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Thursday, May 11, 2017

ANALYSIS/OPINION:

The continuing increases in the minimum wage is curdling the cream in the coffee at many restaurants, and nowhere more than in New York City, the nation’s top town for a variety of good eats. A $2 minimum wage increase to $11 became effective at the end of 2016, and the impact on restaurants, just now emerging, has been startling.

“It’s going up too fast,” Jeremy Merrin, owner of a chain of Cuban restaurants, tells The Wall Street Journal. “We can’t catch our breath.”


Certain politicians figure they can transform entry-level jobs into career jobs by law or fiat. Restaurants face raising their prices or closing, and many are closing. One popular Chinese restaurant in Manhattan, China Fun, closed after 25 years just after the dawn of the new year, and left the bad news in a note pasted on the front door, blaming “punishing rules and regulations.”

Angelica Kitchen, a fixture in Manhattan’s East Village, closed last month after four decades. “I felt like I was being regulated in a way that took certain choices away from me that I felt belonged to me, rightly, as a business owner,” Leslie McEachern tells the Journal. “I’m not trying to undercut or underpay anybody, but I also don’t know what’s coming down the pike.

What’s coming down the pike is more of the same. Another $2 an hour wage increase is due to go into effect in the city at the end of this year.

It’s not just in Manhattan. Seattle recently raised its minimum wage by $4, from $11 to $15. Not long after that, to the surprise of no one but municipal bureaucrats, Seattle restaurants laid off 900 workers. The state of Washington, however, added 6,200 jobs during that same period when a minimum wage of $11 an hour was still in effect.

Over the past few months, the minimum wage has risen in various places at various levels in 22 cities in 21 states. Some of the largest increases were in Arizona, with wages up by a stunning 24 percent. Minimum wages were up 20 percent in Maine and Northern California, and voters in four states — Arizona, Colorado, Maine and Washington — approved a scheme to raise minimum wages even more over the next few years, up to 60 percent in some cases. Dealing other people’s money is easy, and who wouldn’t like cheaper eats?

The wide variety of city and state laws imposing a minimum wage is confusing, to put it mildly. The Employment Policies Institute reports that the 2017 increases have left a “mind-boggling patchwork” of wage laws. Employers in New York struggle with 14 controlling statutes, 13 in California.

This may be a recipe for competition in the free market, with opportunities for prospective employees to pick and choose the best places to work. For the employers, not so much. Enabling governments to impose a bureaucrat’s idea of what wages ought to be only cripples the free market, which can effectively settle on wages and prices. Governments are usually capable of mandating only misery.

Gov. Andrew Cuomo of New York, who has never met a payroll nor studied economics closely, is a fan of the minimum wage, the higher the better. His lawyer, Alphonso David, tells the newspaper that the Cuomo administration studied decades of data and concluded that raising the minimum wage doesn’t hurt business. “As public-policy makers we have to be driven by data,” he says, “and the data we have doesn’t show the minimum wage having an impact on the success or failure of business.”

Ah, well. As a skeptic of government data once said, “Who are you going to believe, data or your own eyes?”


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