Minimum Wage Hikes in New York City Cause Restaurants to Eliminate Jobs, Cut Hours, Raise Prices

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“New York is known for its incredible food scene, but legislators in the Big Apple may have bitten off more than they can chew with the newest minimum wage hike.

The city’s mandated increase, which took effect on December 31, requires businesses that employ 11 or more people to boost wages from $13 to $15 per hour. But most restaurants operate with the tipped wage, offering servers and bartenders a lower hourly base pay and the opportunity to rake in the rest in tips, which often yields better pay overall. If workers don’t earn enough this way, employers are required to make up the difference.

That tipped minimum just rose from $8.65 to $10 an hour. A 16 percent jump is fairly punishing, considering the industry operates on razor-thin profit margins.

A new study conducted by the New York City Hospitality Alliance lends credence to the idea that substantial increases made to the tipped wage are far costlier than they are beneficial. After surveying 574 restaurants, they found that 2019 looks bleak: 75 percent of full-service establishments plan to cut employee hours, and 47 percent will eliminate jobs entirely in response to the forced minimum wage hikes. That follows closely on the heels of a dreary 2018, when 77 percent of full-service restaurants reduced employee hours and 36 percent cut jobs, both of which were also in response to the mandated wage increases.”

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Court Clears The Way For Servers To Sue For Full Minimum Wage

“The ruling by the U.S. Court of Appeals for the Ninth District overturned a lower court’s decision that servers, bartenders and other tipped employees in essence do not perform two jobs. The lower court’s ruling allowed restaurants to pay tipped employees on a single scale, a lower direct wage, provided gratuities made up the rest of the minimum compensation they were due under law on a weekly basis.  In its opinion, restaurants weren’t required under federal law and stated Department of Justice guidelines to pay employees a different wage for pre-shift work like cleaning restrooms, slicing fruit for the bar, or cleaning the heads of soft-drink dispensers.”

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