As restaurants start shutting down in advance of the $15 minimum wage.
For those who haven't worked in food service at all, lemme lay down a little knowledge for you. In a restaurant, a 3% profit margin is GOOD. If you start making a 5% profit margin, you might get audited because that's rather rare.
Now increase your personnel costs by 50%. Guess what happens? Your profit margins go into the negatives, and a negative profit margin means shutting down. It's no surprise that restaurant owners are choosing to shut down now, rather than when they're thousands of dollars in the red. They can see what's coming.
And while people look at the map and think the entire area around the Puget Sound is "Seattle", the truth is that there are plenty of other towns and cities all around Seattle that don't have to suffer under the kind of idiocy that Seattle does. And guess where those businesses are going to go?
Of course, they might not go anywhere at all. They might just leave permanently and decide that they no longer want to do business in an area run by greedy socialists who have no clue how an economy works. That's what I would do, after all. And I guarantee you that I'm not going to do a single bit of business within Seattle boundaries if I can help it, because the cost on me is going to skyrocket. Why should I waste my money in Seattle when I can go thirty miles and do business in a sane area for much less cost?
The one good thing to come out of this is that people all over the country can point at Seattle and say "Well, there's the end result of what you want to do, and I for one refuse to allow you to do that to my town."
I predict a LOT of new restaurant openings just outside the city limits of Seattle. And those few restaurants that last the first round of closures will lose to the second round of higher prices and fewer customers, or full-on fast food automation where there is no one behind the counter, just someone well out of the public view making sure that the machines are reloaded with frozen burger patties, whole tomatoes and cheese slices, with all condiments being a nickel per sealed packet. Pay with credit/POS/debit cards, and you can get rid of any cash on hand.
ReplyDeleteAnd you can look at what's already happening in Sea-Tac, which enacted the $15 wage last year. Employee perks, gone. Hiring, frozen. People getting laid off.
ReplyDeleteAs the writer of the article puts it, what's $15 times zero hours again?
I would love to think that this will be a learning experience but I would think they would have learned the error of their ways from Detroit. perhaps these communist wannabe's are incapable of learning; or they love the smell of failure in the morning.
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