Minimum Wage Increase

$15 An Hour Minimum Wage Leads To Increase In Revenue And Employment For New York City

When the minimum wage increased to $15 an hour in New York City almost a year ago, December 2018, it was met with an extreme amount of criticism, especially from those working in the restaurant industry. The assumption was that in order for restaurant owners to keep up with paying their employees they would need to make serious layoffs, increase the price of their menu items which would cause a decrease in patrons coming in and supporting the business, leading to massive amounts of restaurant closures. What these individuals fail to realize is that they’re in New York City, already one of the most expensive places in the world to live, go out, eat, and experience in general. So when food prices went up, no one really batted an eye. 

In fact, the opposite of this assumption has been occuring. According to Market Watch, both restaurant revenue and overall employment is up compared to last year, which was already pretty high. The reasoning is that a lot of New York City restaurants didn’t actually need to increase their prices to keep up with the new pay increase. Most remained exactly the same actually. 

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“A one-time increase of 10% to 15% is unlikely to dissuade large numbers of customers from dining out. That would amount to an extra $1.20 on a $12 burger,” wrote Nicole Hallett for Market Watch

According to a report by the Federal Reserve Bank of Chicago, there’s massive business potential if minimum wage workers are making more money. More money in the lower wage working market means that these workers will have more money to spend and that can indirectly be put back into the restaurant business with an increase in these individuals eating out. Additionally the reports claim that an increase in minimum wage will lead to an overall increase in employment because of the benefits of giving lower-wage workers a raise, this same reasoning will also lead to better job performances.

The economy in the state of New York in general is also relatively good compared to other parts of the country. So when businesses needed to make cuts within the past year to keep up, it wasn’t that difficult to lay out areas that can be less costly or removed from budgets in general. 

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New York officials have continued this minimum wage debate throughout the year and now are in discussion about whether or not to get rid of tip credits in the industry. A tip credit in the restaurant industry means that employers can actually pay their employees $10 an hour even with a mandated $15 an hour minimum wage. They can do this as long as employees are making a minimum of $5 an hour in tips. The tip credit is another huge reason why employers have remained successful throughout the past year, as they didn’t even really have to pay their employees more. However, state officials are preparing for the same level of backlash, if not more, as last year if they decide to remove tip credit policies. 

Abolishing a tip credit will ensure that all employees have a steady income that remains stable regardless of how busy a restaurant may be during a given shift. According to Market Watch, seven states in the U.S. have already gotten rid of the tip credit, including Alaska and Washington. State officials are encouraging restaurant owners, and any other employer who is concerned about the financial loss they might receive if the tip credit gets abolished, to look at the data from the last year, and understand where in the world you are. In New York City, people are always eating out and business is always booming. So be considerate of those just trying to make a livable wage, and be in support of their increase in pay.