14 States Increase Minimum Wage In New Year – Will They Shutter Restaurants Or Reduce Customer Footfall?

In the New Year, 14 American states have increased minimum wages. A new study conducted to investigate if the wage increase will have a negative impact has revealed some interesting public opinions.

It has been over six years since any increase in federal minimum wage, which has been stuck at $7.25 per hour. Now, 14 states and several cities have made the decision to implement their own increases. A majority of the wage increases have been set in motion beginning Friday, January 1. However, the persistent doubt that the majority of corporations have expressed to avoid increasing wages is: Do modest minimum-wage increases result in lost restaurant jobs, shuttered restaurants and reduced consumer visits?

New research from two Cornell School of Hotel Administration faculty members has concluded that a nominal wage hike doesn’t have any negative impact on the service industry or on the customer footfall. On the contrary, a reasonable wage increase can go a long way in bringing down labor turnover and vastly improving productivity, reports The Christian Science Monitor. The researchers caution that the study only covers “modest” wage increases to the tune of 10 percent.

This might not sit well with the participants of “Fight for 15,” who have been proposing a significant jump of almost 50 percent when compared to the prevalent wages in most of the states. Such jumps could prove to be detrimental; particularly to the restaurant business, as such establishments would have to significantly jack up prices, which would surely end up hurting the pockets of patrons.

Jack Mozloom, a spokesman for the National Federation of Independent Business, said, “Businesses, whose sales are not increasing at the same pace as wages are increasing, are going to face difficult decisions.” Private sector interests claimed that the increases will only hurt businesses and in turn, workers, reported Telesur TV. However, there’s no evidence to support the notion that nominal wage increases will hurt the industry, said Michael Lynn and Christopher Boone in their paper.

“The industry may be justified in opposing immediate, large hikes in the minimum wages, but data do not support opposition to all minimum wage increases. Have Minimum Wage Increases Hurt the Restaurant Industry? The Evidence Says No!”

Among the 14 states, including the capital, California and Massachusetts have been the most liberal. According to an analysis by the National Conference of State Legislatures, both the states had $9 an hour as the minimum wage, which now increases to $10 per hour. Among the lowest is Arkansas; the state has increased the minimum wage by a mere 50 cents to $8. However, the stingiest state turned out to be South Dakota, increasing the hourly minimum by a nickel (5 cents). Still, the state does offer a minimum age of $8.55 an hour.

The increases have come amid rising protests across the country, collectively labeled as “living wage.” On Nov. 10, a one-day worker strike was held in 270 cities in support of the “Fight for 15” campaign. The campaign, launched three years ago, was intended to persuade states to raise the minimum wage above the national average of $7.25 an hour to $15 an hour, reported Black Enterprise.

Though the increases have taken place in 14 states and other states could soon follow suit, none of them agreed to the raise the minimum wage to $15 an hour. As a consolation though, Los Angeles did pass a vote to increase the hourly minimum to $15 an hour by 2020.

It is quite possible that the sector that will be the most affected by the change is the fast food business. According to the Bureau of Labor Statistics, a major chunk of minimum wage earners are fast food restaurant workers.

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