Restaurants won't absorb the costs. They will raise prices and customers will absorb the costs. Econ 101.
ATLANTA --- A double-digit minimum wage increase is welcome for many Georgia workers, but it could take a healthy bite out of profits in restaurants statewide.
The state has 75,000 workers making at or below the minimum wage, according to the U.S. Department of Labor. Workers can be paid less than the minimum if they make up the difference in tips.
The federal minimum wage increases 10.7 percent to $7.25 on Friday, boosting the monthly earnings for a full-time worker $112 to $1,160. It's the last of three increases over the past three years.
Ron Wolf, CEO of the Georgia Restaurant Association, said restaurant owners would rather let market conditions set the wage. The increases have come over three years, allowing most restaurants to prepare. But the recession means many restaurants are already seeing fewer customers while food and gas prices rise, Mr. Wolf said.
He said the wage increase by itself won't likely force a restaurant to close. "But added to all the other factors we're facing in this economy, that's the unknown," he said.
Nationally, food preparation and service jobs account for 53 percent of minimum wage workers.
Lazondra Broughton, a single mother of four, makes $7 an hour at a Chester's Chicken/Blimpie sub shop combo in downtown Atlanta. The extra money will help some, but Ms. Broughton still needs welfare to survive and is looking for a second job.
"It's OK, but it could be better," she said of the minimum wage increase. "It could be more."
Atlanta-based Chick-fil-A, which has more than 1,400 restaurants, won't have to cut jobs because of the increase, spokesman Don Perry said. He said the minimum wage is often for new hires, and many experienced workers make more.
"We're not looking at this as something that's going to be unmanageable," Mr. Perry said.
He said Chick-fil-A could have to make a small increase on food with the wage increase coupled with higher costs, but it would amount to "cents on a sandwich."
"I think the customers understand you have to recover some of the costs to stay viable," he said.
Atlanta-based Wendy's/Arby's Group, the third-largest U.S. fast-food company, said its stores have been preparing for the change since the initial increases.
Wendy's/Arby's declined to provide details about the impact on pricing or jobs.
"Added pressure on labor costs in our restaurants always requires us to consider every option, and we will analyze the effects of this latest minimum wage increase over time," company spokesman Bob Bertini said.
Comments
Restaurants won't absorb the costs. They will raise prices and customers will absorb the costs. Econ 101.
Best and most telling part of the entire article, "Lazondra Broughton, a single mother of four, makes $7 an hour at a Chester's Chicken/Blimpie sub shop combo in downtown Atlanta. The extra money will help some, but Ms. Broughton still needs welfare to survive and is looking for a second job."It's OK, but it could be better," she said of the minimum wage increase. "It could be more." FUNNY, SHE HAS A FULLTIME JOB MAKING $7 AN HOUR AND IS STILL ON WELFARE? OH, THAT IS RIGHT, I GUESS IT'S THE FOUR CHILDREN SHE HAS THAT MAKES IT WHERE THE TAX PAYER OWES HER THE MONEY.
Also, in a country where the Economy is now in double digit unemployement RAISING taxes and things like the min wage makes no sense. The only people that will be hurt is the employee. And no, it will not hurt a HUGE corporation that has 10,000 stores because they sell volume and can do a small increase across the board but the smaller restaurants, non-chain individual ones, will be hit hard. If I have five fulltime employees I will have to make a choice. Most likely they will be forced to reduce fulltime and increase part time workers. That causes an overall loss and works against the intentions of the whole excercise. The big winners are collective bargaining agreements based of off the min wage. Lots of unions base thier contract wage on the min wage. That means when it goes up the contracts give union workers automatic increases and they are already many times the normal wage anyway. UAW is a great example of that. In a recession, with jobs being lost everyday, it ain't smart to raise taxes or increase regulation that causes more burden on the onnes who create jobs. THIS WILL COST JOBS AND IT WILL BE THE FOLKS DOING SERVICE JOBS THAT FEEL THE BITE NOT THE EXECUTIVE.
Last year I went into Wife Saver and couldn't believe that a 2-breast chicken dinner cost almost $10!! When I asked the girl behind the counter about it, she said her manager told her it was because of the minimum wage increase and that was how they had to cover it. I love Wife Saver chicken, but I can't afford those prices. Next time I went to KFC...chicken wasn't as good, but it was cheaper. Hey, on the bright side, maybe the price increases will end up helping to keep my cholesterol and weight down!
Wife Saver is a local chain. It feels the pinch and HAS to pass it on or reduce its costs somehow. This will be a really bad for small business.
Simple economics, my dear Watson. Restaurants will begin to close at a level we haven't seen before. Instead of $7.25 an hour, it will be zero an hour for the workers. The market always wins eventually.
easiest way to fix the problem for the store owners is to raise the prices and make do with fewer employees. Everyone will have to step it up and assume some of Joe's responsibilites because we had to let him go so we could pay everyone the increase.
well, let's see, 40 hours at 7.25 equals about 290 per week, then take out taxes...... yeah I can see where she would still need assistance. Can you pay an estimate ( a low one at that) of 450 a month in rent, your gas or transportation money, insurance ( car),utilities, cleaning supplies,clothes for work, and God forbid anything unforseen happens, on that income Brad Owens? My hats off to the woman, she IS looking for a second job! Maybe she doesnt want to be on welfare, did u ever think about that?
I love wife saver chicken, but publix is cheaper! Go in grab a box and throw on some veggies and dinner is served.
Just: Interesting since KFC operates under the same laws as Wife Saver. Ever occur to you that was an excuse and that WS was just ripping you off? Brad; Assuming you work 40 hours a week, you'll earn a whopping $15,080 (gross) per year. I challenge any of the anti minimum wage crowd to try to live on that, kids or not. It doesnt say why she's a single mother. She could have had a cheating spouse like Mark Sanford and kicked him to the curb.
just:$10 for 2 pices of chicken, tiny sides that equal about a large spoonful, and a biscuit. Go to Fergusens (sp?) in Linconton, 2 GIGANTIC breasts, fries, slaw (I don't remember if you get bread). Last time I got one it was under $5.00. A little high in the sodium department but about the best fried chicken I've ever had. Either call ahead or be prepared to wait about 20 minutes because they cook it fresh. D*mn, it's not even 0830 and you've got me wanting fried chicken.
We should raise that minimum wage sucker up real high and make the workers well off and taxpayers. Why not up it to $50 an hour?
commentator, maybe if she was to have 3 or 4 more babies, she wouldn't need the job. The government subsidies would probably be enough to live as good as she is now.
Personally, I think the $7.25 is too low of an hourly wage. Maybe if the crackerboy rednecks were to get $10/hr and the ethnically diverse were to get $15/hr everyone would be happy.
PT, you're thinking too low...higher and higher. Give every waitress enough to have a huge house and BMW. Solves the problem...right?
It just seems like common sense to me. Raising the minimum wage does little or nothing to help an employee because when the minimum wage goes up so does the price of everything they purchase. Eventually the minimum wage increase shows up in the price of everything so the employee loses any progress made. It's just political feel good inflation with little or no impact in the long run except higher prices.
Well yes, Riverman. I was just trying not to negatively affect the economy. I want to run for office and this kind of really smart economic thinking is important.
WAAA, these huge chain restaurants won't have such huge profits. Big deal. It's the smaller businesses that it hits harder, but I'm sorry, it's about time the minimum wage gets increased. And Riverman, this doesn't affect waiters and waitresses, they make something like a dollar an hour - that's why they work for tips.
Where is the father of the children and how much child support is being paid? If he/they aren't paying, spend more time on prosecuting those that don't pay for the children they produce. If the woman is getting aid, stop it after 2 or 3 children. Why should they get paid for every child they continue to have. When is enough, enough?
LOL..you couldn't pay me to eat food from a fast food...have you seen whats in the back preparing that slop?...........
Restaurants will raise their prices and the servers will get less in tips. This raise will also increase unemployment/underemployment. Ain't the DIMocRATs just great ?!
commentator, no one forced her to have 4 kids to support when she knows she ain't got the education/credentials to get a decent job. We who made the rifht choices are damn tired of paying for this kind of inrresponsibility. Wonder if she can name all the daddys.
I challenge any of the anti minimum wage crowd to try to live on that, kids or not. It doesnt say why she's a single mother. She could have had a cheating spouse like Mark Sanford and kicked him to the curb.
Posted by TechLover on Mon Jul 20, 2009 8:18 AM....Techie, minimum wage was never meant to support a family, but give begining workers and HS kids jobs.
When I got divorced in the 70's and had to raise a child alone, I NEVER got welfare or food stamps or even child support. I just went to work everyday and provided for the child. I had a decent car, but it wasn't new. I had car insurance,life insurance.
I had to pay the doctor cause I had no insurance.
I NEVER owned a designer hand bag,cell phone,didn't smoke, go out to eat except to take the child to McDonalds.
I worked as a waitress then and I am a waitress now.
I bought my dream house two years ago and my child has a good job with benefits.
No where does it say why Ms. Broughton is a single mother of 4. It's possible she is in this situation due to bad choices but then again she may be a widow. Either way, it appears this woman is trying to support herself the best she can. At least give her credit for having a job and looking for a second part time job. She could be sitting on her behind having more children and not working at all. Then you would have something to grip about.
Max: Then how about eliminating all raises and bonuses. After all they just increase prices. A lot of folks on here defended the multimillion bonuses some of our corporations gave out. Gosh, they're valuable employees, we have to retain them. B*itch about someone making under $16K a year raising prices and not the CEOs. The top 10 CEOs in the US last year made a total of over $502 million or equal to 36,866 minimum wage workers. Might that cause prices to be a bit higher?
Just the pay of the highest paid CEO Aubrey McClendon of Chesapeake Energy Corp equals the pay of 8,257 minimum wage workers.
If she is a widow, she is getting some kind of help with either child benefits or/and widow benefits. I bet that CEO got an education (that qualified him/her for more that a job at Mc Ds) and probably didn't have children, they couldn't afford. When you raise min wage for new employees, that means the wage has to be increased for long term/tenured employees.
I doubt anyone who makes $112.5 million dollars in one year has children they cant afford.
Brad Owens, How do you know that Lazondra Broughton isn't a single mom because her husband either died or left her hanging? My hats off to the lady! Not easy to raise kids these days as a single parent. I know I raised mine all by myself!
The Augusta Chronicle ©2012. All Rights Reserved.
