Minimum Wage Rise Causes A Recession In New York City’s Restaurant Trade

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Or at least, coinciding with a rise in the minimum wage in New York City we see an effect upon jobs in the restaurant trade there indistinguishable from a recession. This is not consistent with the idea that minimum wage rises have no effect upon jobs.

There’s a reason we look at restaurants. Some 50% – or so – of those who work in the restaurant trade earn minimum wage. And some 50% of those who earn minimum wage are in the restaurant trade. Of course, this is highly coloured – and thus inaccurate – in that many of these are also earning tips. I did the job for some years and it most certainly wasn’t for the wages that I carried plates and glasses. But you know, these are the numbers we’ve got.

So, if we want to see the effect of a change in minimum wages then we look at the restaurant industry:

Chart of the Day (above) shows graphically the ongoing “restaurant recession” taking place in New York City. Job losses at the city’s full-service restaurants over the last year have been greater than any time since the devastating combined effects of the 2001 recession and the 9-11 terrorist attacks. Over the last year through March, the city has lost more than 7,000 restaurant jobs, a percentage decline of more than 4%. Even during the Great Recession, the biggest year-over-year decline in NYC restaurant jobs was 1.8% in April 2009, which was less than half the declines in recent months (-4% in November, -4.7% in December and -4.2% in March). Therefore, to say that there is currently a “restaurant recession” in the Big Apple is no exaggeration!

This coincides with:

General Minimum Wage Rate Schedule
Location 12/31/16 12/31/17 12/31/18 12/31/19
NYC – Big Employers (of 11 or more) $11.00 $13.00 $15.00
NYC – Small Employers (10 or less) $10.50 $12.00 $13.50 $15.00

A good guess is that this is going to get worse:

The effect of minimum wage rises

Well done to those who insist minimum wage rises have no effect upon employment.