At the end of 2018, the minimum wage in New York City was raised to $15—one of the highest minimum wages in the country. The $2 hike was intended to give New Yorkers a sustainable income, yet, according to a recent survey, job creators are getting the short end of the stick.
A survey released by New York City Hospitality Alliance indicates that the annual employment growth for the city’s restaurants dropped to less than 1 percent as of November 2018. Before the city’s 50 percent tip increase and minimum wage increase, the restaurant industry was developing with an annual employment growth of over 6 percent. But there is more contributing to the decline.
“We see paid sick leave, healthcare, the minimum salary requirement for employees—on top of sky high rent, and all these other mandates,” said Andrew Rigie, director of the alliance, in an interview with NTD News. “So it’s kind of like death by a thousand cuts: it’s not one issue, it’s a culmination of lots of issues over such a short period of time.”
Rigie said that politicians aren’t doing enough to offset the increases that they are mandating for businesses. He also made it clear that no one is complaining about fair and equitable regulation, nor does he oppose the minimum wage increase; rather, it’s excessive regulation that is a problem. At this rate, he says, the employees—the people mandates are supposed to benefit—will continue to see fewer job opportunities.
Rising Labor Cost Calls for Cutbacks
Full service restaurants consist of businesses where customers are served food directly to the table. About 350 of these restaurants were surveyed by the alliance (pdf) and it was found that 74 percent of restaurants will reduce employee hours because of the minimum wage increase in 2019, and 47 percent will eliminate jobs for the same reason.
Last year, 76 percent reported reducing hours, and 36 percent eliminated jobs because of the minimum wage increase to $13.
“What we’ve also heard is that although per hour workers are making more money, they’ve gotten their hours reduced, and at the end of the week when they get their paycheck, they’re making about the same, and in some cases less,” said Rigie.
San Francisco shares similar problems, but there machinery and runners have begun to replace the traditional server, and his personal touch, according to The New York Times. The $15 minimum wage has forced the city to pinch its pennies, dropping workers along the way.
“But what ends up happening is, they’re getting rid of some of the highest paying jobs in the restaurants—the people that are earning tips,” said Rigie.
In looking for solutions, Rigie said that keeping the tip credit in its current form is vitally important. Tip credit is a system for workers who earn tips: servers, bar tenders, and others may be paid $10 an hour, as long as they earn the city’s minimum wage amount in tips, combined with the hourly rate. This relieves the burden on businesses.
Other things he said would help businesses is removing the commercial rent tax that only affects certain business south of 96th street in Manhattan, and providing tax incentives for local businesses that are hiring people in Manhattan.
“So we need to think of other creative ways to make sure that Manhattan can be livable, and it is not fair to just slap another mandate on a small business owner because there’s been a failure to create enough affordable housing and enough programs to keep New Yorkers in New York,” Rigie said.
