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Study Says Minimum Wage Hike Kills NYC Restaurant Jobs — But It's Suspect

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The report is funded by a restaurant industry lobbyist group

Fight for 15 protestors
People protested for the $15 minimum wage in February earlier this year
Getty/Spencer Platt

A recent report out of the Post sounds pretty bad for restaurants in the city — it claims that the minimum wage hike has already screwed up growth in the industry. The number of jobs at full-service restaurants grew just 1.3 percent in 2016, while fast-food restaurants saw 3.4 percent job growth, according to the report.

But while rising labor costs have indeed been impacting restaurants, don’t look to this study as proof. The group quoted in the story, the Employment Policies Institute, is actually a thinly-veiled front for a restaurant lobbyist group, not an independent research firm.

A 2014 report from the Times found that founder Rick Berman’s for-profit PR firm makes money off of the institute, and academic data is regularly massaged. Following a minimum wage hike in New Jersey in 1995, for example, EPI called out professors at Princeton University for using “bad data” that showed no job losses in the fast-food industry following the hike. Yet professors surveyed over 400 restaurants for a study that was widely available, while Berman's outfit only collected information from 71 restaurants and didn’t allow researchers to read the detailed findings of the study.

In this story in particular, EPI plays numbers acrobatics by pitting one year’s growth against more robust growth over five years — an apples to oranges-style comparison.

According to the Bureau of Labor Statistics, the number of employees in the food services and drink industry in New York City is currently at an all-time high. As of May 2017, the city counted 310,000 jobs for restaurants and bars.

Graph of restaurant jobs BLS

Percentage growth of jobs has indeed slowed down since 2011. In 2016, the restaurant and bar industry saw a 2.1 percent increase in jobs, whereas in 2015, it saw a 5.9 percent increase. After the recession, growth reached a high in 2011, when the number of jobs in the industry increased by 7.6 percent.

Still, despite the slow-down in growth, it’s worth nothing that factors like rising rent, real estate taxes, and food costs also impact the bottom line for restaurants. Blaming a slow-down on rising minimum wage oversimplifies the situation.

In reality, it may still be too early to draw wider conclusions about the impact of minimum wage at restaurants in New York. Wages went up to $11 just at the end of last year for businesses with more than 11 employees, and the higher $15 minimum won’t hit until the end of 2018. Businesses with fewer than 11 employees have until the end of 2019 for the $15 minimum.

Other studies from more reputable sources have also reached conflicting conclusions to EPI information. Earlier this week, the University of California Berkeley found that the increase in minimum wage in Seattle has not meant fewer jobs, as right-leaning organizations like EPI have stated. Berkeley also did a study last year showing that New York state’s rising minimum wage would not impact job numbers significantly, though it did not focus on restaurants and was based on a forecast.

All that said, rising minimum wages is still one of the biggest policy issues that will influence the success of restaurants in the coming years.

Some restaurateurs like Danny Meyer have implemented no-tipping policies to hedge for the rise in costs. Restaurants like Greenwich Village legend Da Silvano closed, with the owner citing the rise in labor costs among other things. Franchises of chains have said that they will likely cut down on staff in light of rising labor costs. And restaurants from Le Bernardin to homegrown chain Xi’an Famous Foods have raised prices to accommodate for new wage minimums.

It’s important to the industry to keep an eye on job numbers — just take it with a grain of salt if it’s from the Employment Policies Institute.

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