Minimum wage hikes may cause layoffs

April 27th, 2017  |  Published in Business, slider, Uncategorized

Jorge Lopez, the owner of Taquerua y Fonda La Mexicana, works at night in his diner. Photo: Senhao Liu.

Jorge Lopez, the owner of Taqueria y Fonda La Mexicana, works at night in his diner. Photo: Senhao Liu.


By Senhao Liu

New York City is in the process of rolling out minimum-wage increases, aiming for $15 an hour by the end of 2018 for restaurants with 11 or more employees, and a year later for restaurants with ten or fewer workers. Some owners on the edge of that divide are considering an interim fix–laying off workers to fit into the ten-and-under category, which would buy them a year’s extension.

According to New York State Restaurant Association, New York state currently employs about  833,400 in restaurant and foodservice jobs. To absorb the minimum-wage increase, restaurant owners face three difficult options: increased menu prices, decreased work hours for existing employees, or staff cuts, whether to buy that extra year or simply reduce the payroll.

“I cannot afford another person,” said Jorge Lopez, the owner of Taquerua y Fonda La Mexicana, a diner on Amsterdam Ave and 107th St near Columbia University. “”If I hire one more, that’s going to kill the business.”

Lopez, who came to the United States from Mexico 27 years ago and opened the diner 16 years ago, said that the wage increase schedule has already affected his business. He laid off one worker and will not replace him —  to save the salary and to keep his staff at ten, which buys him a year’s extension on the minimum wage.

“I used to have one guy helping me over there [pointing at the cashier desk], ” Lopez said. “I need another guy but I am now working more.” He now works 12 hours, seven days a week, and has cut back the hours when the diner is open, from 2 a.m. to midnight.

Lopez has no idea when he will again employ another worker, and he has backed off from a plan to rent a neighboring space and expand.

Slightly larger restaurants may consider cutting back employees’ hours to balance out increased labor costs. Chirping Chicken, located on Columbus Ave and 106th St in Manhattan, has over a dozen employees, and George Georgiou, the owner’s nephew, said that they may have to reduce hours to compensate for higher wages. Even that might not be enough.

“Laying off one or two employees is also a solution, ” he said.

Kevin Dugan, the director of New York State Restaurant Association’s NYC office, anticipates a “dramatic effect on the way they used to do business,” for owners of small- to medium-sized restaurants, because their profit margin is so small.

“They are going to have to bring additional revenues from somewhere, whether that’s to increase the prices, or to cut staff,” Dugan said.

It isn’t an easy decision, particularly when  workers have been at a restaurant  for decades and are good friends of the boss. Derek Forlini, the owner’s Forlini’s Restaurant, at the corner of Baxter and Walker streets in Manhattan’s Chinatown, says that he will not lay off employees.

“My guys have been working for me pretty steadily. They are my friends,” he said. Some employees have worked at the restaurant for 25 years.

Forlini, 60, works 16 hours a day at the diner, which his father opened in 1943, and has 14 employees. He says that rent and utility bills are already a challenge, but he won’t sacrifice staff members.

“The only business that won’t go broke is the government, because the government just takes tax money, ” Forlini said. “We [restaurants] are in a different situation. You have to survive, you have to pay for your bills. Government does not pay my rent, do they? Do they know I work for 16 hours a day? Do they care about me?”

But he does have to find out a solution by the end of 2018. In order to keep all his old friends at work, he may have to raise the menu price heavily.

Tags: , ,

Your Comments