Monday, January 18, 2016

Major Fallout from DC’s Minimum Wage Law

Mark Perry writes:

I wrote on CD last week that some early evidence suggests that DC’s minimum wage law is having a pretty devastating effect on the city’s restaurant employment and presented some of that evidence in the top graph above. Looking at the city’s monthly restaurant employment over the last decade and comparing DC food jobs to the surrounding suburbs in Virginia and Maryland, I concluded that: a) the city’s restaurants survived the Great Recession pretty well without any major job losses, especially compared to the loss of nearly 6,000 food jobs in the surrounding suburban areas, and b) the city’s restaurants are now facing a much bigger struggle following the city’s passage of a minimum wage law in January 2014 that will raise the District’s minimum wage to $11.50 an hour in less than six months. At the same time, the DC suburban restaurants are booming with strong hiring last year of nearly 5,000 new food jobs that brought the area’s restaurant employment to an all-time high in November (see top chart).

The bottom chart is new and brings another perspective to the struggle DC restaurants are now facing. In the five-year period between January 2010 and December 2014, DC restaurants were hiring an average of 187 new food workers every month. Last year though, restaurant hiring stalled out, likely due to rising labor costs, and the city’s food jobs fell by an average 21 every month in 2015 (through November). ..

And the fallout from DC’s “economic death wish” — a city minimum wage that might soon be $15 an hour — isn’t only restricted to the District’s restaurants. It is now being reported that Wal-Mart will abandon its plan to open two new supercenter stores on the city’s east side, citing the District’s rising minimum wage, currently at $10.50 an hour, rising to $11.50 in July, and then possibly going up to $15 if the proposed ballot measure is successful this November.

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