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Marylee Shrider: Minimum wage hike hurts business
| Friday, Feb 29 2008 11:45 AM
Last Updated: Friday, Feb 29 2008 11:56 AM
There’s no doubt we Bakersfield folks love our restaurants. Large crowds and long waits are a given on a Friday or Saturday night. We especially appreciate the diversity of our locally owned restaurants, though these days they all seem to have one thing in common.
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New menus. With new prices.
What, you haven’t noticed?
Look closer. In the two months since California’s minimum wage became the highest in the nation at $8 an hour, prices at many restaurants and other businesses have gone up as well.
You’re surprised?
You shouldn’t be. Before Gov. Schwarzenegger signed the bill to increase the state’s minimum wage in 2006, economists and business owners gave fair warning the new law would instantly burden businesses with higher costs, forcing layoffs or cuts to employees’ hours and benefits. The wage hike, they predicted, would be passed on to the consumers and hurt the people it was supposed to help.
And so it has, at least in Bakersfield. Restaurateur Merv Crist, owner of Prime Cut, said the latest minimum wage hike cost him an additional $36,000 a year for his 45 employees. Predictably, the price of sandwiches and burgers went up, job opportunities went down.
“We didn’t lay anyone off, but when people left we didn’t replace them,” says Crist, who is operating with five fewer workers this year. “We’re also getting away from the high school students who just want a job and are hiring older people who need a job.”
Employers now forced to pay top dollar for dishwashers and busboys must get their money’s worth, so competition even for minimum wage jobs is fierce and likely to remain so. Unskilled or inexperienced workers need not apply.
“My patience for training new employees has diminished,” says Crist. “We’re hiring fewer people, so we want those who know what they’re doing.”
New menus came out this week at Mossman’s Coffee Shops, where customers will now pay 25 to 50 cents more per item and employees will enjoy fewer benefits. Longtime owner Rick Mossman says the minimum wage hike increased his payroll costs — salary, workman's comp and employee taxes — nearly $40,000 a year.
“After three generations and 20 years in this business, I finally had to instruct my managers to maintain a lower number of hours so (some) employees won’t qualify for full-time benefits,” he says. “I had to choose between minimum wage and full-time health benefits. That bothers me.”
Restaurants aren’t the only businesses struggling with the wage increase. Mike Russo, owner of three Russo’s Books stores in Bakersfield, says the wage hike is particularly difficult because the books he sells come prepriced from the factory. Price cuts, he says, are not an option.
“I haven’t cut jobs, but I’ve had to cut hours,” Russo says. “For the month of February, compared to last year, we had 150 fewer employee hours.”
Russo isn’t hiring now either. Teens looking for that first job, he says, are out of luck.
Look, this isn’t rocket science, it’s business. Proponents of the wage hike claimed it would fight poverty and help workers climb the socioeconomic ladder, but when the price of unskilled labor rises, employers must look for cheaper alternatives, just as they must when commodity prices and heating costs go up.
It’s too early to know the full impact of the minimum wage hike on California’s consumers and the job market. But if the empirical evidence is any indication, the increase will crush the job hopes of low-wage workers and leave it to financially strapped consumers to pick up the check.
Bon appetit.
Marylee Shrider’s column appears Saturdays. Reach her at 395-7474 or mshrider@bakersfield.com