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PREDICTABLE: Minimum Wage Increase In New York City Leads To Job Losses, Price Increases

Photo by Cem Ozdel/Anadolu Agency/Getty Images
 

Democrats continue to insist American cities should increase the minimum wage to at least $15 an hour, even as the progressive cities that have done so have been a model for the job losses that will come as a result of the policy.

 

The latest example comes from New York City, where an online survey from the New York City Hospitality Alliance – which represents NYC restaurants – found the wage increase has hurt restaurant workers who were supposed to be helped by the higher minimum wage.

The New York Post reported last week that the survey found job losses due to the policy. Andrew Rigie, NYCHA’s executive director, told the Post that in 2018, “full-service restaurants recorded a 1.6 percent job loss, which is the first recorded annual loss in two decades.”

The survey also found that nearly one-third of respondents planned to “eliminate jobs” and a majority would raise prices due to the increased minimum wage, which took effect on December 31, 2018.

While the policy wasn’t in effect when the actual job losses occurred, it was well-known that it was coming, and so it is likely that restaurant owners reacted accordingly in preparation. Further, respondents to the online survey said they plan to continue cutting jobs and hours because of the policy.

 

“A total of 76.5 percent of full-service restaurant respondents reduced employee hours, and 36 percent eliminated jobs in 2018,” the Post reported of the survey. “Also, 75 percent of limited-service restaurant respondents reported that they will reduce employee hours, and 53 percent will eliminate jobs in 2019 as a result of the wage increases, according to the survey.”

A spokeswoman for Gov. Andrew Cuomo (D-NY), defended the policies by falling back on the feel-good claim that they helped workers.

 

“All New Yorkers deserve to make a living wage and under the governor’s leadership, more minimum-wage workers than ever before have received an increase in their wages. The fact is that increasing the minimum wage puts more money in the pockets of hardworking New Yorkers, which creates more demand for local businesses and increases economic activity,” the spokeswoman told the Post.

Last October, Amazon, New York University, and the University of Washington released a year-long study of Seattle’s minimum wage. What they found lined up with the results of the NYCHA survey.

A small percentage of low-wage earners who had more experience received a slight pay increase and had their hours cut. So, basically, they made the same amount of money but had to work less for it. Everyone else had their hours cut to such an extent that making more per hour didn’t help. Low-skilled workers with less experience found it difficult to even find a job in the first place.

“The economists also looked at rates of entry, or how many people, who did not work before and have no skills, entered the labor market following the wage increase,” Quartz reported of the survey. “The estimate that right after the minimum wage went up, entry rates flattened and eventually fell as the minimum wage went up further, suggesting less experienced workers were offered fewer opportunities for work. Meanwhile, in neighboring counties, entry rates continued to increase before leveling off in 2017.”

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