Every $1 Minimum Wage Goes Up Causes 10 Percent Increase In Restaurant Closings

More proof that the minimum wage destroys jobs.

A new study by Harvard determined that there was a “4 to 10 percent” increases in the likelihood of a restaurant closure for every one-dollar increase in the minimum wage.

Interestingly, restaurants with a higher Yelp score seemed more immune to the increase – eateries with a 3.5 rating or lower were 14 percent more likely to close for every dollar increase.

“We find suggestive evidence that a higher minimum wage leads to overall increases in restaurant exit rates – depending on the specification, we find that a $1 increase in the minimum wage leads to approximately a 4 to 10 percent increase in the likelihood of exit,” Dara Lee Luca and Michael Luca wrote in the study.

In San Francisco, the minimum wage – already at $12,25 per hour – will go up to $15 per hour next summer.

Since last September, more than 60 restaurants have closed, most of them citing the minimum wage increase.

The study focused on the San Francisco Bay area, but this is happening in other parts of the state as well.

Jeremy Bagott writes in the San Luis Obispo Tribune, “Another telltale is San Diego, where voters approved increasing the city’s minimum wage to $11.50 per hour from $10.50, this after the minimum wage was increased from $8 an hour in 2015 – meaning hourly costs have risen 43 percent in two years.”

So San Diego has lost 4,000 jobs as a direct result of the minimum wage increase. San Francisco has lost thousands more.

In Illinois, by one estimate, the $15 minimum wage bill currently being tossed around could cost the state as many as 328,000 jobs.

Actions have consequences. If you increase the cost of doing business, companies need to find a way to cut costs.

And in the cutthroat restaurant industry, raising prices is not always an option – so you have to shed the workforce any way you can. Cut hours, cut personnel, and automate.

That’s the future in this country. San Francisco and California will just get there faster than the rest of us.

H/T: RedAlertPolitics

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