Cities including New York, Los Angeles, and San Francisco have adopted ambitious minimum wage increases. In New York, the new minimum wage of $15 an hour raised concerns of layoffs and cut hours, but for restaurant employees, the effects were quite the opposite.
New York has shown that the cost of minimum wage increases is absorbed into food prices and profit margins. Worried about paying more for food? Don’t be. One study found that a $0.80 minimum wage increase equated to only a 3.2% increase in food prices. In fact, New York has found the minimum wage increase has not impacted the number of New Yorkers dining out, and the increase in disposable income for minimum wage workers has actually boosted the economy.
Furthermore, higher minimum wages have saved restaurants money by decreasing turnover rates and improving worker performance. Many other retail chains such as Costco and Trader Joe’s adopt wages higher than the minimum wage for these very efficiency reasons.
Minimum wage increases and their effects are hotly debated, but case studies, such as New York, show that higher wages not only improve living standards for employees but also boost the economy and increase industry efficiency.