High minimum wage not paying off

A Seattle-based restaurant chain has filed for bankruptcy, and according to the owner, the state’s minimum wage mandate is to blame.

Restaurant Unlimited owns 35 restaurants on the West Coast. Seven of them are located in Seattle, where employers are required to pay their workers $15 an hour, $16 if they have a certain number of employees.

According to Fox News, Restaurants Unlimited raised menu prices and even added a so-called living wage surcharge to bills. Even so, the company lost money.

“It’s not surprising to see that the high minimum wage has put a small business out of business, but what is surprising is for the business owner to specifically identify the city ordinance of a high minimum wage as one of the factors that cause the business to go under,” says Paul Guppy, vice president for research at the Washington Policy Center. “So most business owners are afraid to mention that the city’s policy put them out of business, and that’s because of the intolerant attitude that the city has politically against anyone who would criticize the $15 minimum wage.”

When it comes to raising the minimum wage, be it at the local, state, or federal level, Guppy says lawmakers do not take into account the business owner.

“I would also say they’re only interested in responding to particular political forces,” he adds. “In Seattle and other jurisdictions on the West Coast, unions are very powerful, and there are activist labor groups that get engaged in politics. They help elect city council members; they give campaign contributions — things like that. And so the city council is very much in the pocket of these powerful labor unions, and they push hard for a high minimum wage because a high minimum wage tends to push up all other wages.”

Guppy says a lot of union contracts have a factor that says when the minimum wage goes up, the worker making $40 an hour, for example, now gets $44 an hour.

“So it pushes up the entire scale, and that’s one reason why unions push for it so hard. But what it does do is shut the door to any younger worker who is trying to get in and get some experience or part-time work or add to their hours,” he continues. “Anyone who is on the fringe in the labor market tends to get pushed out.”

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