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Labor costs are typically consume 30% of a restaurant's revenue. Increasing those costs by 50% and not expecting major consequences is a unrealistic.
by skookumchuck 9y ago
Labor costs are typically consume 30% of a restaurant's revenue. Increasing those costs by 50% and not expecting major consequences is a unrealistic.
- crdoconnor 9y agoWhich parts of the studies above did you disagree with? What major consequences did you think Seattle suffered from?
- skookumchuck 9y agoMajor consequences to the restaurants. As for the city as a whole, I'd expect to see no new businesses such as light manufacturing locating there unless they have to be there. And Amazon announced they were locating a second headquarters elsewhere. You could argue that has nothing to do with minimum wage, and probably not since Amazon doesn't have their minimum wage operations in Seattle. But Seattle has done things like passing an unconstitutional income tax targeted at Amazon (now winding its way through the courts) that likely factor in to such decisions. Along with other heavy tax increases, like sales taxes, property taxes, and a proposed "head tax" that appears to be targeted at Amazon.
- moorhosj 9y agoWhat are you suggesting those consequences would be?
- skookumchuck 9y agoHigher prices, fewer customers, more automation, fewer restaurants, less willingness to take a chance on marginal employees. More mom&pop restaurants with no employees. More off the books and illegal employees. Personally, I don't go out to eat in Seattle anymore. Too expensive.
- moorhosj 9y agoMeanwhile, Seattle Food Services and Drinking employment is at an all-time high. April 1, 2015 - 135,100 employed December 2017 - 149,600 employed https://fred.stlouisfed.org/series/SMU53426607072200001SA https://fred.stlouisfed.org/series/SMU53426607072200001SA
- skookumchuck 9y agoThe trouble with most such statistics is context. How much has Seattle's population grown in the same time period? Are there more or less restaurant employees as a percent of the population? Does Amazon's huge hiring surge of highly paid employees skew the results? Nothing is ever static in economics, it's very hard to do A-B experiments.
- moorhosj 9y agoOddly, I didn’t find any of that nuance or context in your original comment. You presented absolutes and the data proved you wrong. Maybe the population has grown by more than 10% in 2.5 years like food service employment. At the same time, the overall unemployment rate has fallen since the wage hikes started.
- skookumchuck 9y ago> You presented absolutes and the data proved you wrong. I could say an absolute statement that throwing more wood on the fire would make it hotter. If it also happens to drop into the lake, that doesn't prove me wrong. In any such statements, there's an implicit assumption that other effects stay the same, that I am not dropping the fire in the lake. Seattle has undergone enormous change in the last 5 years due to Amazon. Ignoring that in any cause/effect analysis of the overall city invalidates the analysis.
- crdoconnor 9y agoNo, the "trouble" is that exactly the opposite of what you warned would happen actually happened. What happened was exactly in line with the papers I cited predicted. 1. Large profit hit, 2. small price hike, 3. no effect on employment (employment actually went up, possibly for other reasons). The reason you believe what you believe is because you swallowed a lot of kool aid. The people concerned about 1 happening want us to think will 3 happen. In Seattle it didn't. In well run studies it didn't. In propaganda and poorly run economic studies it does.