Wednesday, March 25, 2015

MORE MADNESS As a Result of Higher Minimum Wage Laws: Lower Take Home Pay for Some

When you start regulating the economy, you never know what kind of twists and turns will occur.

The situation Bay Area lefty interventionists have created, beyond problems in the childcare sector and in Oakland's Chinatown, with their minimum wage hikes, is resulting in some surprising negative effects. Michael Saltsman at WSJ reports;
The current federal minimum wage is $7.25, half of what San Francisco’s wage floor will be set at by 2018 after a series of increases that begin in May. Nationally, Congress phased in the last 40% increase to $7.25 over a three-year period; in Oakland, an almost-identical 36% increase happened overnight on March 1...

In Oakland, local restaurants are raising prices by as much as 20%, with the San Francisco Chronicle reporting that “some of the city’s top restaurateurs fear they will lose customers to higher prices.” Thanks to a quirk in California law that prohibits full-service restaurants from counting tips as income, other operators—who were forced to give their best-paid employees a raise—are rethinking their business model by eliminating tips as they raise prices.

Ironically, this change in compensation practices has reduced the take-home pay for some of the employees it was supposed to help: At the Oakland restaurant Homestead, the East Bay Express reported that servers are taking “a substantial pay cut,” earning a flat wage of $18 to $24 an hour and no tips instead of the $35 to $55 an hour they were accustomed to earning when tips were included.

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