Restaurant die-off is first course of California’s $15 minimum wage
In a pair of affluent coastal California counties, the canary in the mineshaft has gotten splayed, spatchcocked and plated over a bed of unintended consequences, garnished with sprigs of locally sourced economic distortion and non-GMO, “What the heck were they thinking?”
The result of one early experiment in a citywide $15 minimum wage is an ominous sign for the state’s poorer inland counties as the statewide wage floor creeps toward the mark.
Consider San Francisco, an early adopter of the $15 wage. It’s now experiencing a restaurant die-off, minting jobless hash-slingers, cashiers, busboys, scullery engineers and line cooks as they get pink-slipped in increasing numbers. And the wage there hasn’t yet hit $15.
As the East Bay Times reported in January, at least 60 restaurants around the Bay Area had closed since September alone.
A recent study by Michael Luca at Harvard Business School and Dara Lee Luca at Mathematica Policy Research found that every $1 hike in the minimum wage brings a 14 percent increase in the likelihood of a 3.5-star restaurant on Yelp! closing.
Another telltale is San Diego, where voters approved increasing the city’s minimum wage to $11.50 per hour from $10.50, this after the minimum wage was increased from $8 an hour in 2015 – meaning hourly costs have risen 43 percent in two years.
The cost increases have pushed San Diego restaurants to the brink, Stephen Zolezzi, president of the Food and Beverage Association of San Diego County, told the San Diego Business Journal. Watch for the next mass die-off there...
Luckily, I live in the central coast area between L.A. and San Francisco, so this area hasn't gone as extreme left as those parts of California.
Maybe you have not noticed but your link from fresnobee is ONLY an opinion coming from hard left media. If you read it carefully how he manipulated and distorted his opinion.
Read the real news coming East Bay Times. It barely mentioned the MW wage increase. But heavily emphasized on rising rents, very low unemployment, keeping good employees, cost of living -------NOT the MW increased. These are the victims of success NOT the victims of failures. I traveled a lot to San Francisco area and I know a lot of business owners---- The biggest complaint right now is finding employees bcoz of low unemployment. NOT the MW. In desperation one of them even hired 2 warehouse workers with a criminal record.
Why are Bay Area restaurants closing?
Upward of 60 restaurants around the Bay Area have closed since the start of September alone, with many citing difficulties like the cost of finding and keeping good employees, rising rents, new requirements for providing health care and sick leave, and doing it all while competing with the slew of new dining options.
The restaurant industry has always been among the most competitive and challenging to navigate, and failures are nothing new, but the current struggles have left some wondering if the traditional dining model might be headed for an overhaul.
Sal Bednarz, who has owned Oakland’s Actual Cafe for seven years, shut the doors there and at his adjacent Victory Burger restaurant in late December after his struggle to find and keep good employees became “critically bad” in the past two years.
Cafe Rouge, a Berkeley fixture for 20 years, closed Dec. 30, also citing the difficulty of staffing the place. Long-lived eateries like Genova Delicatessen in Oakland, San Jose’s Bold Knight and San Francisco’s Kuleto’s shut down. Pasta Pomodoro, a Bay Area-grown chain, closed all 15 of its remaining restaurants in the region and filed for bankruptcy Dec. 30. Popular Oakland restaurant Hawker Fare announced it will close Feb. 18 due to a change of building ownership.
In an industry where profit margins are slim, making it hard to raise wages or invest in recruitment tools, Bednarz explained, “we have little leverage” when it comes to hiring.
Decades-low unemployment across the Bay Area — 4 percent in the East Bay and 3.5 percent in the South Bay — means that restaurant workers can enter other industries or move to other restaurants. Bednarz said candidates often have not showed up for job interviews.