By Jon Dougherty
(NationalSentinel) After three straight increases in the minimum wage, small-to-medium businesses in New York City are struggling to remain afloat and keep their doors open, according to a new analysis from the American Enterprise Institute.
Over three years’ time, Democrats who govern New York have voted for three increases in the state minimum wage, from $11 an hour to the current $15 an hour, or a 107 percent increase since 2013, AEI noted.
“The current state minimum wage outside of NYC is $11.10 an hour, so employers in the city are faced with paying a large 35 percent wage premium compared to their counterparts outside of the metro area for low-skilled workers. And it’s having a devastating effect on the city’s small businesses and restaurants,” AEI reported, citing a number of media reports in recent weeks to support its conclusions.
The Wall Street Journal reported this week that due to the inflated wage, businesses have been forced to reduce labor costs by reducing the number of employees. Also, some are raising their prices in order to offset the additional mandated wage increases.
“What it really forces you to do is make sure that nobody works more than 40 hours,” Susannah Koteen, owner of Lido Restaurant in Harlem, told the paper. “You can only cut back so many people before the service starts to suffer.”
Koteen had planned to move her restaurant to a larger building, but she has decided against that noting that she would have to hire more people with a bigger place, and she doesn’t want to do that given the instability of her industry and the higher costs.
“You would just have no choice but to cut people at the bottom,” she said.
The current federal minimum wage is $7.25. Including New York, other Democrat-governed states have also mandated a $15-per-hour wage including Massachusetts, California, Maryland, Illinois, New Jersey and Connecticut.
Sarah McNally, owner of McNally Jackson Books, said she employs 75 people at her four shops in Manhattan and Brooklyn. She told the WSJ she hasn’t had to cut back anyone’s hours yet and she’s always paid employees $5 above the minimum.
But she wants to open two more shops so to do it she’s being forced to scale back her workload.
“With raising minimum wage to living wage, it feels now like we’re at the bottom of the pay spectrum,” she said. “There’s absolutely no benefit to being a retail business in New York.”
Thomas Grech, president of the Queens Chamber of Commerce, told the WSJ he’s seen an increase in small business closures over the past several months.
“They’re cutting their staff. They’re cutting their hours. They’re shutting down,” he said. “It’s not just the rent.”
Meanwhile, The National Interest describes the minimum wage increase as “a disaster,” noting that when it was implemented in December it “was meant to bolster earnings and quality of life, but for a lot of residents, it’s doing the opposite.”
“Many people working in the restaurant industry wanted to work overtime hours, but due to the increase, many restaurants have cut back or totally eliminated any overtime work,” Andrew Riggie, executive director of the New York City Hospitality Alliance, told Fox News. “There’s only so much consumers are willing to pay for a burger or a bowl of pasta.”
Roughly 77 percent of NYC’s restaurants have cut hours for staff while 36 percent said they had to layoff employees and 90 percent had to increase prices following the minimum wage hike.
The higher minimum wage laws are having a deleterious effect beyond New York City, TownHall.com notes.
Restaurants Unlimited, Inc. “which operates 35 restaurants ranging from fine dining to ‘polished casual’ eateries, including Henry’s Tavern, Stanford’s and Kincaid’s, filed for Chapter 11 protection in Delaware,” in early July.
Chief Restructuring Officer David Bagley directly blamed “progressive wage laws” for the decision.
“Over the past three years, the company’s profitability has been significantly impacted by progressive wage laws along the Pacific coast that have increased the minimum wage,” Bagley said. “As a large employer in the Seattle metro market, for instance, the company was one of the first in the market to be forced to institute wage hikes.”
All of the 2020 Democratic presidential contenders have called for a $15 minimum wage increase.
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