Massive layoffs and closures weren't on the menu, after all.
Critics would have you believe that upping the minimum wage in restaurants will lead to massive layoffs and closures. But since raising the minimum wage to $15 per hour nearly a year ago, the restaurant industry in New York City has thrived.
With profits so low in the restaurant industry, averaging just 3%-5%, employers may not have the option to accept less in profits without going in the red. Still, massive layoffs in the restaurant industry are unlikely because owners need a certain number of staff to operate a full-service kitchen.Prices go up Some in the restaurant industry have argued that raising menu prices will lead to fewer people dining out and, consequentially, more restaurant closures.In fact, both restaurant revenue and employment are up. The reason for this is that restaurants don’t have to raise prices very much to pay for a minimum-wage increase.
The focus on single restaurants also ignores the larger economic impact of raising the minimum wage. According to an analysis by the Federal Reserve Bank of Chicago, if low-wage workers have more money in their pockets, they will have more money to spend, potentially expanding the number of consumers who can afford to eat out.
If the economy were to go into a recession, business would undoubtedly suffer, though the suffering could hardly be attributed solely or mainly to a minimum-wage increase. In other words, a good economy means that everyone benefits, including low-wage workers.
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