Restaurant owners are freaking out about surviving a $15 minimum wage. I hope the $15/hour minimum wage proposal IS passed into law, even though I don’t think government should be involved in labor contract between two private parties. I’m just curious about what would happen to Puget Sound region restaurants, the culinary landscape and socio-cultural life.
“You sick fuck,” some of you are thinking. “That’s like saying you want to be gang banged until your asshole looks like a donut just to see if you’d enjoy it.”
Sure, if you say so. I really don’t think it’ll be that bad. A few reasons why:
1. Shit like this has happened before. Like back in 1988, I-518 increased wage of tipped workers by 85%. Yet restaurant scene is as strong as ever. And we still have Dick’s, Teriyaki, McDonald’s, Olive Garden.
2. Free agency didn’t destroy baseball, as some predicted. Attendance has risen and big market teams are LESS dominant than they were pre-free agency era. And baseball players get paid 10 times more than they would without free agency.
3. Shortly after her arrival to New York City and prior to recording her first single, Madonna was raped at knifepoint. She didn’t report it. What does this have to do with the price of kale?
4. Koreatown, Los Angeles. Destroyed in 1992 LA Riots. Today, it’s thriving, the most cosmopolitan and dense LA neighborhood, and the center of LA nightlife.
5. Banning smoking in taverns didn’t put most of them out of business.
6. It’s 1910. You own stagecoaches. Some dickhead named Ford starts mass producing automobiles. Your business is falling apart as people increasingly opt for autos to get around. Should anyone care?
7. You own a turnkey restaurant that makes you a solid income. Some family opens a similar restaurant a couple blocks away. Entire family works in the restaurant, no employees. Since they live 6 in a three bedroom, 1200 sq house in a modest neighborhood, they’re able to undercut you on price. Forcing you out of business. Should anyone care?
Point is, doesn’t matter what happens. Shit happens. It’s business owner’s responsibility to figure out how to make it work, to cooperate with an unpredictable world. So let’s think about contingency plans. Business owners don’t deserve a certain lifestyle any more than do minimum wage workers.
Thought project. What happens at $15/hour to following businesses?
Busy McDonald’s Franchise: Estimate $15,000 worth of increased labor costs per month, assuming staff of six (manager and assistant manager not included), 20 hours per day. That’s $180,000 per year. That won’t work for most franchisees. Solution, replace two employees with self-serve registers, like the ones we see in unionized grocery stores. One employee — likely assistant manager — handles three registers. The technology is already there, they’re just waiting for the moment labor costs exceed technology costs. Robot making burgers are also available (expensive) if owner wants to further reduce staff.
Moderately busy Subway Franchise: Having trouble seeing which processes they can automate. There would need to be major overhaul of current processes for automation to happen. To maintain profitability, Subway franchise would have to be family owned and operated (as is increasingly the case, with South Asian immigrant families taking the lead), with perhaps one 30 hour a week, high value employee (assistant manager). In this scenario, increased labor cost is insignificant. It’d be like dealing with gas prices tripling within a year. Those who treat franchise as turn-key operation won’t make it (as is often the case anyway).
Highly regarded bistros and fine dining establishments. They’ll professionalize service jobs. Tips will be included in the bill, servers and bartenders will be paid a wage plus benefits, including sick time and paid vacation. That’s what Herbfarm does. That’s how it’s done in France. Professionalization further reduces turnover and improves service.
Low-End chain restaurants like Olive Garden. I don’t know how they survive now. And because of their low status and difficult customers, they’ll have a difficult time attracting professional service workers. But they seem to figure it out.
Alive Juice Bar. Similar to Subway, will need to be family owned and operated (grandma grandpa, teenager kids, mom and dad, similar to how Pho and Teriyaki restaurants are operated) to remain profitable. One option is to reduce hours to 6am-3pm and work alone. Would make same amount as I do now AND work less (managing, training, and hiring takes a lot of time). In fact, I’d look forward to not subjecting my date to interruptions during dinner. Professionalization of positions — increasing prices — isn’t an option because we’re take-out fast-food. Customers aren’t obligated to tip. Other option is to reduce staff and work longer hours. Would make significantly more than before. Will also look into technology that allows customers to place and pay for order from their phone. Continue to encourage paying with credit card to check themselves out.
The point is that there’s always a way to survive. I’m predicting that $15/hour will, long-term, spur new technological innovations that will at least double worker productivity (increased pay does NOT improve productivity. Technological advances and lower turnover do. The incompetent will remain so regardless of pay). Meaning, real labor costs will go down, and businesses will be more profitable than ever. How else can we explain the increased productivity and fairly stable unemployment rate after every minimum wage increase?
(The person watching over 4 grocery self-check out stands is more productive not because he’s exerting more energy, but because the technology allows him to do the work of 2-3 employees working traditional check out line. Don’t ever think higher pay spurs one to work harder. It does not. No evidence. But plenty of counter-evidence).
As for those laid off, technological innovation will make them employable again, as has always been the case. For instance, timed-cooking technology used at McDonald’s and Appleby’s allowed those who can’t figure out with their senses when a burger is done or a steak is medium rare to be productive enough to work the line. Advanced cash registers allow those who can’t do arithmetic to be productive. Spell-check may allow an administrative assistant who struggles with spelling to keep his job.
The only concern is that by dumbing down jobs — as Starbucks has over the past two decades to support their expansion — we’re creating an unskilled workforce that will never become skilled, never enjoy creative work. More troubling, they will become even more culturally and socially estranged from those creating the technology necessary to keep businesses running and people employed and productive. Will continued resentment and envy be inevitable? Will $15/hour become the new poverty wage?
“…even though I don’t think government should be involved in labor contract between two private parties…”
OK then, who enforces the contract? Why are “labor” contracts special?
“Don’t ever think higher pay spurs one to work harder. It does not. No evidence. But plenty of counter-evidence.”
So you say. Your semi-literate sentence fragments don’t constitute evidence to the contrary.
You state this premise twice, with equally weak justification each time. Possibly you aren’t aware that there are rules and forms in dialectic, but you should know that if you make a claim it’s up to you to back it up, not demand evidence of its contradiction of your imaginary interlocutor.
Don’t confuse enforcement with legislation. Courts should enforce, but not legislate (morality). Otherwise we end up with ridiculous laws banning same sex marriages. Alright, bad example, as you may not care about marriage equality, but you get the idea. Conflating enforcement with legislation leads to tyranny.
Peer reviewed evidence, Harvard University:
There’s a lot more, but you’re probably not interested in studies from think-tanks like Heritage. Those who are can google.
Or put it this way: why doesn’t baseball team improve a .200 hitter to a .300 hitter by raising his salary from $1 million to $10 million? Wouldn’t that be easier than trying to sign a .300 hitter for $10 million?
Or do your own experiment. Hire a homeless person to clean your own. If you’re not happy with results, pay him more. Until you get acceptable results. Let us know what happens.
Thanks for reminder to remain evidence based. Don’t hesitate to go through rest of the blog to point out lapses in proper citation, organization, and logic. Grammar too. I want this blog cleaned up. I can pay with gift card. $15/hour. You can work at your pace.