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New York City restaurants are reportedly feeling the pain from a $15 minimum wage


The law mandating a $15 wage went into effect at the end of last year

Thomas Trutschel/Photothek via Getty Images

New York City's $15 minimum wage for workers is apparently hitting the city's restaurants hard, according to the New York Post.

What's the background?

On Dec. 31, 2018, a new law went into effect in New York City mandating that the hourly pay for workers at fast-food and retail companies rise from $13 per hour to $15 per hour. The city is ahead of the rest of the state on this issue, with New York as a whole planning to reach a $15 minimum wage in small increments over several years (by the end of this year the state will raise the wage to $11.80).

By Jan. 16, CBS News had reported that restaurants had begun reducing the staff's hours as a result of the increase.

What happened now?

At least some restaurants are still feeling the pain from the new cost. The New York Post reported that mom-and-pop restaurants like Gabriela's Restaurant and Tequila Bar on the Upper West Side are being forced to close.

"We started by having to let go of the ladies who hand-made our tortillas. It's certainly better when you can make your tortillas fresh for every taco," Nat Milner, one half of the husband and wife team that owns Gabriela's, told the New York Post. "It made sense at $8 an hour but not at $15."

The New York City Hospitality Alliance reported that 87.3 percent of those surveyed said that they would have to "increase menu prices in 2019 to reduce costs in response to mandated wage increases."

More than three-quarters of respondents said that they had already had to reduce hours for employees due to prior wage increases before the $15 wage rule took effect, and 74.5 percent said that they planned to reduce hours after it was in place.

Worse, 47.1 percent of the respondents said that they would have to permanently fire workers because of the mandatory $15 wage.

What else?

Some of the restaurant owners said that they wanted their employees to make more, but can't afford to stay in business with the added costs.

"I'd love to give all my staff raises to $1,000 an hour if I could," Ricky Passarelli, owner of Bobby Van's steakhouse, told the New York Post. "But as expenses are going up, the volume of sales is going down. There are more steakhouses, and even the price to buy steak has gone up 50 percent in the past two months."

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