The Minimum Wage Hike Hangover Arrives: Dining Out To Cost 10% More Starting January 1

Tyler Durden's picture

One year ago, when the brainwashed economist Ph.D intelligentsia was stampeding over each other to come up with the most hyperbolic terms to dub the recovery that would be unleashed on the economy as a result of plunging oil, and gas, prices - with "unambiguously good" being our personal favorite - we would write post after post explaining just how wrong this is, and how in a hyperfinancialized economy, a 2-year record collapse in oil prices is about as "unambiguously bad" as it gets, and not just only for the hundreds of thousands of highly paid energy sector workers who had been the only source of in the early years after the financial crisis.

Back then US GDP had risen 2.9% over the prior year; it has since tumbled to 2.1% and is sliding, while the rest of the world, especially the oil-producing nations, is gripped in a severe recession which has already spread to the US manufacturing sector and will soon drag down US services into a recession as well, aborting the Fed's rate hike cycle.

And then there was the idiocy with raising minimum wages which was supposed boost overall compensation: in another instance showcasing the real intellectual capacity of career and academic economists and those clueless enough to listen to them, we warned repeatedly that even the smallest of mandatory wage hikes would ripple through the economy and unleash extensive price increases across the board, not to mention countless job cuts as small and medium business, already struggling with keeping profits from plunging, had to find ways to eliminate overhead or raise prices.

As a result of this latest forced governmental intervention into the economy, everyone would be far worse off.

But while we had seen isolated cases of mostly food sector companies push prices higher, so far there has not been a coordinated industry-wide effort that will see a sizable impact on food inflation. This will change for New Yorkers starting on January 1, when the cost of a night out in the Big Apple is about to get even pricier.

As the Post reports, NYC diners can expect their restaurant and bar tabs to rise as much as 10 percent, plus tips, as restaurants seek to protect their profit margins from mandatory wage hikes; some eateries will eliminating tipping entirely - that primary source of incremental wages for thousands of food industry workers - and are hiking base prices by as much as 30%, with the money going toward higher payroll.

As a result even less money will end up going in any one individual worker's pocket; worse those who are ambitious and seek to stand out from the crowd will see their efforts diluted as their outsized contribution is repaid at the same rate as everyone else: easily the worst aspect of socialism.

The reason for the across the board increases: "squeezed restaurateurs face a mandatory increase in wages that is changing the economics of the restaurant business and may result in a seismic shift in how workers are paid and the number of hours they work. New York’s minimum wage will rise to $9 an hour from $8.75, while the wage restaurants pay servers — not counting the tips customers pay — is going up by 50 percent, to $7.50 an hour."

This will have a profound impact on the bottom line, if not on the likes of massive corporations like McDonalds, then certainly on your favorite around the block restaurant.

“Higher wages will cost us $600 a week,” said Jon Goldstein, a partner in Bistro 61, an Upper East Side eatery, which is experimenting with scheduling tweaks before it considers menu increases.

 

 

“We’ll stagger our servers’ shifts so they don’t all come in at the same time or for a full shift, and we’ll make sure we don’t pay overtime,” Goldstein said.

Which means less money for everyone.

Some of the most famous names will be impacted too: P.J. Clarke’s, which operates three eateries in the city, estimates that the wage hikes will cost it $200,000 per restaurant and that its prices will go up nearly 4 percent next year. At one of its locations, the pub will eliminate table-busing positions.

“We’ll make smaller sections for the servers so that, instead of 16 seats, they’ll have 12 seats,” said co-owner Philip Scotti “We’ll try it at one restaurant and see how it works.”

 

At American Whiskey, a cavernous bar and restaurant at West 30th Street, diners can expect to see their tabs increase between 5 percent and 10 percent, said owner Casey Pratt.

 


 

It's not just the food: draft and bottled beers will go up by $1 and $2, to $8 and $9, while some main dishes will tick up by $2.

 

“I don’t think it’ll be enough to keep people away,” said Pratt.

Pratt will find out soon enough just what the price elasticity of New Yorkers for alcohol truly is.

For some hiking prices is not an option so they have to do the only other thing they can: cut costs: smaller and lesser known restaurants don’t feel they have the power to raise their prices enough to eliminate tipping altogether like celebrity restaurateurs Danny Meyer and Tom Colicchio, who are rolling out such changes in their restaurant empires.

“Everyone sells pizza,” said Jason Brunetti, who owns Pizzetteria Brunetti in the West Village. “What’s going to justify me selling pizza for $3 more when you can get a margherita pie at a thousand different places?”

 

 

Instead, Brunetti is trying to eliminate overtime pay by hiring a part-time employee to make up the difference.

 

By ending tipping, restaurants can sidestep the tipped minimum-wage pay hike. That makes the move even desirable for restaurants that would rather pocket the higher revenue while retaining the flexibility to raise prices as well as wages for workers.

And then comes the spin: restaurateur Gabriel Stulman, who owns six restaurants in the West Village, announced last week he’s eliminating tipping on Jan. 4 at Fedora and will consider doing so at his other eateries. “While the prices for individual menu items may seem high at first, the overall cost of the meal will be only slightly greater under the new system,” according to the restaurateur’s site.

Sure, just call it the hedonically-adjusted ObamaWage tax: "it may seem high at first, but once the zombification settles in, it will all fall into place."

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Normalcy Bias's picture

There goes all of those wonderful newly created Waiter/Bartender jobs.

NihilistZero's picture

Nothing happens in a vacuum.  Fucking currency debasement has raised your dining bill far more since 2008 than some meager increase attributed to a wage that makes people's life suck just a little less.

But you know, they're the Free Shit Army, so fuck 'em right?

(While Wall Street RIT charges them bloated rents while they squeeze 8 to a house)

I MISS KUDLOW's picture

i cant even afford to eat in,,,,ten dollars for a small bag of walnuts

TheDanimal's picture

Just eat ObamaNuts instead like everyone else. 

DownWithYogaPants's picture

Ever eat a pine tree?  I have!  ObamaNuts reminds me of wild hickory nutz.

SuperRay's picture

I'm so fucking tired of waiting for the collapse. I vote to double the minimum fucking wage and bring on the shitstorm.

vollderlerby's picture

Good call.  Let's get it over with already.

Theosebes Goodfellow's picture

Seeing as no one has said it yet, allow me to bust some chops.

Fuck you, New York City.

Fuck you, Mayor de Blasio.

Fuck you, Gov. Cuomo, (the lesser).

And in case I'm "blocking" and not being clear enough,

Fuck you, New York and your poorer relations, New Jersey.

There is not enough love nor money that would draw me within 100 miles of your borders.

Eat shit. And die.

[Did that come out okay? You sure I wasn't holding back too much?]

OldPhart's picture

Had a couple visits back that way.  The latest, 2012, was three days in NYC.

I don't think I'll miss it after it's nuked.

The area of New Jersey I was in was actually pretty. But I've seen better.

 

Scooby Doo's picture

Does posting that come with a fine? DeBlasio might get able to raise some cash if he can fine every NY put down. Call a person in NYC by the wrong gender pronoun, get a fine for $250K. Why not fine everything that makes a crybaby run to a safe room?

Antifaschistische's picture

You know what I don't understand.....why would anyone making less that $150k p/yr even want to live in NY City?  If you want to live their "JUST because" then you deserve what you get.  What I would love to see is mass migration out of NY by people who can't earn more than $20 per/hour, to cities where they can actually afford to live.

OldPhart's picture

Showing some age there, Down.  Many parts ARE edible.

One of these is not like the others..'s picture

You go to that link and after a teaser there is a down load link.

I expected to find a price, I got a loud video ad. My interest vanished in microseconds.

Why the fuck is NOTHING ever straightforwards anymore??

Normalcy Bias's picture

Perhaps you read me incorrectly. I've waited many a table and tended the fuck out of some bars. My sympathy goes to the people who're just trying to make ends meet.

DownWithYogaPants's picture

The job was never meant to be a career.  What part of high school part time do you not understand?

Normalcy Bias's picture

Cockbreath, I never said it was meant to be a career. Got troll along elsewhere.

Bunghole's picture

Now that's Fight Club.

Save "bitch tits" for when you really get mad.

Normalcy Bias's picture

Thank you, Sir. Just doing my part to put some fight back up in this piece...

willwork4food's picture

You boys are pussy cats. Why, in my day we had to walk 2 miles to the nearest internet cafe, study ISP protocol codes and algorithims. If someone pissed us off we would have find their email server, dump a bunch of porn pics in, steal their bitcoins and call their mama a whore.

WSMassiv's picture

Dont forget a dick pic on the screen saver and change the password.  (oooohhh yea.)

wee-weed up's picture

Facefuck Suckerberg, is that you?

Antifaschistische's picture

But....if you're at the "just trying to make ends meet" point....then NY is NOT where you should live.

sun tzu's picture

I don't think bars and high end restaurants hire highschool kids

MsCreant's picture

When did he say it was his career? And even if it was, why the disrespect for honest work? 

I have waited tables, tended bar, worked construction, sold and repaired appliances, and more. While I don't do these things now, I know I could lose my job any time and need to do those things again. Is someone supposed to be ashamed if that were to happen? I have never earned this much money as I do now. I do not for a second "assume" I always will. My life has been a series of ups and downs. When I am down, I smile and think of it as a puzzle, a temporary situation. Up can be too. 

God forbid you need to be down for a while. Sucks to be you. Hope you can find compassion for yourself if you are ever in the shit. You may be in it emotionally and spiritually right now to post such a thing as you have posted.

Normalcy Bias's picture

Not only does his reading comprehension suck, he's surely a horrible tipper. He's one of those assholes who have no respect for waitstaff, and who think the job is easy - because they've NEVER done it themselves.

mccvilb's picture

Bartenders - guidance counselor, payday loan officer, cognitive psychologist, priest, comedian, special needs teacher, MMA fighter, emergency medical technician, advisor to the lovelorn, organic chemist, aenesthesiologist, best friend. An occupation for which so much is expected and so few qualify.

OldPhart's picture

Yes, I have sympathy for the bar maids that are busting their ass to make shit as wages.  I tip heavily.

To old (and still too butt ugly), these days, to entice any back home, but I still tip heavily.

Jeffersonian Liberal's picture

Zero,

So you don't believe in the market setting prices and wages? You believe in the iron fist of government dictating how much low-skilled workers get paid and how much people have to pay?

You may think your intentions are good, but they stink.

By making their lives stink a little less, you are actually encouraging them to remain in those fairly dead-end, low-paying jobs.

By forcing people to pay these workers more than they think they deserve, you encourage people to stop buying their goods and services. When that customer base drops off, what do you think happens?

I'll tell you what happens. They go out of business and these minimum-waged employees get laid off.

Then their lives really suck...a whole lot more.

And your "good intentions" may also be blinding you to the historical fact that every time the iron-fisted government forces an increase in the minimum wage, usually 18 months later (more or less, but always inevitably) there is a spike in unemployment.

Why is that?

Because many businesses can only afford to pay the minimum wage as it was. They have multiple employees and they can pay them all the lower wage. Most would like to pay more to keep their better workers from leaving, but they can't (because they aren't rolling in dough as the iron-fisted government would have us believe).

The minimum wage gets jacked up and these businesses can't pay all their employers the increased wage, so they let a bunch of them go...just so they can stay in the game.

Also, over 70% of minimum-wage jobs are secondary jobs, meaning they are not the primary source of income, but just a little extra.

As for me, I'd rather the government choke on a chicken bone and let the markets decide not only wages but the value of money (interest rates, etc.).

NihilistZero's picture

Another resident of Libertopia chimes in...

This economic system is N E V E R going to stop manipulating money and asset values. Therefore your above essay is moot. And please leave the unemployment arguments aside. Full employment is a TERRIBLE goal. If a company can let go of a 2 workers and keep one and still get by they are keeping the most PRODUCTIVE worker and SHOULD be paying him a higher wage. Those let go can perhaps stay home and raise a smarter generation whose parents aren't working 4 jobs.

Your arguments have no basis in how our economy works as is. In fact if the FED REALLY wanted wage inflation we could increase the EIC so that ALL workers got a raise, it would surely have been a better way to spend the QE billions then on the banks. And do not counter with it shouldn't have been spent at all because we both know that in the wake of the crisis the fiat sight was getting opened one way or another.

stacking12321's picture

who the hell are you to say that they "should" be paying a higher wage?

you go start your own business, then you can pay whatever you want.

it's not your place to tell others how much they "should" value any particular good or service, let them decide for themselves.

it's their business, it's none of your business!

NihilistZero's picture

It's also no business of the FED tto devalue peoples savings but they do it anyway dumbfuck.

The world is an imperfect place.  Send me as postcard from Libertopia when you find it.  Until then shut the fuck up and live in the real world.  There are no markets anymore in this centrally planned nightmare.  To say that raising the minimum wage is even close to the root of our problems is total solipsism.

Jeffersonian Liberal's picture

Zero Lover,

No, I won't leave the unemployment issue aside. It is critical to the discussion. Your original point was that central management to raise the minimum wage was a good thing because it made the lives of the lower strata of workers "suck a little less." Well, having no job at all sucks the most to those who don't want to be a slave to welfare. Your counter-argument for "culling the herd" is absurd and ignores the fact that most businesses that are just getting by can't afford to keep any dead weight around regardless what they're being pad. In short, the "god workers" get laid off, too, but they wouldn't if business was not under the iron fist of your allegedly benevolent dictatorial government.

You obviously believe in Keynesian economics, which is failing miserably, and socialism, which is also failing miserably.

It's sad that you have so much passion and so little focus.

The fiat currency you lay all the blame on comes from a central-banking system, which is a fascist banking system (in its economic sense -- a favored corporation chosen by the iron fist of the State to represent and control that industry).

That is, the currency is dying because of a socialist/fascist approach (central management) to our monetary policy.

This is what you seem incapable of seeing:

A free currency cannot be separated from a free market.

For either to work, both must be employed. This means that both must be free to succeed or to fail. You tried to ridicule me by calling me some sort of Libertarian (which I am not). But I do agree with the Libertarians when it comes to getting the State out of our lives.

And that includes not allowing a central state to dictate the value of money or the value of labor.

A Nanny Moose's picture

Except that raising min wage does not actually make people's lives suck less. It renders unemployable those to add less value than the wage.

It makes life suck even more.

SimplePrinciple's picture

Absolutely right.  I saw a cartoon that summed it up well, with a bunch of people partying and living it up standing atop a high platform.  The cartoon was labeled "The Jobs Club" and the height of the very high step up to it was measured as the Minimum Wage.

So that poor sucker without experience cannot make it into the jobs club.  Plenty of people capable of doing better but with no incentive to give up their cushy living wage displace those who really need that entry-level job.  Typical of our phoney baloney economy, prices and wages no longer allocate labor and other resources to their highest valued uses.  How can this make for prosperity?  The answer is that it cannot.

ebworthen's picture

Nah, the elites and upper classes can afford it.

Raise prices 40%, I cook for myself.

swamp's picture

The average private industry wage has DECREASED over the past 20 years while the loser minimum wagers GAIN excessively.

junction's picture

It is insane to blame the ills on society to chump change increases in the minimum wage when the real problem, as we know, is that the United States, like everywhere, is run by looters - banksters, lying politicians, thieving fascist corporations and druglords with names like Bush.  In NYC 50 years ago, there was a state program called Mitchell-Lama to build big middle class apartment house projects.  Now the middle class is priced out of many real estate markets, with tax breaks and demolition permits given by crooked politicians to connected developers.  In Manhattan, for over 30 years, Smith & Wolensky restaurants stole tips from waiters and cheated staff out of overtime with not a word from the Labor Department, for much of that time under the Governors Carey and Mario Cuomo administrations.  As bad as things are now, wait until we get the criminal border crossers from overseas flooding into the big cities - rapists, thugs, drug dealers and the like.  Then a two bit raise in the minimum wage will pale into insignificance.       

vollderlerby's picture

Bunch of good points.  Shows why so many Trump supporters aren't just pissed off, they're out for blood.  Reading this, I'm with them.

Lockesmith's picture

It's corruption from the bedrock below the foundations right up to the top.

The only reason cities/shitholes like NYC exist is that people are forced to pay for the supporting infrastructure, such as roads, subway, sewerage, electricity etc etc at gunpoint.

I'd say let people bold what they want to build and the middle class will find a solution with more or higher housing, but if you were to do that, these cities/problems wouldn't exist in the first place.

surf0766's picture

Hangovers is a civil right.

Handful of Dust's picture

Hangover victims need a Safe Space too; it's their right!

OldPhart's picture

Carrying home hot barmaids should be a civil right.

MayIMommaDogFace2theBananaPatch's picture

Just be sure to wear your oven mitts.  Or I guess you could use one of those pizza transports to make sure the barmaids are still hot when you get home.

Bangin7GramRocks's picture

Not shedding any tears because some lazy fucks need to pay 10% more for their low grade steak and Bloomin' Onion! Cook healthy food at home you dumb bastard. Crazy thought! If you weren't so damn unhealthy from eating shit and not exercising, you wouldn't need to bitch about the price of healthcare. Merry New Year to you all!

slyder wood's picture

Haven't eaten at Steakback Outhouse in a while.

Normalcy Bias's picture

Straight from the 'Outback' of Tampa, FL. On second thought...

bamawatson's picture

reprise; chipolte new year's Blowout