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Minimum-wage increases don’t help the right people

The pressure to raise the minimum wage in California and across the country continues. The argument regarding the impact of these wage-control-type measures also continues.

Some maintain the increases will force price adjustments. Others claim the "oppressive" business community can cover those higher prices by reducing their own profits. Still other arguments focus on how those increases would affect the very poor.

One of the more credible evaluations, released by the San Diego County Taxpayers Association and the San Diego Greater Chamber of Commerce in June 2014, points out that many reviews concur that very little, if any, minimum-wage increase reaches the very poor.

The executive summary of the report puts it this way: "Increasing the minimum wage is an inefficient tool for reducing poverty because the majority of low-wage workers do not live in low-income households.

“People living in poverty are the ones who are supposed to benefit from increases to the minimum wage, but relatively few do. Studies show less than 20 cents of each dollar in increased wages reach families living in poverty." The complete study is available on the Taxpayer Association's website.

Given the sound bite appeal of supporting these artificial increases, liberal candidates and elected officials will continue to push. Increases are approved almost routinely. In California, another will become effective Jan. 1, 2016.

The most artful response I have seen for these government-imposed intrusions on the marketplace is one offered by a restaurant in Sebastopol, Sonoma County. It is both refreshing and only a little self-serving.

The message is handed out with the menu at Peter Lowell's, which, if I were a restaurant reviewer, I would call among other things, a "quality boutique restaurant with tasty food and an attractive décor." Here, in part, is what that message tells patrons.

"In preparing for the rise of minimum wages in January we are raising all servers’ wages to $10/hr.

"We have decided to raise the pay rate for all kitchen employees to at least $15.

"We have also decided to offer fully funded, bronze-level health care to all employees working over 30 hrs/week…

"We must raise our prices to cover the higher wages and health care."

Finally, the management of this establishment added an automatic service charge of 20 percent to each bill and discouraged tips. The restaurant's management says it considers tipping "an outdated practice." The 20 percent will be divided between servers and non-salaried kitchen staff.

I've offered much of this notice because it seems rational and logical. When we dined there with friends recently, we all agreed this was a responsible way to explain the issue. I suspect most of the restaurant's regular patrons will accept and understand, as well. It also makes the rather clear point that it costs more to produce a product when wages are increased.

There was a little bragging involved, as well. That is certainly understandable and we forgave the modest self-serving side of this message.

What isn't clear, though, is how many of that restaurant's staff work 30 hours a week or more. Many employers are reducing the hours of some of their employees to keep the business below the mandatory health coverage requirements of Obamacare. That, of course, limits the value of the health coverage aspect.

You also can't tell what the food price increases are or will be. Not a problem, as it is reasonable to raise prices when costs go up.

Closer to our home, a La Mesa restaurant is shuttering. Its response to the rising cost of doing business was different. In the notice discussing the decision to shut down a restaurant that has been under the same family ownership for more than 40 years, reference was made to — surprise, surprise — the rising cost of doing business. Ingredients for this specialty family restaurant continue to rise, we were advised, as well as labor costs.

Reluctant to raise meal prices, the owners are closing the shop. Paraphrasing, the owners said they did not want to raise the cost of meals to their many loyal customers.

Admittedly, the increases in minimum wage are only part of the problem for this business. However, these wage increases apparently made just enough of a difference to cause the owners to throw in the towel.

An increase in the minimum wage is not going to help the employees of this restaurant. They will soon have no wage at all.

Hawkins is retired after 35 years as a construction industry association manager. He was a broadcast reporter and news anchor in Denver. As a Navy officer, he saw action in Vietnam in the River Assault Squadrons and is the recipient of a Silver Star and Purple Heart.

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Michael Englehart 12:00am September 12, 2015

As Thomas Sowell famously said; "The real minimum wage is zero."