The Effect of New York’s Proposed Minimum Wage Hike on Restaurant Owners

Author: Hans & Associates, P.C.Stephen D. Hans

Like other businesses, New York restaurant owners face significant challenges in today’s job market. Currently, members of the New York legislature have proposed raising the minimum wage from $7.25 to $8.50. From a restaurant owner’s standpoint, how would this affect running a restaurant?

As with many issues today, divisive views exist. However, both sides of the debate agree that the restaurant industry is one of the most affected by minimum wage increases. This is because most restaurants set wages at or around the minimum wage rate.

Syracuse.com reported estimates by an assistant research professor, Jeanette Wicks-Lim at the Political Economy Research Institute at the University of Massachusetts. She calculated that restaurant owners would raise a $20 meal to $20.20 to cover the wage increase expenses. She said wage increases would not necessarily result in layoffs. In contrast, Michael Saltsman, a research fellow at the Employment Policies Institute, partly funded by the food industry indicated that historically, minimum wage increases have resulted in layoffs.

Forbes magazine  provided an interesting perspective that during wage hikes, the less skilled and experienced workers suffer the most. Employers paying a higher wage look to maximize production by being more selective in their hiring. The more skilled and experienced workers produce greater profits for them. According to Forbes, fast food restaurants suffer the least, with increases limited to 3.9% in additional costs. The article concluded that while companies typically try to find ways to improve their products or services after wage increases so they can survive, this does not make the economic policy sound. Forbes recommended strongly that conservatives oppose minimum wage increases and allow market competition to dictate higher wages rather than the government.

With legal changes looming on the horizon, restaurant owners are wise to consult their accountants and New York employment defense lawyers  to make sure they comply with regulations and avoid fines or lawsuits.

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