NYC Implemented Minimum Wage Hike For Fast Food Workers. Now They're Looking For Jobs.

Greatest plunge in restaurant jobs in roughly 20 years

Photo by Cem Ozdel/Anadolu Agency/Getty Images
 

In July 2015, New York’s Fast Food Wage Board, appointed by New York governor Andrew Cuomo, agreed with the labor movement and recommended a $15 an hour minimum wage for fast food workers working for companies with at least 30 stores nationwide.

 

That plan looks like it was a disaster, because following the implementation of that recommendation, New York City showed the greatest plunge in restaurant jobs in almost 20 years.

The 2015 recommendation meant that wages among fast-food restaurant workers in New York City would rise to $15 an hour by December 2018. A survey published near the end of 2018 found “76.50% of full service restaurant respondents reduced employee hours, and 36.30% eliminated jobs in 2018 … 75% of limited service restaurant respondents report that they will reduce employee hours, and 53.10% will eliminate jobs in 2019 as a result of mandated wage increases that took effect on December 31, 2018. … When the tip wage increased 50% in 2015, and since doubled, annual employment growth dropped from 6.67% to less than 1% as of November 2018.”

In mid February, economist Mark Perry of the American Enterprise Institute wrote:

December 2018 restaurant jobs were down by almost 3,000 (and by 1.64%) from the previous December, and the 2.5% annual decline in March 2018 was the worst annual decline since the sharp collapse in restaurant jobs following 9/11 in 2001. As the chart shows, it usually takes an economic recession to cause year-over-year job losses at NYC’s full-service restaurants, so it’s likely that this is a “restaurant recession” tied to the annual series of minimum wage hikes that brought the city’s minimum wage to $15 an hour at the end of last year.

It's not just New York City; in August 2016, reports surfaced that the raise in the minimum wage had hurt employees in Seattle. The Washington Post wrote, “Although some workers are earning more, fewer of them have a job than would have without an increase. Those who do have a job are working fewer hours than they would have without the wage hike.”

 

The Washington Examiner added:

The minimum wage hikes resulted in modest declines to their employment rates and hours worked. … The city’s employment rate was 4.3% percent in April 2015 when the $11 rate went into effect. By May of this year, Seattle unemployment had climbed to 4.8%.

Timothy Taylor explained at the Conversable Economist blog:

 

Low-wage workers in Seattle were better off as a result of the higher minimum wage if they managed to keep their job or to keep working roughly the same number of hours. But the employment rate of low-wage workers in Seattle declined slightly, as did the hours worked, which would lead to lower total earnings. The early evidence from Seattle is that a higher minimum wage at the city level doesn’t raise total earnings by much, because low-skilled workers end up with fewer hours on the job.

And then there’s San Francisco: In April 2017, the Harvard Business School released a study that examined restaurants in the San Francisco Bay Area between 2008 and 2016 titled, “Survival of the Fittest: The Impact of the Minimum Wage on Firm Exit.” The study posited that a $1 increase in the minimum wage led to a roughly 14% increase in the likelihood of a median 3.5 star restaurant closing. The study concluded that over the next two years, San Francisco’s restaurant industry would shrink, meaning workers would lose jobs.

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