NYC’s struggling retailers face what minimum wage hikes can’t do

I’ve written for years about one subject over which economists are in greatest agreement: the negative unintended consequences of the minimum wage.

Last week I showed there’s a staggering consensus of economists about what a $15/hr. minimum wage won’t do:

  • 98 percent don’t think it will create jobs
  • 97 percent don’t think it will increase youth employment
  • 93 percent don’t think it will increase adult employment
  • 99 percent don’t think it will help lower-skilled job seekers
  • 100 percent don’t think it will make it easier for small businesses to stay in business

New York City is one of the most expensive places to live in the United States. Prevailing wage rates there are such that NYC is more amenable to a $15/hr. minimum wage than anywhere in North Carolina, but especially the poor, rural areas of the state.

But to invert Sinatra, if it can’t make there, it’s not gonna make it anywhere.

The Wall Street Journal reports that “New York City Businesses Struggle to Keep Up After Minimum Wage Increase.” It opens:

More than six months after the $15 minimum wage went into effect in New York City, business leaders and owners say the increased labor costs have forced them to cut staff, eliminate work shifts and raise prices.

The article quotes a restaurant owner who cut shifts, cut overtime, and raised prices to avoid laying off staff. She also ceased a planned expansion for fears she’d have to cut the new staff it’d require.

“You would just have no choice but to cut people at the bottom,” she said.

Cut people at the bottom.

Another excerpt:

Thomas Grech, president of the Queens Chamber of Commerce, said he has seen an uptick in small-business closures during the past six to nine months, and he attributed it to the minimum-wage legislation.

They’re cutting their staff. They’re cutting their hours. They’re shutting down,” he said. “It’s not just the rent.”

Lisa Sorin, president of the Bronx Chamber of Commerce, said Manhattan businesses and their customers can afford to pay more to compensate for the wage increase, while those in the surrounding boroughs probably couldn’t. “It’s almost like a whirlwind of keep up or get out,” Ms. Sorin said.

For more reading:

Jon Sanders / Director of Regulatory Studies

Jon Sanders studies regulatory policy, a veritable kudzu of invasive government and unintended consequences. As director of regulatory studies at the John Locke Foundation, Jo...

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