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Minimum Wage
Serveur: Asura
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By Asura.Kingnobody 2015-03-18 15:05:26
If the cost of goods rises (i.e. food prices rise), then price should rise along with it, as everyone is suffering, both the restaurant and the consumer. Consumers would expect that if their food bill is increased, so should the price for prepared food too.
So if food costs rise for everyone, it should be taken in stride and everyone should expect it and just deal with it, but if a different resource (employees) costs rise...then...not okay.
Or is it simply that you can more easily try to lobby away one "problem", but not the other? Costs rise for everyone and not just one party, then it's expected for prices to rise. Remember, consumers don't have to rely on restaurants to survive.
Or is it simply that you can more easily try to lobby away one "problem", but not the other? Personally, I wouldn't have had minimum wage rise back in 2006. It was a stupid idea then, and it's a stupid idea now.
I have information from the restaurant industry here in San Antonio that I cannot disclose.
Like you'd ever let anyone else slide by with that explenation.
I understand it's likely work-related.
But still. It is something I cannot disclose. If nobody is willing to accept it, then so be it. My ego can take it. And if somebody were to say that to me, and I know that they can possibly have information that would harm them if disclosed, I would completely understand.
If our pretend manager/whatever-job-title-he-is-pretending-to-be-now were to say that, however, I would call ***.
Keep in mind that in all of this, I've stated that merely raising the minimum wage isn't the answer, I just think that the answer is something most conservatives will like even less. As long as the answer isn't to force businesses to do what they don't want to do, I don't think it will be an issue.
 Ragnarok.Nausi
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By Ragnarok.Nausi 2015-03-18 15:20:07
Did you by chance read these word in the OP?
Quote: The magazine went on to report that one “major factor affecting restaurant futures in our city is the impending minimum wage hike.”
And what is the expertise of the person saying that? Would you trust the economic assertions of a landscaper over an economist? Would you take medical advice from a plumber?
This is why we can't have a serious conversation with you. There is no bar of competency when something supports the idea you already have. No ridiculous fallacy can be debunked because you demand infinite credibility from the opposition and virtually none in support.
I make an assertion, you tell me to "read the article". I point out the place in the article that supports my assertion, then you pretend you never made the initial request and instead question the validity of the article.
I've had better luck conversing with a dog.
VIP
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By Odin.Jassik 2015-03-18 15:31:22
Did you by chance read these word in the OP?
Quote: The magazine went on to report that one “major factor affecting restaurant futures in our city is the impending minimum wage hike.”
And what is the expertise of the person saying that? Would you trust the economic assertions of a landscaper over an economist? Would you take medical advice from a plumber?
This is why we can't have a serious conversation with you. There is no bar of competency when something supports the idea you already have. No ridiculous fallacy can be debunked because you demand infinite credibility from the opposition and virtually none in support.
I make an assertion, you tell me to "read the article". I point out the place in the article that supports my assertion, then you pretend you never made the initial request and instead question the validity of the article.
I've had better luck conversing with a dog.
I asked if you read the article because it poses a relatively weak premise "The only problem is, in the end, it may do more harm than good for many." Right.. changes may have an affect on some people... It then goes on to quote quotes of lobbyists from other publications. It never once quantifies anything and the only facts it contains are the date of the law and the new wage.
Quoting the quote of a quote of a lobbyist as fact without any critical analysis or skepticism is a pathetic way to support an idea.
 Bahamut.Milamber
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By Bahamut.Milamber 2015-03-18 15:33:22
The point being, the study you linked states that the effect is over longer term through restricted/altered growth rates, rather than direct impact. The study is trying to predict the future using past data. Of course it's going to use altered growth rates, as those are an unknown factor. I don't have any issue with the study. It's a fairly interesting read.
The problem is that you are using the study, which explicitly makes the statement that the minimum wage does not have a short/near term impact with regards to loss of jobs (but instead impacts rate of job growth), in support of this concept:
So, you wanted a study about the effects of minimum wage in a specific area to happen immediately after the minimum wage increased?
Remember, this law took effect in January 1, 2015. It's March 18th, 2015. The fact that so many of these restaurants have gone out of business in such a short time frame, where the only factor that changed was that labor costs increased is something to consider. It doesn't support it. In fact, it pretty much says:
LinkedStudy said: We examine whether the minimum wage impacts employment through a discrete change in
its level or if it is reflected over time through a change in the growth rate. Much of the
previous literature on the topic has assumed that an increase in the minimum wage results
in a relatively rapid adjustment in employment. Yet, there are theoretical reasons to believe
that this change may be slower. (Emphasis added by me)
 Leviathan.Chaosx
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By Leviathan.Chaosx 2015-03-18 15:34:24
Keep in mind that in all of this, I've stated that merely raising the minimum wage isn't the answer, I just think that the answer is something most conservatives will like even less. Socialism Communism?
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By Asura.Kingnobody 2015-03-18 15:35:33
The point being, the study you linked states that the effect is over longer term through restricted/altered growth rates, rather than direct impact. The study is trying to predict the future using past data. Of course it's going to use altered growth rates, as those are an unknown factor. I don't have any issue with the study. It's a fairly interesting read.
The problem is that you are using the study, which explicitly makes the statement that the minimum wage does not have a short/near term impact with regards to loss of jobs (but instead impacts rate of job growth), in support of this concept:
So, you wanted a study about the effects of minimum wage in a specific area to happen immediately after the minimum wage increased?
Remember, this law took effect in January 1, 2015. It's March 18th, 2015. The fact that so many of these restaurants have gone out of business in such a short time frame, where the only factor that changed was that labor costs increased is something to consider. It doesn't support it. In fact, it pretty much says:
LinkedStudy said: We examine whether the minimum wage impacts employment through a discrete change in
its level or if it is reflected over time through a change in the growth rate. Much of the
previous literature on the topic has assumed that an increase in the minimum wage results
in a relatively rapid adjustment in employment. Yet, there are theoretical reasons to believe
that this change may be slower. (Emphasis added by me) The statement you are referring to and the study were two different thoughts. Remember, I stated that there wasn't a study done on this specific event. But I did post a study about longer-term effects of minimum wage increases, which is what my main argument was about.
I'm sorry about the confusion, I thought it was clear but I guess not.
By Bloodrose 2015-03-18 15:39:54
If a business can't stay in business due to rising labor costs, then that says more about their business practices than the price of minimum labor costs going up.
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Ragnarok.Nausi
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By Ragnarok.Nausi 2015-03-18 15:44:24
If a business can't stay in business due to rising labor costs, then that says more about their business practices than the price of minimum labor costs going up.
Labor is probably the single biggest cost facing almost every business in the country.
As perspective, we *** about gas prices spiking up 50% for the summer when realistically, what do we actually spend on gas 3-5% of our monthly budget? Very little increase and disruption causes us to change our behavior.
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By Asura.Kingnobody 2015-03-18 15:44:28
If a business can't stay in business due to rising labor costs, then that says more about their business practices than the price of minimum labor costs going up. You are talking about an industry that's overly competitive with very low profit margins and zero room for error. It has little to do with the business practices and a lot to do with external factors determining the health of the industry and establishment.
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By Asura.Kingnobody 2015-03-18 15:44:47
If a business can't stay in business due to rising labor costs, then that says more about their business practices than the price of minimum labor costs going up.
Labor is probably the single biggest cost facing almost every business in the country.
As perspective, we *** about gas prices spiking up 50% for the summer when realistically, what do we actually spend on gas 3-5% of our monthly budget? If that.
By Bloodrose 2015-03-18 15:59:28
The restaurant business is hardly low on profits, and is one of the single leading industries for profits.
Employee overhead should never exceed 30% of all costs, considering the effective costs associated with the industry are broken down as Food Costs, Beverage, and then employee overhead, the latter being the lowest.
90% of the external factors, are business practices - location, marketing, reputation, etc. all of which are practices designed to bring in customers.
Beverage cost should never exceed 21%. A bottle of premium spirits will retail for about 25 dollars, but can produce about 250-300 dollars in sales. A successful business model can bring in 1400-2500 in sales a night. That's roughly the amount of money it costs to pay the monthly cost of renting a building. And that's during the first hour after opening the doors.
Food costs in a restaurant run upwards of 30-40% during optimum operating costs. The cost of employee overhead ends up being down around 10-15% if a restaurant is run correctly.
The average profit margin with in the US for bars and restaurants is actually pretty high. Average restaurant has 1-2 managers, and roughly 6 other employees, plus an owner. after all sales are conducted and everything is paid out, the average amount a successful bar will make is between 40k and 100k a month.
Also, the biggest reason people *** about gas going up, despite it only being 3-5% of their monthly cost, is because it affects other aspects that result in increased costs across the board. Not just for you, but for everyone.
Ragnarok.Nausi
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By Ragnarok.Nausi 2015-03-18 16:01:13
Bloodrose knows so well how to run a successful restaurant that he doesn't run a successful restaurant for a living.
By Bloodrose 2015-03-18 16:05:24
And nausi knows oh so well how to run a successful government, that he doesn't run a successful government for a living.
However, I had plans to open my own restaurant until I suffered a back injury 10 years ago, which along with being crippled, crippled my chances at producing the necessary capitol investment, or procuring a loan to open such a venture.
VIP
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By Odin.Jassik 2015-03-18 16:15:32
If a business can't stay in business due to rising labor costs, then that says more about their business practices than the price of minimum labor costs going up.
Labor is probably the single biggest cost facing almost every business in the country.
As perspective, we *** about gas prices spiking up 50% for the summer when realistically, what do we actually spend on gas 3-5% of our monthly budget? Very little increase and disruption causes us to change our behavior.
Even in service industries, it's not the largest direct cost, though it is a big one, especially when you consider the indirect labor costs and the fact that labor is rolled up into virtually every other expense on some level. But, the same can be said for almost every other expense including fuel. Transportation makes up a pretty significant portion of the cost of consumer products, as well as their indirect costs, etc. The problem with breaking down cost for a business is that you have to break down the costs for every cost they have. When it all boils down, administration ties up the biggest portion of American business costs, and labor and fuel are tied up in that as well. It's a big web of factors, which is why boiling economics down to a single causal relationship is bogus.
And nausi knows oh so well how to run a successful government, that he doesn't run a successful government for a living.
Leave out that nobody knows how to run a successful government, what would a successful government even look like?
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By Bloodrose 2015-03-18 16:19:04
It would look like... wait for it...
LORDGRIM!
Edit: on a serious note, everyone has a different subjective view as to what a successful government looks like in theory.
I could argue that the Canadian Parliamentary system is successful - from a Canadian point of view. It has it's flaws, but so does every other thing that is successful, the key to objective success is working for the majority of the people, rather than the minority.
TL;DR, easy question to ask, hard question to answer.
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VIP
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By Odin.Jassik 2015-03-18 16:24:40
TL;DR, easy question to ask, hard question to answer.
The point of the question isn't to be answered, it's to be contemplated.
By Bloodrose 2015-03-18 16:26:41
TL;DR, easy question to ask, hard question to answer.
The point of the question isn't to be answered, it's to be contemplated. yeah, that's pretty obvious. The hard to answer questions make you contemplate more than just the question, it makes you contemplate your outlook or stance on the subject, and all things related to your personal knowledge of the subject.
Cerberus.Pleebo
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By Cerberus.Pleebo 2015-03-18 16:27:55
In case we still have people clinging to that other article: Is $15 wage dooming Seattle restaurants? Owners say no
By Bloodrose 2015-03-18 16:30:34
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By Asura.Kingnobody 2015-03-18 16:33:03
Employee overhead should never exceed 30% of all costs, considering the effective costs associated with the industry are broken down as Food Costs, Beverage, and then employee overhead, the latter being the lowest.
90% of the external factors, are business practices - location, marketing, reputation, etc. all of which are practices designed to bring in customers.
Beverage cost should never exceed 21%. A bottle of premium spirits will retail for about 25 dollars, but can produce about 250-300 dollars in sales. A successful business model can bring in 1400-2500 in sales a night. That's roughly the amount of money it costs to pay the monthly cost of renting a building. And that's during the first hour after opening the doors.
Food costs in a restaurant run upwards of 30-40% during optimum operating costs. The cost of employee overhead ends up being down around 10-15% if a restaurant is run correctly.
The average profit margin with in the US for bars and restaurants is actually pretty high. Average restaurant has 1-2 managers, and roughly 6 other employees, plus an owner. after all sales are conducted and everything is paid out, the average amount a successful bar will make is between 40k and 100k a month. You are correct up to a point. You are forgetting about many other expenses, like taxes (payroll, property, corporate/franchise (in US) or regional taxes (in Canada), alcohol taxes in most states, etc.), non-food supplies (silverwares/plates, paper products, and floral), utilities, inspections, insurance, cleaning/janitorial, security, professional/legal fees, licencing/royalties (if franchised), among other things that are restaurant specific.
There are a whole slew of expenses that you don't see. This is anywhere between 30-35% of the gross profit percentage.
You are only seeing a portion of the expenses itself. Labor alone costs between 30-40% of gross profit. Food and spoilage can cost between 30-40% also. An efficient restaurant with no issues at all, and no surprises may get around 10% net income, but very highly likely.
I would like to go into more details than this, but it would be both over most people's head and cannot be disclosed further than this. The percentages are common industry knowledge, but details other than that isn't.
Cerberus.Pleebo
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By Cerberus.Pleebo 2015-03-18 16:44:58
FFS, read...
Quote: No wage increases have occurred yet in Seattle; they begin, incrementally over seven years, in April. Quote: The Seattle Magazine article itself notes that “none of our local departing/transitioning restaurateurs who announced their plans last month have elaborated on the issue.” Quote: Now that $15 is a fait accompli, even the WRA’s Anton [this was the guy quoted in the original article] said in a phone interview, “It’s nothing to be afraid of, it’s just something to be aware of. There will be changes, but we’ll make them, and we’ll figure it out.” They also list several restauranteurs who deny closing due to a wage increase that hasn't actually happened yet.
By Bloodrose 2015-03-18 16:52:21
Yes, I am aware of the industry percentages, but the labor costs should not be even remotely that high.
I'm also aware of the monthly operating costs and percentages, which also shouldn't be that high.
The average restaurant will take in roughly 350k-600k dollars a year in business. Which leaves, less than 350-60k profit for the owner. If there is more than 1 owner, it's broken down even less, which is a non-profitable business.
The average restaurant in a city should be seeing a profit margin of at least 30%, otherwise the successful business models out there wouldn't be bringing in 350k+ dollars a year in profit after expenses, despite only doing around 600k dollars in business a year.
The average restaurant/nightclub/bar/etc. does between 10k-20k a week in sales, but for argument's sake, we'll average it to be 13k on the low but moderate end. Multiply that by 52 weeks. That's 676k dollars a year. that's only 67.6k dollars a year in profits. Pretty damn low and not even close to the reality. 20-30% take home profits is more in line with expectations and reality.
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By Asura.Kingnobody 2015-03-18 16:53:48
No wage increases have occurred yet in Seattle; they begin, incrementally over seven years, in April. Quote: Effective January 1, 2015, Schedule 2 employers shall pay each employee an hourly minimum wage of at least $10.00.
Now, if that editorial piece got that wrong, I wonder what else it got wrong. I wonder if they actually bothered contacting these people in the first place?
[+]
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By Asura.Kingnobody 2015-03-18 16:56:38
Yes, I am aware of the industry percentages, but the labor costs should not be even remotely that high.
I'm also aware of the monthly operating costs and percentages, which also shouldn't be that high.
The average restaurant will take in roughly 350k-600k dollars a year in business. Which leaves, less than 350-60k profit for the owner. If there is more than 1 owner, it's broken down even less, which is a non-profitable business.
The average restaurant in a city should be seeing a profit margin of at least 30%, otherwise the successful business models out there wouldn't be bringing in 350k+ dollars a year in profit after expenses, despite only doing around 600k dollars in business a year.
The average restaurant/nightclub/bar/etc. does between 10k-20k a week in sales, but for argument's sake, we'll average it to be 13k on the low but moderate end. Multiply that by 52 weeks. That's 676k dollars a year. that's only 67.6k dollars a year in profits. Pretty damn low and not even close to the reality. 20-30% take home profits is more in line with expectations and reality. Well, I cannot prove to you using hard numbers, so I guess we are at an impasse.
By Bloodrose 2015-03-18 16:58:24
Well, to be fair, you didn't use any hard numbers.
And you misrepresented much of the cost of operating a restaurant to someone who's been in the industry for 10+ years.
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By Asura.Kingnobody 2015-03-18 17:03:41
And you misrepresented much of the cost of operating a restaurant to someone who's been in the industry for 10+ years. I appreciate your viewpoint, but I'm going to have to disagree.
Cerberus.Pleebo
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By Cerberus.Pleebo 2015-03-18 17:05:33
No wage increases have occurred yet in Seattle; they begin, incrementally over seven years, in April. Quote: Effective January 1, 2015, Schedule 2 employers shall pay each employee an hourly minimum wage of at least $10.00.
Now, if that editorial piece got that wrong, I wonder what else it got wrong. I wonder if they actually bothered contacting these people in the first place? Old draft. Current one and every other piece of info related to the increase says it starts in April.
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By Asura.Kingnobody 2015-03-18 17:08:58
Well ***. Seattle needs to put a superseded stamp on that copy or some ***.
Or remove the draft copy period, since it is no longer relevant.
Sorry I guess >.>
By Bloodrose 2015-03-18 17:13:15
***, KN admitted being wrong, or using old data, AND apologizing for it.
Here's your Canadian Flag lapel pin, and beer mug.
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omg what a surprise...
Quote: In a few weeks, Seattle’s new, highest in the country, $15 per hour minimum wage will go into effect. Like many liberal policies, it was passed by City Hall with the best of intentions. The only problem is, in the end, it may do more harm than good for many.
Private businesses, unlike government entities (which, in theory, can always raise taxes or borrow), must make more than they spend in order to pay the rent, make payroll, keep the lights on, pay their business taxes, and, heaven forbid, have some left over for the owners and investors who are taking the risk and putting in the long hours.
Earlier this month, Seattle Magazine asked, Why Are So Many Seattle Restaurants Closing Lately?:
Last month—and particularly last week— Seattle foodies were downcast as the blows kept coming: Queen Anne’s Grub closed February 15. Pioneer Square’s Little Uncle shut down February 25. Shanik’s Meeru Dhalwala announced that it will close March 21. Renée Erickson’s Boat Street Café will shutter May 30 after 17 years with her at the helm…What the #*%&$* is going on? A variety of things, probably—and a good chance there is more change to come.
The magazine went on to report that one “major factor affecting restaurant futures in our city is the impending minimum wage hike.” Anthony Anton, president and CEO of Washington Restaurant Association, told the magazine, “It’s not a political problem; it’s a math problem.” He estimates that restaurants usually have a budget breakdown of about 36 percent for labor, 30 percent for food costs, and 30 percent to cover other operational costs. That leaves 4 percent for a profit margin. When labor costs shoot up to say 42 percent, something has to give.
Restaurants can take actions to adjust, such as raise their prices, acquire cheaper ingredients, and cut their operating hours and labor force. However, all those actions generate reactions from the public which can still lead to lower revenues for the restaurant and, for some, the decision to close their doors.
The Washington Policy Center explains:
When prices rise consumers seek alternatives, a behavior economists call the “substitution effect,” which results in lower demand for the higher-priced product. In the case of restaurants, consumers have access to the ultimate substitution – they can stay home.
A spokesman for the Washington Restaurant Association told the Washington Policy Center, “Every [restaurant] operator I’m talking to is in panic mode, trying to figure out what the new world will look like.”
Seattle had a foretaste of the effect of the $15 minimum wage earlier this year when Prop 1, which made a $15 minimum wage for those working in parking garages and hotels near Seattle-Tacoma International Airport, took effect. A reporter asked a cleaning woman and a part-time banquet server, who work in a hotel near SEATAC, what they thought of the new law:
The cleaning woman responded, “It sounds good, but it’s not good,”
“Why?” I asked.
“I lost my 401k, health insurance, paid holiday, and vacation,” she responded. “No more free food,” she added.
The hotel used to feed her. Now, she has to bring her own food. Also, no overtime, she said. She used to work extra hours and received overtime pay.
“What else?” I asked.
“I have to pay for parking,” she said.
I then asked the part-time waitress, who was part of the catering staff.
“Yes, I’ve got $15 an hour, but all my tips are now much less,” she said. Before the new wage law was implemented, her hourly wage was $7. But her tips added to more than $15 an hour. Yes, she used to receive free food and parking. Now, she has to bring her own food and pay for parking.
The Seattle Times reported that a Clarion Hotel recently made the decision to close its full service restaurant (laying off 15 people) and let go of a night desk clerk and a maintenance worker. It also plans to raise its rates by 10 percent to offset increased labor costs.
As the April 1 deadline approaches, the residents of Seattle will have a front row seat to the effects of the $15 per hour minimum wage, but early indicators suggest it will not be as positive as City Hall intended.
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