The Drive for $15 is having consequences that were entirely predictable. During the last two years NYC raised the minimum wage for restaurant workers from $11 to $15. Data show that, as a result, New York City experienced its sharpest decline in restaurant jobs in nearly 20 years. Never before, outside of a recession, have job losses been like this.
This is in sharp contrast to the celebratory nature of people when the increases were announced.
Apparently these people thought that the laws of economics had been suspended. Restaurants function on fairly tight profit margins. The money is not just pouring in making owners instant millionaires living off the sweat of their workers. Margins are usually in the 2 to 6 percent range. When you significantly increase the cost of labor, something has to give.
What happened was the raising of prices in some places along with the reduction in hours as well as the number of jobs. With the recent increase from $13 to $15 per hour, three quarters of the full service restaurants in the city were anticipating reducing employee hours going forward. In addition, at least half were planning to eliminate some jobs. The result will be some workers taking home less in their paychecks than before the $15 rate went onto effect. Some other workers will also wind up earning $0/hour when their jobs disappear.
The NYC council is jumping in to “fix” the problem created by the government’s meddling in the marketplace. They want to shield such workers from “unjust” firings. Such a law would be a first for restaurant workers anywhere in the country. If enacted, it will only make things worse. Undoubtedly it would lead to the demise of some restaurants in the city. If there ever was a recipe for messing up the economic vitality of NYC, this certainly fits the bill. This is socialism and its well-known effects. This comes at a time when NYC is teetering on the edge of bankruptcy due to the socialistic practices of Mayor DiBlasio.
This kind of interference in the marketplace is making it more difficult for low-skilled workers to find and keep a job. Next, the politicians will complain about the inequality of low-skilled workers being unable to find a job with a “living” wage. They will then recommend some “jobs” program that will cost the taxpayers oodles of money but have little to no effect on the jobs marketplace. If NYC continues in this direction, it won’t be long before they will be known as the France of America. And that is not a good thing. Ask the yellow vests.