Louis DeBroux on the plight of some marginal businesses in California who are seeing lower support from their customers as they raise prices to ensure they can keep paying their current employees at the new mandated minimum wage:
Earlier this year, labor unions in Los Angeles whipped up low-wage workers into a frenzy with demands for a minimum “living” wage of $15 per hour. They achieved their goal and the $15/hour wage bill was signed into law. This was supposed to be a huge victory for the workers (though, it should be noted, within days of the law going into effect, the same labor unions that lobbied for the $15/hour minimum wage were lobbying government for an exemption for union companies, so that union companies could pay well below the new minimum wage).
Even so, some California business owners decided to show solidarity with the cause of low-wage workers, significantly increasing their starting wage of their own volition.
Vic Gumper, owner of Lanesplitter Pizza (with stores in Albany, Berkeley, Oakland, and Emeryville, California), voluntarily raised wages for his employees to between $15 to $25 per hour. In order to cover the cost of the higher “living” wage, Gumper began advertising $30 “living wage pizzas” to his customers, which include patrons from the Pixar Animation Studios and biotech companies located near his shops. In doing so he declared these pizzas “sustainably served, really … no tips necessary”.
The result? Sales have dropped by 25% as liberals in these communities have balked at having to pony up more money for the pizzas. The hit has been so significant that Gumper has had to close during lunch hour at several locations (think about that…a restaurant that has to close during LUNCH because it can’t afford to stay open!).
Gumper says that “The necessity of paying a living wage in the Bay Area [which has one of the highest costs of living in the nation] is clear, so it’s hard to argue against it, and it’s something I’m really proud to be able to try doing…At the same time, I’m terrified of going out of business after 18 years.”
There really isn’t a free lunch … if you use the power of government to raise the costs of doing business, either the local businesses pass on that increased cost by way of the prices they charge to their customers or they economize by reducing their labour costs (and the number of employees they support). A more drastic solution is going out of business or moving out of the jurisdiction: neither of which is typically considered during the legislative process.
