SAN FRANCISCO RESTAURANTS CLOSE AT "UNPRECEDENTED" RATE AFTER CITY BEGINS STEEP MINIMUM WAGE RATE HIKES
by Kevin Ryan
Restaurant owners in San Francisco are blaming a spate of restaurant closings in part on the city's highest-in-the-nation minimum wage hikes. Over 60 top restaurants around the Bay Area closed between September and January alone, and it's expected to get much worse as the pace of minimum wage step-ups accelerates, prompting one local restaurant publication to call it a “death march.” San Francisco’s minimum wage was increased to $13/hr last July, will step up to $14/hr this July, and $15/hr in July 2018. And California is one of just 8 states that does not allow businesses to include tips in their calculation of minimum wage, meaning wait staff receive even more than the high minimum wage.
Well, those that keep their jobs do. Year-over-year employment growth in the restaurant industry has slowed, and is now falling in San Francisco. And many owners blame the wage hikes, saying their profit margins have fallen to near zero and they've been forced to layoff staff and curtail hiring to stay profitable.
And it's not just restaurant workers being impacted. Since San Francisco added its own municipal minimum wage in 2004—one of the first in the country—menu prices have jumped 52%, twice the rate of inflation.
The be fair, owners cite other factors contributing to the cost increases, including rising rents, new requirements for providing health care, and new sick leave mandates. But they all have one thing in common with higher minimum wages: they make it more expensive to do business, and in a rising number of instances, are making it impossible to stay in business.
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