New York Restaurants Consider Cutting Jobs to Offset Rise in Minimum Wage

An article in Crain’s New York Business suggests that the minimum wage increase, which went into effect on December 31st, 2018 and raised the hourly wage for restaurant employees to as high as $15.00, may have negative consequences for those workers.

This article states that restaurant owners will respond to their rising costs of operation by cutting workers hours and eliminating jobs. In the past two years, 76% and 74.5%, respectively, of surveyed restaurants stated they would cut employee hours in response to the minimum wage increases, a trend likely to continue in 2019. "There's financial anxiety by many restaurant owners throughout the city because the cost of running a business continues to skyrocket," states the article. "You can see from the survey just what has happened over the years—restaurateurs are eliminating jobs. They're really struggling to retool their business model because of all the financial pressures."

The wage standard in the New York restaurant industry has been a hot topic of debate over the last few years.There have been six consecutive annual minimum wage increases, which have resulted in a minimum wage of $15.00 for non-tipped employees and $10.00 for tipped employees, an amount twice as much as five years ago. The elimination of the tip credit has made headlines as campaigns such as One Fair Wage and Save NY Tips argue competing sides.

Advocates for the tip credit claim it benefits both restaurants and workers, as average wages are higher with gratuities and employees work harder to earn those tips. Restaurants that have attempted to implement no-tip policies in the past few years have seen push back from both customers and employees. Opponents of tipping, which include famous New York restauranteur Danny Meyer, have a different philosophy. They argue that by raising base wages for restaurant workers, there will be a rise in pay stability and uniformity in wages for front and back of house workers. ROC United, who started the One Fair Wage campaign which advocates for eliminating the tip credit, claim that tipped employees are more susceptible to harassment and exploitation.