Think Freely Media presents Common Sense with Paul Jacob

Minimum Shock

minimum wage, closure, restaurant, business, prohibition, wages, pay, Berkeley, San Francisco

“Three restaurants vacated the Bay this week, with Berkeley’s Bistro Liaison getting the most attention,” the San Francisco edition of Eater informs us. “It’s a bittersweet exit for the owners, who plan to start new careers.”

The week in question was in February. But this was not an isolated event. Sixty-four Bay-area restaurants and fast food joints closed their doors this last winter.

That is a lot of closures.

Why?

Every eatery has a different story, but the entry December 17* provides a big clue: minimum wage hikes.

Citizens should hardly be surprised. They got what they asked for. The minimum wage went up to $13.00 per hour last July, and will go up another two bucks next year. And this was the result of a citizen initiative. “On November 4, 2014, San Francisco voters passed Proposition J, raising the minimum wage to $15.00 by 2018,” the City Office of Labor Standards and Enforcement tells us.

And the thing about minimum wage laws is that they do not — either by magic or by law — directly raise any wages. They, by law and quite directly, prohibit wage contracts below the minimum established.

Businesses then react, struggling to accommodate the newly imposed costs. Sometimes they keep all their employees and economize on other inputs, but often they must re-arrange hours and workers and whole production schemes.

If hemmed in elsewhere, they just go out of business.

Just as one should expect, according to the law of supply and demand.**

Citizens might wish to reconsider. That is, initiate a measure to repeal a previously successful initiative . . . that gave us this unsuccessful policy.

This is Common Sense. I’m Paul Jacob.

 

* The entry reads thusly: “OAKLAND — alaMar Kitchen and Bar as you know it is shuttering on December 17, but will reopen in the new year with a fast casual format. The owner points to minimum wage raises and the cost of doing business in the Bay Area as the reasons cited for the closure/change.”

** It is often said that businesses just “raise prices” and “pass along the costs” to consumers in general, but, for reasons of supply and demand, they cannot do this without decreasing sales and thus revenue.


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By: CS Admin

5 Comments

  1. Rocketman says:

    Great example of Socialistic short term thinking. And consider this, what is going to happen when fast food and other restaurants decide to cut their costs even further by putting in automated systems that make human employees obsolete? Those employees that were demanding $15 an hour for unskilled labor are going to be begging for any job that they can find at a fraction of that rate.

    • Leo says:

      And they won’t find them for the very reason they lost their jobs (minimum wage requirement to pay them more than their labor was worth). All minimum wages are anti capitalistic just like rent controls etc.

  2. John F Brennan says:

    And so the good intentioned but ultimately disastrous War on the Impoverished continues the destruction of the lowest rungs of the economic ladder and enslavement of the least skilled to welfare. Congratulations to the citizens of San Francisco.  No one should be living on the fault anyway, so it is good that they are driving the people, except for the one percenters out as then, when the quake comes killing those remaining the progressives can see that as a positive sign for their false gods as well. 

  3. Bob says:

    We all knew it was coming,
    it was just a matter of time.

  4. Pat says:

    You focus on restaurants but I assume this applies to all positions?
    Does the housekeeper get a raise or shorter hours?
    How do minimum wage workers afford to live in San Fran anyway?

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