More than six months after the minimum wage of $15 an hour went into effect in New York City, several employers find that the requirement is leading to unsustainable costs, resulting in numerous staff cuts.
According to Fox News, from that new perspective, even many entrepreneurs have had to choose to close their businesses. However, records from the New York State Department of Labor indicated that until June the unemployment rate remained relatively stable at 3.8%, compared to last year’s figure of 4.1%.
In contrast to the previous partial stability, New York City’s minimum wage has increased three times for employers with at least 11 employees in the past three years, according to Fox.
At the end of 2016, the hourly rate rose to $11 from $9 an hour. In 2018, the minimum wage jumped to $13 from $11 an hour and by 2019 the rate was set at $15 per hour. For employers with 10 or fewer workers, it will increase to $15 an hour at the end of 2019.
Susannah Koteen, owner of the Lido Restaurant in New York’s Harlem neighborhood, is concerned about the potential impact of the wage increase on her business, which employs about 40 people.
As she told Fox News, she has not had to lay off any workers so far, but the increase has forced her to reduce shifts and be more stringent about overtime. As a cost-savings measure, she has had to change the menu offerings seasonally and she also raises prices more often since the wage boost.
“What it really forces you to do is make sure that nobody works more than 40 hours… You can only cut back so many people before the service starts to suffer,” Koteen told Fox News.
Previously Koteen had planned to move her food business to a larger establishment, which necessarily implied an increase in staff. However she is unwilling to contemplate losses and take risks after assessing the unpredictable conditions of her business under the current wage requirement.
The wage rate currently required by the federal government is $7.25 per hour. But other states like Massachusetts, California, Maryland, Illinois, Connecticut and New Jersey have enacted $15-an-hour wage legislation.
The legislative measure was voted on in June by legislators in the House of Representatives, which has a majority of the Democratic opposition. While the rule would apparently benefit workers, it could result in the loss of millions of jobs.
According to the Congressional Budget Office (CBO), contrary to Democrats’ forecasts, the $15-an-hour legislation will result in significant job losses.
According to the study conducted by the CBO, there is “considerable uncertainty” about the impact of this new measure. The report indicates that 1.3 million Americans could be out of work in just one week.
According to Fox News, 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 new legislation.
Grech also said that as an effect many companies “are cutting their staff. They’re cutting their hours. They’re shutting down,” he said, pointing out that “it’s not just the rent.”
Also, the president of the Bronx Chamber of Commerce, Lisa Sorin, interviewed by the same media, said that Manhattan companies can pay more to compensate for the wage increase, but points out that the other surrounding districts could not do the same. Sorin said, “It’s almost like a whirlwind of keep up or get out.”