The ugly underbelly…

Of the $15/hr minimum wage…

We’ve heard a lot of stories out of Seattle, some out of San Francisco, and now NYC…

This minimum wage spike has forced several New York City businesses to shutter their doors and will claim many more victims soon. Businesses must meet the $15 wage by the end of 2018, the culmination of mandatory increment increases that began in 2016. Restaurants where staff earn tips are subject to a $5 per hour tip credit, but must pay $10 per hour. That is nearly double the 2014 minimum wage of $8 with a $3 tip credit.

This young lady nails it, along with the ‘other’ pieces of the puzzle in NYC, rents, long term contracts, NO rent control on commercial buildings, HERE from The Federalist.

We’re already seeing some rollout of the kiosks, and people in the waitstaff world, at least in Seattle, dropping hours to STAY on welfare.  I’m also hearing some of the same issues starting in the DC area, and they’ve already lost a ‘planned’ WalMart a couple of years ago when DC ‘mandated’ that all big box stores pay $15/hr. Of note, that store WAS going into an underserved area of DC. But WalMart walked away from the $$ already spent and basically said hell no.

The ‘next’ thing I believe will go away is the small neighborhood convenience stores… The only ones left will be the ‘bigger’ profitable stores that have plenty of traffic will be able to afford the minimum wage.

There are jobs out there, but many of them are ‘trades’, which means working outside, not sitting in the AC and spending half the day on one’s cell phone. I think ‘this’ is a reason a lot of them go unfulfilled, as the latest generation has been ‘groomed’ to think they are better than that… Not so much…



The ugly underbelly… — 16 Comments

  1. There’s been a thread going on another site I visit on the trades – we’d love to get some of the young folks in as apprentices in the steamfitters and welders and electricians, but the kids don’t seem willing to put in the grunt work (or learn from the Masters, either). Wages are good — a journeyman can start at much better than a living wage ($50K plus around here) — and the work is there. The millennials aren’t interested, seems as if.

  2. Despite the fussing, my nephews are lining up good jobs with decent pay driving large trucks and operating heavy equipment in and around warehouses. Not the brightest guys, but good young men who put in effort. They’ll do well, and just sometimes need some hints. I deal with too many entitled snowflakes who think being in college is an excuse for every indulgence. Too bad for them that I act quite differently.

  3. Read the article, and was struck by this:
    For a solution, the mayor of NYC wants to fine/tax commercial property landlords who have vacancies.
    The idea is that they are bad, wicked, evil people who are holding out for higher rents, and therefore, they must be punished.
    Maybe there are other factors; I don’t know.
    It seems to me, though, that they are now trying to fix the problem that their fix for the other problem caused.
    Remember that opening scene in ‘Reservoir Dogs,’ where Steve Buscemi as Mr. Pink discusses his refusal to tip? The boss says Mr. Pink is dumping on people who are working in the ONE job that any unskilled person can do to make a buck, and Mr. Pink offers the timeless advice “Two words: learn to type.”
    Well, they are gonna HAVE to do SOMETHING like that now, because the boss’ observation is no longer valid; there WON’T be those jobs that any unskilled person can do.
    So the restaurants that were running on a TINY profit are no longer profitable, and have to close, and nobody wants to open another. Which means the space is vacant. Which leads to vandalism, according to the article, giving the neighborhood a bad feeling.
    HECK, YEAH! IT’S OBVIOUSLY THE FAULT OF THOSE GREEDY LANDLORDS! Raise taxes! That will solve everything!

    • I predict an increase in fire fighter jobs due a sudden rash of lightning caused “fires.”

    • Rising rents have long been a problem in NYC; I’ve read articles elsewhere that the almost all of the ‘legendary’ (read long established) small businesses in NYC own the building they are in.
      As the article points out, residential rents are ridiculously high also – like in San Francisco, Seattle, or many other cities, the supply of housing is artificially limited due to local regulations. Additionally, high taxes and permit fees ensure that anything that is built is expensive as well.

      The cities blame anyone but themselves, even as they keep making the problem worse in the name of solving it. I’m not sure about currently, but as of 2 years ago, half of all new jobs in the country for the last decade were in Texas; I was in Houston recently and it was BOOMING – it is the highest populated state with low costs and light regulations.

  4. I’ve been watching this situation out of the corner of my eye. This level of minimum wage is insane. Any labor intensive business, such as a restaurant, won’t be able to turn a profit. The worst case scenario here is a proprietorship that makes just enough money to keep the doors open, and so they do. They’re understandably reluctant to close down a business that’s been profitable for ten years or more.

    I don’t entirely agree about the mom and pop convenience stores being hardest hit. Typically, those businesses are run by the entire family, and may have one or at most two employees. The real solution is to fire the employees and keep on keepin’ on, which is what will happen.

    Landlords are an entirely different kettle of fish. The landlord wants a solvent, reliable tenant who pays his rent early, never complains, and makes improvements to the space out of his own pocket and sweat equity. The tenant wants a landlord who makes repairs without having to be notified that something is wrong, that is understanding about the rent being late, and who enthusiastically pays for improvements and views the cost as an investment in the future. The reality is a compromise that makes both landlord and tenant equally unhappy, but works. Somehow, the concept of compromise has been lost and replaced by a sort of you owe me philosophy on both sides of the table. This isn’t working, and forcing the landlord to capitulate is not a solution that will work.

    I don’t really see an end in sight.

  5. The coming regulations should put the family owned shops out of business for good. The logicsl extension of the $15 min wage is to reqiire that for all who work there, even family, snd to, as France has done, testrict the hours that an owner can work, because that denies hours to employees.
    I wish that I could add a sarc tag, but I see the active stupid rising by the hour.
    John Sage

  6. Just finished a biography of President Rutherford B. Hayes. He was of the opinion that when you were in college you should be getting BOTH academics AND trade training at the same time.

    • Booker T. Washington had the same approach at Tuskegee Institute.

  7. People keep concentrating on restaurants and small stores, but there are other, more-visible things that will be affected. Daycare, for example. (and in many places, that’s subsidized by the state, so you know who’s going to take the hit for that…). The guys running leaf blowers, cutting grass, and trimming hedges. Warehouse workers. Delivery drivers. The people who stock the shelves in the big box and department stores. Painters. General construction labor. Janitorial and other cleaning crew. Cashiers. Security guards. Lots of maintenance workers. Home health workers. Laundry workers. Farm workers. (you thought the illegal problem was bad *now*…) Pretty much any “entry-level” labor is going to be hosed.

    It’s not going to be a post-apocalyptic scenario with burning trash barrels and people wearing chains and pieces of old car tires, but I foresee a lot of dirty buildings, loose trash, unmowed lawns, and scabby-looking buildings in the “wahoo, money!” zones…

  8. One of the San Jose neighboring cities has figured out how to create more tax money from the lack of housing in the Silicon Valley/SF Bay Area: They are driving out commercial businesses and converting the land to high-density housing. In Rock-and-Rolling land that is only about 5-6 floors, though, so I expect them to continue this program by making inroads into the single-family developments once they exhaust the commercial areas. Once they move on the homes, I would expect the value of them to drop precipitously, making it even cheaper to convert the land. A win-win for the new Asian politicians taking over the area.