Asshat Alert: Hike in minimum wage prompts more closings of San Francisco restaurants

From the Washington Examiner:

San Francisco’s higher minimum wage is causing an increasing number of restaurants to go out of business even before it is fully phased in, a new study by the Harvard Business School found.The closings were concentrated among struggling, lower-rated restaurants. The higher minimum also caused fewer new restaurants to open, it found.

“We provide suggestive evidence that higher minimum wage increases overall exit rates among restaurants, where a $1 increase in the minimum wage leads to approximately a 4 to 10 percent increase in the likelihood of exit,” report Dara Lee and Michael Luca, authors of “Survival of the Fittest: The Impact of the Minimum Wage on Firm Exit.” The study used as a case study San Francisco, which has an estimated 6,000 restaurants in the Bay Area and is ratcheting up its minimum wage. Restaurants are one of the largest employers of minimum wage workers.

The city’s minimum wage is currently $13 an hour, compared with California’s rate of $10.50 and the federal rate of $7.25. The city’s rate is set to increase to $14 in July and again to $15 next year. That rate, unlike federal law, does not include an exception for tipped employees. The rest of the Golden State will see the minimum rate rise to $15 in 2022. States are free to set rates higher than the federal level, and cities can do the same regarding state minimums.

The Harvard study used reviews on the social media site Yelp as a gauge of relative quality. It found that lower-rated eateries in particular were more likely to go under as the minimum wage was raised. Five-star restaurants were largely unaffected, while ones with a 3.5 star rating were 14 percent more likely to fail when the city’s minimum pay rate rose 10 percent above the state’s minimum. The failure rate increased steadily as the restaurant’s ratings declined.

“The impact on exit is concentrated among lower quality restaurants, which are already closer to the margin of exit. This suggests that the ability of firms to adjust to minimum wage changes could differ depending on firm quality,” the study found. The higher-rated restaurants can adjust, primarily through working their employees harder.

Higher minimum wages also reduce the rate at which new restaurants open by 4-6 percent per $1 increase in the minimum, the study found.

—oo—

There ya go, more moronic Lefty success. but, but, but “it’s not fair”.  Bwhahahahaha

~ Hardnox

 

About Hardnox

Constitutional Conservative that Lefties love to hate.
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9 Responses to Asshat Alert: Hike in minimum wage prompts more closings of San Francisco restaurants

  1. Shar says:

    It is a sad situation. Not everyone can afford a five star restaurant. I’m sure all the lower rated will either go out of business or use robots. Another case of taking starter jobs from teens and college students. The unaffordable care act didn’t help either.

    Whats in that squeeze bottle? It looks gross. Diet size bowl. I’m out.

    • I.R. Wayright says:

      “Whats in that squeeze bottle? It looks gross.”
      Soylent Green.

      “The unaffordable care act didn’t help either.”

      Right. People don’t have as much spendable income as before. It has surely hurt our household. I think that is a major factor in the closing of large department stores at the malls. I don’t think the numbers would show it is completely due to Amazon or other online sellers.
      BUT, I needed a spark plug last week. Just one. I knew that I would have to drive 12 miles to the nearest place and then I might have to got to several other stores to find the plug for the power washer. I figured I would probably pay close to $4 with tax. Then add in my time and travel expenses of a gallon of gas which is now $2.65, so now we are looking at $6.65 for that one purchase. So I went on Ebay and found four of them delivered for $7. A no brainer.

  2. captbogus2 says:

    I will say it again. The economy is based on the lowest wage rate. When you legislate a minimum wage you initiate a starting point for inflation because a minimum wage is a STARTING point, both for people entering the job market and the economy. When you raise the minimum wage you do not give a ‘helping hand up’ to the lowest paid wage earners because with the increased costs of manufacture comes increased costs of the product, doesn’t matter if it is a Cadillac, a MacDonald’s or a can of Budweiser. The only way out of the job entry minimum wage market is through promotion and learning job skills. Just handing someone more money for doing the same job doesn’t get it.

  3. clyde says:

    “Suggestive Evidence”???? Leave it to the brain dead at Hahvahd to coin a term that is useless for real world applications. It is FACT every time the nitwits raise the minimum wage to ostensibly “help the poor” it ends up HURTING them more.

  4. BrianR says:

    Well, wait a minute. What the hell?

    San Fran is subject to the economic law of supply and demand?

    That’s an outrage!

  5. Popular Front says:

    ‘among struggling, lower-rated restaurants…’ Well there it is in a nutshell. Why are they struggling? There are only three major requirements for an eatery:
    good food
    good service
    fair prices
    get those three right and all else does not matter, especially the decor. Some of the best food I have eaten was in out-of-the-way places with iron chairs and formica tabletops but I always make a point of revisiting when I’m in the area. Funnily enough one of my favourites worldwide was on the waterfront in Sausalito called ‘Horizons’. Nice place, good food,great views. Any SFers know if it is still there?

    If restauranteurs are quibbling over a couple of extra bucks for their staff then they are in the wrong business IMHO.

  6. Terry says:

    I believe that if one of those employees in the picture could master squirting the sauce in the cup AND placing a leaf in it, he would be well worth $15 an hour !

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