On Foodable Weekly: What Are the Effects of Minimum Wage Increase?

Minimum wage is at $10 an hour, but by 2022, it will increase to $15. Restaurants are being given another year to comply. With profit margins in the business already so thin — with most of operational costs going toward labor — will this increase in minimum wage impact the foodservice sector the most, compared to every other sector in the nation's economy? In terms of employment, restaurant and hospitality boasts the second largest group of employees in the United States, following right after healthcare. How will the minimum wage increase alter the workforce of the restaurant industry? 

In this episode of "On Foodable Weekly," we are joined by California Restaurant Association president and CEO, Jot Condie, who was a seasoned lobbyist and political strategist prior to his service.   

Minimum Wage, Maximum Tech

"...I think has been a wake-up call, not just for the restaurant industry in California, but for business in general," he said. "...The minimum wage is going to be $15 an hour, which is an untested experiment that's frankly an irresponsible oversight over our economy on behalf of the lawmakers." 

Condie believes the application of this wage, a San Francisco-like-wage in a place like Fresno, could be devastating for California's economy, especially because there are 17 counties in the state that have an unemployment rate of more than 9 percent. Small business owners who already face challenges sustaining their brands will find it even more so difficult to thrive in these economic conditions. Family-run operations may be cratered and entry-level jobs may be eliminated. What are the possible solutions to these potentially drastic shifts in labor? Technological advancements.

"We've always known that technology...is playing a larger and larger role in every area of commerce, but I think this is going to accelerate the adoption of technology in our industry," Condie said, referencing to Eatsa in LA that requires interaction due to tablet-based systems and self-service. "If you look back over the last five years or so, as we were climbing out of the Great Recession, the restaurants that survived the Great Recession spent a lot of time getting lean through those times."

The Future Through Advocacy 

When wage increases occurred in the past, maybe only 50 cents at a time, there was little analysis on the effects this had on employers. Now, with a significant five-dollar increase, what can operators do to address these labor issues? Advocate. 

"We will be doing a lot economic analysis on the impacts and chronicling every time there is a restaurant...that has to cut back hours, eliminate jobs, eliminate lunch service...and letting lawmakers know that the bill they voted on in 2016 — this is the impact it's having on people's lives and the economy," Condie said.