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>I think some businesses are going out of businesses because they stubbornly refuse to raise their wages I'm skeptical that a business would choose to go out o

>I think some businesses are going out of businesses because they stubbornly refuse to raise their wages I'm skeptical that a business would choose to go out of business rather that give raises. Have you considered that margins are tighter than you think? I know small businesses like that.

paulcole 5y ago
I mean this is HN where the solution to the problem is obvious to a software developer but invisible to someone with decades of experience in the restaurant industry.
71a54xd 5y ago
One could argue the move to continue unemployment payments / covid payments is a strategy to "raise minimum wage" without actually having to pass any policy to do so. Politically it's brilliant, you gain the support of your voter base in 2yrs with the assumption that "cheap employers" will simply go out of business because nobody will work for them. And your more conservative base will champion you for "resisting to raise minimum wage". I for one support raising minimum wage, but the automation / negative outcomes of menial labor being too expensive to hire for will happen whether or not the official minimum wage is increased. UBI is another debate entirely, however I'd also argue that UBI in time harms poor people more than it really helps them and just enriches huge companies and land-lords.
- avidiax 5y ago
  That's an interesting take, but it seems like a post-hoc rationale/strategy to me. Conservatives will block any rise in the minimum wage, but couldn't completely block additional unemployment benefits. Progressives would back a rise in the minimum wage, but had to deliver on relief for the unemployed working class, so they did just that. The secondary effect of rising wages was probably only something that conservatives were expecting.
  - 71a54xd 5y ago
    Yep, but at the end of the day anyone who's trying to build wealth or have anything left for retirement gets fucked by inflation. People who are spendthrift and receiving UBI or unemployment payments (long term) were never trying to do that anyways and their payments in theory would increase with inflation. I'm a supporter of the idea of UBI but I just can't see the incentives panning out realistically.
    - mindslight 5y ago
      But price inflation is the policy goal regardless of minimum wage or UBI. In fact, government spending makes for better inflation in that it is spread around the economy, rather than lending based inflation that only shows up in CPI after it sends assets through the roof.
      - 71a54xd 5y ago
        Could you go into more detail here? My head is still slow to digest economics concepts like this, but this is something I certainly haven't read about before.
        mindslight 5y ago
        The Federal Reserve's mandate is to make sure there is a steady level of gradual price inflation. The main way they accomplish this is to lower interest rates, so that more money gets lent out into circulation. But this new money only affects the Consumer Price Index via housing assets and other big ticket items that get financed - it doesn't directly bid up the demand for consumer goods. Whereas if the federal government creates more money (via debt) and gives it out direct aid to the people, it goes right into the consumer market. Prices rise across the board, getting the CPI to the target level without the Federal Reserve having to lower rates. There will always be inflation as long as the monetary policy is to create inflation. But government spending at least chooses somewhere explicit for it to end up, rather than the default option of just inflating financial assets (which we've had quite enough of).
    - 5y ago
- ajsnigrutin 5y ago
  The problem with both unemployment payments and UBI is, that someone has to pay them, and (in case of the first) they stop at some time. If you get X money per month of unemployment and X+20% to work, then yeah, if it's not a fulfilling work (and let's be honest, what work at that price is fulfilling), you'll rather stay at home. Once the "free money" dries up, people will be forced to take the shitty jobs too, but due to many failed businesses, there will be even less jobs available, and this skews the jobs-vs-workers ratio, making wages even lower. Making it easier (and cheaper) to start a business would create more jobs, raising the price of work, and replace the shitty jobs with better one (in terms of pay and conditions).
  - 71a54xd 5y ago
    Yep, and in states with lots of illegal immigration the actual price of "labor" is heavily depressed since they're willing to work for basically anything.
    - akiselev 5y ago
      If it's depressed it's because business owners who hire undocumented immigrants (often knowingly, even assisting with GC/visa fraud to pass I9 verification) are never, ever fined or punished. Enforcement is a farce.
      - runnerup 5y ago
        I bartended at a Mexican restaurant in USA around the Great Recession. The owners absolutely knowingly employed illegal immigrants. Interestingly, the illegal immigrants generally got paid way more per hour (~30% higher) and also generally paid taxes via ITIN number. Eventually our restaurant got “raided” and the owners called around to find them new jobs at other places around town. One guy lived with me for awhile. He eventually went back to Mexico because he saved a bunch of money and wanted to spend it on a real degree/career. The universities in our area told him they’d take his money and let him audit classes but wouldn’t be able to give him any proper documentation like a transcript or degree.
      - deleted 5y ago
- opo 5y ago
  >...but the automation / negative outcomes of menial labor being too expensive to hire for will happen whether or not the official minimum wage is increased. This is true, but obviously the rate at which this happens will matter. In 1900, 41 percent of the US workforce was employed in agriculture. Due to increasing use of technology, 70 years later only 4 percent of the labor force worked in agriculture. If that loss of jobs had happened in say 20 years instead of 70 years, it obviously would have been a much more painful transition. https://www.ers.usda.gov/webdocs/publications/44197/13566_eib3_1_.pdf https://www.ers.usda.gov/webdocs/publications/44197/13566_ei...
- lumost 5y ago
  Perhaps depressed wages are partly to blame for the lack of automation in the current economy. If there is labor scarcity it may unlock new innovations by forcing market participants to find more productive uses of labor. Labor force participation has been falling for a long time as labor sellers (employees) fail to find an adequate price for their labor from employers (the buyer). Many economists assumed this was the fault of the labor seller for not having skills attractive to buyers. It's also possible that in certain segments employers were using labor in-efficiently, or simply miss-pricing the value of a worker. Which is a long winded way of saying that a higher minimum wage may bring more labor into the market, while simultaneously forcing businesses to leverage automation to improve the productivity of said labor.
  - shadilay 5y ago
    Absolutely this. Wages have been depressed for a long time which has severely hampered innovation. Historically the black death labor shortage led to the renaissance.
  - AKSucks 5y ago
    "Many economists assumed this was the fault of the labor seller for not having skills attractive to buyers" Given the massive redistribution of wealth in the US for the last half a century it's pretty clear that's not true, and that what's really been going on is businesses have been squeezing "labor sellers" to death.
forz877 5y ago
It doesn't take much to open a small business. There's a reason many small businesses fail, and often times it is the result of rather foolish decisions and ideals.
chrisseaton 5y ago
Am I the only person who thinks restaurant prices are pretty low? I'm sure they could go up quite a bit. Lunch out costs me maybe £15. Surely that could be £20 or so?
- brandmeyer 5y ago
  20 GBP for lunch? Even at 10 USD I'll buy lunch only once in two weeks. A 20 USD lunch is a rare treat for special occasions only.
  - lotsofpulp 5y ago
    The probability of the food from a restaurant being sufficiently tasty/nutritious is way too low compared to the effort required to make it at home for it to be worth spending 20GBP eating out all the time. I also simply choose to eat out a maximum of 1 or 2 times a month. I can afford 20GBP, I just have better options.
  - coldtea 5y ago
    Surely it depends on the income level? There are people for which a $20 USD lunch everyday or close, is nothing to write home about. In fact their time can be far more valuable (into what money they can command by doing some extra work), so that the opportunity cost between cooking and buying lunch to make it not worth to cook.
    - brandmeyer 5y ago
      I'm just pointing out that the demand for eating out is highly elastic. If the restaurant industry as a whole raises prices relative to background inflation, then overall sales will fall and some will go out of business.
  - ginko 5y ago
    That's pretty much the prices in Norway. To be fair Norwegians do eat out less than in other places as a result of it.
  - 5y ago
robotresearcher 5y ago
Naive question: why not raise prices?
- mirkules 5y ago
  Because if everyone raises their prices, the wage increase then effectively makes no difference. If everyone raises wages, they have to raise prices. For the restaurant, this means they have to charge more for the same service, and they have to pay more for their supply chain (because they also increased their prices). For the worker, that means they will pay more for things and services they need/want, because every other business will suffer from the same issues and be forced to raise their prices. All this to say, the worker's purchasing power decreases if everyone raises wages, and that is the definition of inflation.
  - ergot_vacation 5y ago
    It's interesting that nearly everything that might benefit the lower and lower-middle classes seems to lead, inexorably, to inflation: UBI, a living wage, decent benefits, the list goes on. One might almost conclude that inflation has become a lazy boogie man, to be trotted out for propagandist purposes whenever change is suggested.
  - foobarian 5y ago
    All wages increasing is better than only the elite wages increasing and leaving service workers in the dust. They are the ones paying for the lunch.
  - patrickthebold 5y ago
    Inflation is a factor, but it's not perfectly fixed to wage increases. E.g. if min wage goes up 30% we're not going to see 30% inflation rates.
  - LadyCailin 5y ago
    Citation needed. I can find plenty of studies that show it doesn’t. [0] Raising wages at the bottom doesn’t increase prices across the board, and so this benefits folks at the lower end more than it hurts. [0]: https://www.jstor.org/stable/41445397 https://www.jstor.org/stable/41445397
rodgerd 5y ago
> I'm skeptical that a business would choose to go out of business rather that give raises. I don't think that you've met a lot of small business, owners, then.
AussieWog93 5y ago
>I'm skeptical that a business would choose to go out of business rather that give raises. Have you considered that margins are tighter than you think? I know small businesses like that. I run a small business. I know other small business owners. An MBA-like focus on hyperefficiency is rare. Usually people have their views about how the world should work and act in accordance with that. Some people will come around, but plenty of others will fail to adapt, go out of business and blame "the economy".
- systemvoltage 5y ago
  It doesn't take a MBA-like focus to think "Gee..only if we had more margin, we'd pay more". This entire thread is totally out of touch with reality.
  - AussieWog93 5y ago
    >It doesn't take a MBA-like focus to think "Gee..only if we had more margin, we'd pay more". It does take razor-sharp focus and constant innovation to work out how you can increase margin, though. You can't just arbitrarily raise prices without offering any additional value and expect your business to stay alive.
    - systemvoltage 5y ago
      Small businesses already have a razor sharp focus otherwise they'd disappear. Literally their margins are their bread. I find your take slighly condescending but I want to give you a benefit of the doubt - what makes you think small businesses aren't focused on optmizing their margins? Just like you, I am a small business partner and know many small business owners. If you put an MBA-educated person in charge, the opposite would happen. Reading HBR doesn't make you a qualified for optimizing a restaurant business. Neither does having an MBA degree.
      - 29083011397778 5y ago
        Is it possible there's multiple types of small business owners, and you're talking past each other? Because I'm sure some owners know where every dime goes, like you say. But the small business I work at currently doesn't work like that. The small business I worked at previously was closer, but the owner worked longer hours, possibly for less pay, and absolutely had more responsibilities, than I ever did working there. And I assume that led to a divided focus, and in turn, not being able to focus solely on optimizing every dollar.
coldtea 5y ago
>Have you considered that margins are tighter than you think? If they can't give a decent wage [1] then they were not a viable business to begin with, regardless whether they can find some poor souls to work for them. If it takes a mandatory minimum wage to reveal that and bring their demise, so be it - let them stop putting a band-aid on part of the economy and have better businesses take their place. [1] Which is not the same as: a wage someone will capitulate and agree to work for - there are always e.g. unregistered immigrants, single mothers working 2 jobs, people in emergecy desperately needing anything they can get, kids who just see it as a temp gig to get some pocket money but otherwise live with their parents, and so on, that are desparate for near substinence - or even below substinence...
- bawolff 5y ago
  Given they essentially shut down their business, not being a viable business (anymore) seems the obvious conclusion.
- AKSucks 5y ago
  "If they can't give a decent wage [1] then they were not a viable business to begin with" Yep. 1000%. If your workers need to be on any form of government assistance, you're being subsidized. Mr. Factory Owner does all sorts of bullshit like paying unlivable wages, not having any employees working over the number of hours at which they'd have to pay benefits, and so on. But guess who's always got enough money to donate to republican and libertarian campaigns, and has very strong opinions about 'pulling yourself up by your bootstraps' and how wasteful government assistance is?
gwbas1c 5y ago
> Have you considered that margins are tighter than you think I suspect that some business owners will need to take a paycut in order to stay in business. (I'm sure there are plenty of founders reading this article who sometimes pay their employees more than they pay themselves.)
- bawolff 5y ago
  This is a small business not a start up or megacorporation. Owners are usually the first person to get a paycut when times are tough.
  - _djo_ 5y ago
    You would be surprised. I've lost count of the number of small businesses I've seen where employees go unpaid or are underpaid to 'save the business' while the boss makes no such sacrifices. Had to help a number of people applying to the local equivalent of a labour small claims court.
wheels 5y ago
In fact, restaurants are pretty much the pathological case of small businesses: they're a lot of work and a high percentage of them lose money. If your deli was already losing money, I can imagine a lot of owners deciding not to throw good money after bad.
devwastaken 5y ago
Restraunts are high turnover businesses, as in most new owners don't make it more than 2 years. Many small businesses are owned by people without much knowledge or experience outside of that business. Very little classical education/degrees. The only businesses that thrive become survivor bias, they believe what worked before is what will work now, not realizing that markets do change. I can perfectly see a dysfunctional small company draining their business away by just not changing. Happens all the time on Kitchen Nightmares.
ginko 5y ago
>Have you considered that margins are tighter than you think? So they need to adjust their prices.

paulcole 5y ago

I mean this is HN where the solution to the problem is obvious to a software developer but invisible to someone with decades of experience in the restaurant industry.

71a54xd 5y ago

One could argue the move to continue unemployment payments / covid payments is a strategy to "raise minimum wage" without actually having to pass any policy to do so. Politically it's brilliant, you gain the support of your voter base in 2yrs with the assumption that "cheap employers" will simply go out of business because nobody will work for them. And your more conservative base will champion you for "resisting to raise minimum wage". I for one support raising minimum wage, but the automation / negative outcomes of menial labor being too expensive to hire for will happen whether or not the official minimum wage is increased. UBI is another debate entirely, however I'd also argue that UBI in time harms poor people more than it really helps them and just enriches huge companies and land-lords.

avidiax 5y ago
That's an interesting take, but it seems like a post-hoc rationale/strategy to me. Conservatives will block any rise in the minimum wage, but couldn't completely block additional unemployment benefits. Progressives would back a rise in the minimum wage, but had to deliver on relief for the unemployed working class, so they did just that. The secondary effect of rising wages was probably only something that conservatives were expecting.
- 71a54xd 5y ago
  Yep, but at the end of the day anyone who's trying to build wealth or have anything left for retirement gets fucked by inflation. People who are spendthrift and receiving UBI or unemployment payments (long term) were never trying to do that anyways and their payments in theory would increase with inflation. I'm a supporter of the idea of UBI but I just can't see the incentives panning out realistically.
  - mindslight 5y ago
    But price inflation is the policy goal regardless of minimum wage or UBI. In fact, government spending makes for better inflation in that it is spread around the economy, rather than lending based inflation that only shows up in CPI after it sends assets through the roof.
    - 71a54xd 5y ago
      Could you go into more detail here? My head is still slow to digest economics concepts like this, but this is something I certainly haven't read about before.
      - mindslight 5y ago
        The Federal Reserve's mandate is to make sure there is a steady level of gradual price inflation. The main way they accomplish this is to lower interest rates, so that more money gets lent out into circulation. But this new money only affects the Consumer Price Index via housing assets and other big ticket items that get financed - it doesn't directly bid up the demand for consumer goods. Whereas if the federal government creates more money (via debt) and gives it out direct aid to the people, it goes right into the consumer market. Prices rise across the board, getting the CPI to the target level without the Federal Reserve having to lower rates. There will always be inflation as long as the monetary policy is to create inflation. But government spending at least chooses somewhere explicit for it to end up, rather than the default option of just inflating financial assets (which we've had quite enough of).
  - 5y ago
ajsnigrutin 5y ago
The problem with both unemployment payments and UBI is, that someone has to pay them, and (in case of the first) they stop at some time. If you get X money per month of unemployment and X+20% to work, then yeah, if it's not a fulfilling work (and let's be honest, what work at that price is fulfilling), you'll rather stay at home. Once the "free money" dries up, people will be forced to take the shitty jobs too, but due to many failed businesses, there will be even less jobs available, and this skews the jobs-vs-workers ratio, making wages even lower. Making it easier (and cheaper) to start a business would create more jobs, raising the price of work, and replace the shitty jobs with better one (in terms of pay and conditions).
- 71a54xd 5y ago
  Yep, and in states with lots of illegal immigration the actual price of "labor" is heavily depressed since they're willing to work for basically anything.
  - akiselev 5y ago
    If it's depressed it's because business owners who hire undocumented immigrants (often knowingly, even assisting with GC/visa fraud to pass I9 verification) are never, ever fined or punished. Enforcement is a farce.
    - runnerup 5y ago
      I bartended at a Mexican restaurant in USA around the Great Recession. The owners absolutely knowingly employed illegal immigrants. Interestingly, the illegal immigrants generally got paid way more per hour (~30% higher) and also generally paid taxes via ITIN number. Eventually our restaurant got “raided” and the owners called around to find them new jobs at other places around town. One guy lived with me for awhile. He eventually went back to Mexico because he saved a bunch of money and wanted to spend it on a real degree/career. The universities in our area told him they’d take his money and let him audit classes but wouldn’t be able to give him any proper documentation like a transcript or degree.
    - deleted 5y ago
opo 5y ago
>...but the automation / negative outcomes of menial labor being too expensive to hire for will happen whether or not the official minimum wage is increased. This is true, but obviously the rate at which this happens will matter. In 1900, 41 percent of the US workforce was employed in agriculture. Due to increasing use of technology, 70 years later only 4 percent of the labor force worked in agriculture. If that loss of jobs had happened in say 20 years instead of 70 years, it obviously would have been a much more painful transition. https://www.ers.usda.gov/webdocs/publications/44197/13566_eib3_1_.pdf https://www.ers.usda.gov/webdocs/publications/44197/13566_ei...
lumost 5y ago
Perhaps depressed wages are partly to blame for the lack of automation in the current economy. If there is labor scarcity it may unlock new innovations by forcing market participants to find more productive uses of labor. Labor force participation has been falling for a long time as labor sellers (employees) fail to find an adequate price for their labor from employers (the buyer). Many economists assumed this was the fault of the labor seller for not having skills attractive to buyers. It's also possible that in certain segments employers were using labor in-efficiently, or simply miss-pricing the value of a worker. Which is a long winded way of saying that a higher minimum wage may bring more labor into the market, while simultaneously forcing businesses to leverage automation to improve the productivity of said labor.
- shadilay 5y ago
  Absolutely this. Wages have been depressed for a long time which has severely hampered innovation. Historically the black death labor shortage led to the renaissance.
- AKSucks 5y ago
  "Many economists assumed this was the fault of the labor seller for not having skills attractive to buyers" Given the massive redistribution of wealth in the US for the last half a century it's pretty clear that's not true, and that what's really been going on is businesses have been squeezing "labor sellers" to death.

forz877 5y ago

It doesn't take much to open a small business. There's a reason many small businesses fail, and often times it is the result of rather foolish decisions and ideals.

chrisseaton 5y ago

Am I the only person who thinks restaurant prices are pretty low? I'm sure they could go up quite a bit. Lunch out costs me maybe £15. Surely that could be £20 or so?

brandmeyer 5y ago
20 GBP for lunch? Even at 10 USD I'll buy lunch only once in two weeks. A 20 USD lunch is a rare treat for special occasions only.
- lotsofpulp 5y ago
  The probability of the food from a restaurant being sufficiently tasty/nutritious is way too low compared to the effort required to make it at home for it to be worth spending 20GBP eating out all the time. I also simply choose to eat out a maximum of 1 or 2 times a month. I can afford 20GBP, I just have better options.
- coldtea 5y ago
  Surely it depends on the income level? There are people for which a $20 USD lunch everyday or close, is nothing to write home about. In fact their time can be far more valuable (into what money they can command by doing some extra work), so that the opportunity cost between cooking and buying lunch to make it not worth to cook.
  - brandmeyer 5y ago
    I'm just pointing out that the demand for eating out is highly elastic. If the restaurant industry as a whole raises prices relative to background inflation, then overall sales will fall and some will go out of business.
- ginko 5y ago
  That's pretty much the prices in Norway. To be fair Norwegians do eat out less than in other places as a result of it.
- 5y ago

robotresearcher 5y ago

Naive question: why not raise prices?

mirkules 5y ago
Because if everyone raises their prices, the wage increase then effectively makes no difference. If everyone raises wages, they have to raise prices. For the restaurant, this means they have to charge more for the same service, and they have to pay more for their supply chain (because they also increased their prices). For the worker, that means they will pay more for things and services they need/want, because every other business will suffer from the same issues and be forced to raise their prices. All this to say, the worker's purchasing power decreases if everyone raises wages, and that is the definition of inflation.
- ergot_vacation 5y ago
  It's interesting that nearly everything that might benefit the lower and lower-middle classes seems to lead, inexorably, to inflation: UBI, a living wage, decent benefits, the list goes on. One might almost conclude that inflation has become a lazy boogie man, to be trotted out for propagandist purposes whenever change is suggested.
- foobarian 5y ago
  All wages increasing is better than only the elite wages increasing and leaving service workers in the dust. They are the ones paying for the lunch.
- patrickthebold 5y ago
  Inflation is a factor, but it's not perfectly fixed to wage increases. E.g. if min wage goes up 30% we're not going to see 30% inflation rates.
- LadyCailin 5y ago
  Citation needed. I can find plenty of studies that show it doesn’t. [0] Raising wages at the bottom doesn’t increase prices across the board, and so this benefits folks at the lower end more than it hurts. [0]: https://www.jstor.org/stable/41445397 https://www.jstor.org/stable/41445397

rodgerd 5y ago

> I'm skeptical that a business would choose to go out of business rather that give raises. I don't think that you've met a lot of small business, owners, then.

AussieWog93 5y ago

>I'm skeptical that a business would choose to go out of business rather that give raises. Have you considered that margins are tighter than you think? I know small businesses like that. I run a small business. I know other small business owners. An MBA-like focus on hyperefficiency is rare. Usually people have their views about how the world should work and act in accordance with that. Some people will come around, but plenty of others will fail to adapt, go out of business and blame "the economy".

systemvoltage 5y ago
It doesn't take a MBA-like focus to think "Gee..only if we had more margin, we'd pay more". This entire thread is totally out of touch with reality.
- AussieWog93 5y ago
  >It doesn't take a MBA-like focus to think "Gee..only if we had more margin, we'd pay more". It does take razor-sharp focus and constant innovation to work out how you can increase margin, though. You can't just arbitrarily raise prices without offering any additional value and expect your business to stay alive.
  - systemvoltage 5y ago
    Small businesses already have a razor sharp focus otherwise they'd disappear. Literally their margins are their bread. I find your take slighly condescending but I want to give you a benefit of the doubt - what makes you think small businesses aren't focused on optmizing their margins? Just like you, I am a small business partner and know many small business owners. If you put an MBA-educated person in charge, the opposite would happen. Reading HBR doesn't make you a qualified for optimizing a restaurant business. Neither does having an MBA degree.
    - 29083011397778 5y ago
      Is it possible there's multiple types of small business owners, and you're talking past each other? Because I'm sure some owners know where every dime goes, like you say. But the small business I work at currently doesn't work like that. The small business I worked at previously was closer, but the owner worked longer hours, possibly for less pay, and absolutely had more responsibilities, than I ever did working there. And I assume that led to a divided focus, and in turn, not being able to focus solely on optimizing every dollar.

coldtea 5y ago

>Have you considered that margins are tighter than you think? If they can't give a decent wage [1] then they were not a viable business to begin with, regardless whether they can find some poor souls to work for them. If it takes a mandatory minimum wage to reveal that and bring their demise, so be it - let them stop putting a band-aid on part of the economy and have better businesses take their place. [1] Which is not the same as: a wage someone will capitulate and agree to work for - there are always e.g. unregistered immigrants, single mothers working 2 jobs, people in emergecy desperately needing anything they can get, kids who just see it as a temp gig to get some pocket money but otherwise live with their parents, and so on, that are desparate for near substinence - or even below substinence...

bawolff 5y ago
Given they essentially shut down their business, not being a viable business (anymore) seems the obvious conclusion.
AKSucks 5y ago
"If they can't give a decent wage [1] then they were not a viable business to begin with" Yep. 1000%. If your workers need to be on any form of government assistance, you're being subsidized. Mr. Factory Owner does all sorts of bullshit like paying unlivable wages, not having any employees working over the number of hours at which they'd have to pay benefits, and so on. But guess who's always got enough money to donate to republican and libertarian campaigns, and has very strong opinions about 'pulling yourself up by your bootstraps' and how wasteful government assistance is?

gwbas1c 5y ago

> Have you considered that margins are tighter than you think I suspect that some business owners will need to take a paycut in order to stay in business. (I'm sure there are plenty of founders reading this article who sometimes pay their employees more than they pay themselves.)

bawolff 5y ago
This is a small business not a start up or megacorporation. Owners are usually the first person to get a paycut when times are tough.
- _djo_ 5y ago
  You would be surprised. I've lost count of the number of small businesses I've seen where employees go unpaid or are underpaid to 'save the business' while the boss makes no such sacrifices. Had to help a number of people applying to the local equivalent of a labour small claims court.

wheels 5y ago

In fact, restaurants are pretty much the pathological case of small businesses: they're a lot of work and a high percentage of them lose money. If your deli was already losing money, I can imagine a lot of owners deciding not to throw good money after bad.

devwastaken 5y ago

Restraunts are high turnover businesses, as in most new owners don't make it more than 2 years. Many small businesses are owned by people without much knowledge or experience outside of that business. Very little classical education/degrees. The only businesses that thrive become survivor bias, they believe what worked before is what will work now, not realizing that markets do change. I can perfectly see a dysfunctional small company draining their business away by just not changing. Happens all the time on Kitchen Nightmares.

ginko 5y ago

>Have you considered that margins are tighter than you think? So they need to adjust their prices.