San Francisco voters recently passed a measure, as several cities around the country are starting to do, which will raise the minimum wage to $15/hour by July 2018. Its a steady ramp-up, one dollar per year, and, frankly at the rate that everything is becoming more expensive here, I don’t know that $15 will look so great in three years. I’m very happy that the discussion has started and that we’re on our way to giving hourly employees a better wage.
An article appeared in the Huffington Post last May about the effect the new minimum wage has had on the community of Seatac in Washington. They aren’t going the gradual route…they just upped the wage in one fell-swoop. The impact? One worker could actually quit one of his full-time (40 hours a week) jobs to concentrate on his other full-time job and spend more time with his family. And start exercising.
Another worker decided he could start saving (What a concept!?) So when his car breaks down, he won’t have to scramble to make it one month.
Another CEO in Washington decided to raise the minimum wage of his workers to $70K/year. The average employee in this company was making $48K/year. Wow. Imagine what the buying power that CEO just released! What would you do if you had an extra $22K/year? Buy a car? Send a kid to college? Save for college? Travel and spend? I read that this CEO has met with some resistance, from within his company as well as from outside.
As an employer, this may appear at first to put a huge strain on your ability to make money. After all, the food industry is probably the #1 employer of folks on minimum wage (I have no idea if this is true…it just seems like it is!). New York State recently created a mandatory minimum wage of $15/hour for fast food workers. Interestingly enough, this proves problematic as it begins to pull folks away from really important low paying jobs, like child care, towards jobs at McDonalds and Burger King. Economists have said that minimum wage works to raise the folks on the edge of the middle class up into the middle class, but only if it is across the board.
I realized this was an issue that needed to be addressed when I was sitting in a management meeting at a restaurant where I worked. The ballot measure for raising the minimum wage was coming up for a vote. The owner, talking to all the managers, kitchen and front-of-the-house, told us to tell all our team to vote against the ballot measure as it could mean the restaurant would have to cut back on staff to stay in business. Really? What planet did you come from? Who is going to turn down a raise? If making $15/hour means that you only need to have one job to make ends meet, that you could spend more time with your family, tuck your children into bed at night, or take a Sunday drive to the country…why wouldn’t you vote for that?
Let’s face it: no one gets rich on $15/hour. The point is to shrink the income inequality gap, which can only be good for everyone. The question really is, how does it effect your business plan? How does it effect your decision making? Raise your prices? Limit your menu to reduce the need for labor? Make a smaller profit? Eliminate tips?
In the next few blog posts, I want to explore this issue further. This is an issue with so many people weighing in. There is conflicting perspectives that a high minimum wage boost unemployment figures and is bad for business and that is reduces unemployment and is good for business. I want to hear from restaurateurs about what has worked for them, how you have adjusted your business labor model to account for these changes…