Rising Minimum Wages for Restaurants
Name
Institution Affiliation
Introduction
The average minimum wage of an American is now at its historical peak, and there is still a possibility for development in the coming future. With the federal rates being stagnant for ten years at a rate of $7.25, several states, including municipalities, have taken the initiative to develop a high minimum wage level compared to federal law demands. The past years have witnessed no increase in the minimum wage, reducing by 16% in substantial value terms in the past decade, grateful to inflation and the rising cost of living. For instance, in the last years, New York increased its minimum wage to about $11.10, as Washington needs a minimum wage of $12. Publicized moves have been made by towns like San Francisco, including Sattler, to raise the minimum wage slowly. San Francisco is currently at a minimum wage of $15.59 as per July this year.
Implementing the federal minimum wage in 2020 has a possibility of lowering employment with about two million jobs. Therefore, raising the minimum wage can enormously affect entry-level ranks where the rates of lack of jobs are high. In short, the restaurant industry would be blown. According to a recent survey by the National Restaurant Association, about 529 full-time operators have prompted employees. An entry-range server gets earnings of about $19 every hour. Experienced operators get about $25 every hour. These bring out the seriousness of the case and how it can impact business owners who struggle with thin margins with managing a small business. Unlike most firms, it is essential to toss benefaction in the picture (Aaronson, 2008).
Willie Degel, the owner of the Old Food Network Series, once explained the problem. At some point, the front house workers were shifted from $5 to $7.50, which resulted in a 50% increase earning himself $350,000. At that time, the Degel restaurants had gotten rid of the busboy post. According to him, fewer workers have to do more work, and his employees have to understand that. It essential to incorporate some cuts and consider the prices. Energy is critical and looks at everything beneficial.
The economic outlook is not uniform to all restaurants. Workers in New York, including Alabama, differ in hourly wages. These margin and cost concerns, labor issues, restaurant advantages derived from the state’s flexibility. ‘The question is whether Congress should increase operating costs, which will force small business owners to employ few workers, reduce working hours or close their businesses, as stated by the vice president of Public Policy and Workforce, Shannon Meade, in a statement made at the National Restaurant Association. Harri, a workplace organizing platform for restaurants, issued the Hospitality and Food Service Wage Inflation Survey, which looks at real impacts on restaurants. Before exploring some of these outcomes, it is essential to look at how these dialogues have emerged (MacDonald & Aaronson, 2006). Regardless of the federal rates shifting to $15, the minimum wage has been a concern across the nation for a while now. Currently, hikes in the minimum wage have been witnessed in different towns and states.
How then does raising the minimum wage affect the restaurant industry? A tough time, according to Harri’s information, 45% of business owners indicated that labor cost increased to 9% from 3% in the current year. About 26% witnessed the labor increase to 15% as 12% of the labor cost rose, exceeding 15%. The issue has become a universal problem nowadays. It is a challenge to balance the charge to protect margin but not to disable customer service. Restaurants have responded to these challenging times in different ways. About 71% have increased their menu prices. Texas Roadhouse serves as the perfect example as the statehouse chain wanted to take excess 1.5% maximum price in 2019. An increase in menu prices has proven to be a successful remedy for most restaurants. It gives a balance to the cost as well as making up for the declining values. Thus, customers are willing to issue enough cash for less service, which makes up a perfect strategy. It results in high confidence, which is related to speeding wage growth. An increase in the minimum wage rates will do better than harm to income growth, which results in a firm retail sale, including restaurant spending. Therefore, rising menu prices is essential.
The other impact is labor operations. Sometimes, the easiest solution is the solution at hand. No one wants to reduce labor, but at times it is the only solution. For restaurants, they see it as a significant risk. For instance, when five operators are eliminated from a staff of 10, changes will be visible. In case a single veteran goes for leave, many questions will arise. The issue is serious for restaurants and a competitor to any sector. Thus, the only way to winning is based on customer service. To get there, you need wise, successful, dedicated, and committed workers. It is hard always to be high performers and hard to find such dedicated workers and even afford them.
Looking at Texas Roadhouse, as an excellent example of a case study, among the reasons why the chain has safeguarded traffic regardless of huge prices is its approach to staffing. The restaurants are well-staffed more than the past years. Texas Roadhouse questioned their managing partners to ensure they staff their restaurants, not care about the costs, and what comes with it. It was as a result of a simple question as to why workers were vacating Texas Roadhouse. Most chain turnovers happen between the initial 30-60 days of the hourly stage. The critical challenge is quality time. There was a time when concerns were expressed at the lowest labor barrel. Maybe when paying them (Neumark & Wascher, 2006). As per the Bureau of Labor Statistics of 2018, employees between the ages of 16-24 summed up to 55%. Hospitality contains a large number of teenagers and young people. Therefore, it is hard to impress a generation that knows about flex hours, including the benefits of extra pay. Not all restaurants can afford to be as cool as Startup found in Silicon Valley. That why it is essential to develop a restaurant brand based on culture, just like profit. The young adult workers drift to purpose-driven firms that match their goals.
Conclusion
We wind up, and the minimum wage increase is here to stay. Can they ever reach $15 at the federal level? Which is hard to make conclusions. It would be wise for restaurants to invest in their workers before the shrinkage of labor pools and the cost hike, Devising and implementing systems and technology to make it after turnovers are possible and fasten the procedures. It is possible to place a price on brand accuracy. That is the initial point for the total equations.
References
Aaronson, D., French, E., & MacDonald, J. (2008). The minimum wage, restaurant prices, and labor market structure. Journal of Human Resources, 43(3), 688-720.
MacDonald, J. M., & Aaronson, D. (2006). How firms construct price changes: Evidence from restaurant responses to increased minimum wages. American Journal of Agricultural Economics, 88(2), 292-307.
Neumark, D., & Wascher, W. (2006). Minimum wages and employment: A review of evidence from the new minimum wage research (No. w12663). National Bureau of Economic Research.