate on famously low profit margins, typically 2 to 6 percent. So a. . .mandatory wage increase [from $11 an hour to $15] over a two-year period is not trivial.
In response to the minimum wage hikes, New York City restaurants did what businesses tend to do when labor costs rise: they increased prices and reduced labor staff and hours.
How much labor force reduction has occurred? Mark Perry of the American Enterprise Institute has the numbers:
December 2018 restaurant jobs were down by almost 3,000 (and by 1.64%) from the previous December, and the 2.5% annual decline in March 2018 was the worst annual decline since the sharp collapse in restaurant jobs following 9/11 in 2001.
In addition to lost jobs, the $15 minimum wage has caused a reduction in hours for some employees who are retained. A reduction in hours can offset partially, or even fully, any net gain in wages that would otherwise accrue due to the hourly wage hike.
What’s a leftist to do about these unintended but entirely predictably consequences? According to FEE, New York City council members are trying to shield restaurant employees from “unfair” firings.
Is it unfair to fire an employee because his job is being eliminated to save the employer labor costs? Not under any traditional understanding of “just cause” firing.
If the City Council were to ban employer’s from firing employees to reduce labor costs, more unintended consequences would follow: further reductions in the hours of employees, and/or sky-rocketing restaurant prices, and/or restaurants going out of business (thus shedding all of their employees).
Or maybe the City Council plans to dictate the number of hours restaurant employees must be allowed to work and prohibit restaurants from going out of business.
Fast food restaurants don’t constitute the commanding heights of our economy. Even so, the left would be happy to control them. The rest of us, including the “working class,” would be less than happy with that result.