Higher wages a surprising success for Seattle restaurant

Don't get me wrong I am glad the owner of this restaurant is doing well, and making money, thanks to the patronage of folks who want an increased minimum wage.
However that being said this is not what is the norm for the region at the moment...

www.seattlemag.com...

Now I dunno about you guys but I would trust the local news a bit more than the national news in the form of the Associated press.

originally posted by: tinymind
a reply to: sirlancelot

You bring up a point which I had not thought about.
For those who currently quallify for assistance will then be paying taxes, which will go toward higher government revenues and, likely, lower defficite spending; which will lead to smaller government.
As far as the overall economy, it will increase the demand for a lot of goods and services which will call for more people to be employed so these goods and services can be provided to these new consumers. It is almost like "trickle down economics" in reverse.

Firstly Im all for a modest wage increase that has cost of living built into increases! Your economics thinking is faulty! Assuming everything we ALL buy rises by 20%, who will be most affected? The little guy. The people this idea would help the most would be hurt the most by it.

"Smaller govt" are you kidding me with the peeps in the govt now more income will not cause smaller govt it will continue what we have already seen, bigger govt, more taxes, more regs (taxes).

Very assumptive and naive thinking my friend!

originally posted by: Punisher75
Don't get me wrong I am glad the owner of this restaurant is doing well, and making money, thanks to the patronage of folks who want an increased minimum wage.
However that being said this is not what is the norm for the region at the moment...

www.seattlemag.com...

Now I dunno about you guys but I would trust the local news a bit more than the national news in the form of the Associated press.

Article clearly explains why the math doesn't work...

"Since the legislation was announced last summer, The Seattle Times and Eater have reported extensively on restaurant owners’ many concerns about how to compensate for the extra funds that will now be required for labor: They may need to raise menu prices, source poorer ingredients, reduce operating hours, reduce their labor and/or more.

Washington Restaurant Association's Anton puts it this way: “It’s not a political problem; it’s a math problem.”

He estimates that a common budget breakdown among sustaining Seattle restaurants so far has been the following: 36 percent of funds are devoted to labor, 30 percent to food costs and 30 percent go to everything else (all other operational costs). The remaining 4 percent has been the profit margin, and as a result, in a $700,000 restaurant, he estimates that the average restauranteur in Seattle has been making $28,000 a year.

With the minimum wage spike, however, he says that if restaurant owners made no changes, the labor cost in quick service restaurants would rise to 42 percent and in full service restaurants to 47 percent."

America needs a new industry that can put people back to work.

I propose colonization of space. Let's create a ton of highly skilled manufacturing jobs building the tools we'll need to live in space.

They'll be a lot of work on the space stations and Moon/Martian colonies to get them up and running too!

Humanity can do anything it want if we put our mind to it.

a reply to: Edumakated

I am in total agreement with you.
I imagine that the owner of the restaurant in the OP, is very likely buying his time, likely running towards the red, seeing how much of the competition will go away before he knows what he can set his prices at thanks to less competition.

I hope for his sake he has enough cash saved away to ride out the storm and keep his business afloat, until there is less competition.

originally posted by: Mawiss

originally posted by: Kali74
a reply to: Mawiss

Why don't you want your waitress to make more money?

They can make all the money their little hearts desire. It will not be coming from my wallet. In fact give the chef a bell and I'll go get my own food. Waitresses and real estate agents are two biggest scam jobs going.

I would guess that you cannot afford to go out to eat?

The president of Ivar's is Bob Donegan.

The same Bob Donegan that sat on the mayoral council that drafted the min wage increase.

I wouldn't take this 'example' as an indicative piece anymore than an oil companies "climate reports", government "budgets", etc.

Also, he has no plans to extend this to the Ivar's stands. Interesting that.

a reply to: MystikMushroom

Before we colonize space, we have to be able to manufacture spacecraft in orbit.

That said, we need space stations and space docks that are manufacturing capable. That would be an incredible job source that would never dry up.

originally posted by: Edumakated

originally posted by: Punisher75
Don't get me wrong I am glad the owner of this restaurant is doing well, and making money, thanks to the patronage of folks who want an increased minimum wage.
However that being said this is not what is the norm for the region at the moment...

www.seattlemag.com...

Now I dunno about you guys but I would trust the local news a bit more than the national news in the form of the Associated press.

Article clearly explains why the math doesn't work...

"Since the legislation was announced last summer, The Seattle Times and Eater have reported extensively on restaurant owners’ many concerns about how to compensate for the extra funds that will now be required for labor: They may need to raise menu prices, source poorer ingredients, reduce operating hours, reduce their labor and/or more.

Washington Restaurant Association's Anton puts it this way: “It’s not a political problem; it’s a math problem.”

He estimates that a common budget breakdown among sustaining Seattle restaurants so far has been the following: 36 percent of funds are devoted to labor, 30 percent to food costs and 30 percent go to everything else (all other operational costs). The remaining 4 percent has been the profit margin, and as a result, in a $700,000 restaurant, he estimates that the average restauranteur in Seattle has been making $28,000 a year.

With the minimum wage spike, however, he says that if restaurant owners made no changes, the labor cost in quick service restaurants would rise to 42 percent and in full service restaurants to 47 percent."

Curious how none of the supposed solutions come from reduction in pay of the business owner or CEO.

It's also curious how the raising of prices to cover the costs of minimum wage, and patrons supporting this restaurant regardless of the 20% increase, isn't taken into consideration.

originally posted by: Edumakated
a reply to: EternalSolace

It is isolated but it does illustrate how inflation would kick in with higher prices. So imagine all business in the area raising their prices by 20% or more. So while these employees are earning a higher wage, their cost living also increases so they wind up back where they were before.

A 20% price increase only puts you in the same or worse position if the wage increase is 20% or less. If wages go up 25% (and they went up more) but prices only go up 20% you end up ahead.

a reply to: Edumakated

q13fox.com...

What do you bet Poppa Johns / Dominos / Little Ceasers and Pizza Hut will be able to stay open?

I sometimes wonder if people realize what these things do to businesses that are not multi-million/billion dollar a year?

All this does is destroy small business, forcing people to work for and buy from mega corporations, who can afford to pay the wage.

What will the Mega Corporation do next?

Decide how much it wants to charge with less competition to fight against.

The only reason company's like "little ceasers" can exist against Poppa Johns is through volume sales. To get a Poppa Johns Pizza in my area is about 15 dollars for a pepperoni pie.
I can get 2 from little ceasers pies for about 10 bucks.

They both pay minimum wage. However one has higher prices to cover their overhead and the other uses lower quality ingredients to cover that loss.
(Sorry for all the food examples but it seemed appropriate)

So basically when minimum wage goes up the value of each dollar goes down.

Who does this screw?
People who make more then minimum wage but are not rich enough not to get hammered by the loss of the dollars value...i.e. the middle class.
It ends up not meaning anything in the end, for those who get the increase as it does not take long for prices to rise to compensate, however since the minimum wage is what gets increased and not anything above the new minimum wage, everyone else is screwed.

For example, and lets use round numbers here for the thought experiment.
Say Person A makes 8.00 an hour and person B makes 10 an hour.

Lets raise the minimum wage up to say 9.50

Person A still makes minimum wage but it don't matter cause their life will not improve one iota once prices raise to compensate.

Person B is screwed, big time, because he did not get a raise, what he got was a lower value on his dollar amount, where he once was making a 3 dollars more than the minimum wage, and able to buy more goods and services, now he cant because he is only making .50 more than minimum wage himself.
Assuming that whatever company he works at has employees at minimum wage, he can forget about any pay raises for quite sometime, as the company just had to give a whole bunch of people a raise, that wont even help them in a years time.

What effect does this have on the CEO?
None
Why?
Because he is stupid rich anyway and wont even notice the difference in costs.

In short the rich stay rich and the poor stay poor, with the only change being more people end up poor.

a reply to: Aazadan

If it works great. If not I feel for those negatively impacted. Even if it's a small negative impact of possibly a price increase putting this place out of being affordable to someone. Guess time will tell. Maybe it all works.

a reply to: Reallyfolks

The people negatively effected are the people in the middle. That's what minimum wage increases are, a wage decrease for those around the new minimum. Someone making $15 in Seattle before the change sees a 20% decrease in purchasing power.

You can't both shrink income inequality and not negatively impact anyone. Any wage changes, up or down hurt someone.

originally posted by: Reallyfolks
If it works great. If not I feel for those negatively impacted. Even if it's a small negative impact of possibly a price increase putting this place out of being affordable to someone. Guess time will tell. Maybe it all works.

Time has already told. This isn't the first time min wage has gone up. Same thing happens every time...costs rise to accommodate new wages, those that do not benefit from the min wage increase suffer, middle class contracts.

Granted...if we contract the middle class enough (effectively make them all in the 'min wage camp') than the next class up will bear the brunt.

Still a ways away from the mythical 1%.

There is a far simpler solution, but you know politicians! Why do it the better way when you can rehash the same old way, and buy votes while you are at it.

You want a real solution, start decreasing the cost of living directly...not increasing wages to cover the ever increasing costs of living.

a reply to: EternalSolace

I do know waitresses and waiters who make a good living with just tips alone if they're working at higher priced popular restaurants.

We've had a few decades of trickle down in the U.S. and we see how well that didn't work. What's the harm in turning the boat and seeing if trickle up might. I know that when my 401K took a dive in 2008, three people I employed part time lost about 20 percent of their income. And now that I'm doing okay again, I'm contributing to someone else's income again too and bought a new car and just generally stimulate the local economy...in small ways, yes, but every little bit helps.

originally posted by: Kali74
a reply to: Mawiss

Why don't you want your waitress to make more money?

Quite simple really, how much do you want your average college graduate with a BS degree make?

www.payscale.com...=Bachelor's_Degree/Salary

Look at that chart, and tell me you are not crazy for asking that question.

We have Engineers, Operation Managers making $50k to $100k a year. You want a table buster to make $80,000/annually?

Why in the ass would anyone, ever take a 8 year college/university course to become an Engineer in the future? What is the freaking point? Why not just all go work for your local fast food chain and make a comfortable $80k a year?

Unless they raise EVERYONE's pay rates, put the tiers back in, this is simply absurd.

Let me repeat this back to you, so I can make sure we are all on the same page here. What you want to see, is for a person with a High School Diploma or an GED, to make the same amount of money or even more, than an Engineer or C Level executive that busted their ass in school?

Am I taking drugs or something, or is this society going straight to the #ters?

originally posted by: truthseeker84
Am I taking drugs or something, or is this society going straight to the #ters?

I find it quite remarkable that society finds it acceptable for people to barely make ends meet just because they aren't a doctor or engineer.

a reply to: truthseeker84

On no you forgot the most important part... the Engineer who will also have to pay back all those student loan debts on top of having to try to life with valueless currency.

a reply to: EternalSolace

Its not an issue of finding it acceptable for someone to make ends meet. its understanding that the raising of the minimum wage does nothing but make MORE people, barely make ends meet, as people who make slightly more than what the new minimum wage will be have now just lost any financial ground they have been able to achieve.