2019 Brings Minimum Wage Hikes, How Will This Impact Restaurants?

The $15 minimum wage movement has morphed into a force to be reckoned with.

The Fight for $15 worker movement, that started in 2012, led to 20 cities initiating minimum wage increases in 2018.

In mid-February, thousands of fast-food workers gathered in protest in almost 50 cities in support of the $15 wage bump.

In the last few weeks, 20 states have passed legislation increasing the minimum wage, some of which included a tipped wage increase.

In Missouri, the new hourly wage increased from $7.85 to $8.60 and will be raised 85 cents per year until it reaches $12 in 2023. In Arkansas, the minimum wage has been raised from $8.50 to $9.25 and in 2021, it will hit $11.

Although most states are far from the $15 an hour minimum wage, California and Washington are at $12. In Washington D.C., the minimum wage has been increased from $13.25 per hour to $14.

Washington also requires employers to pay tipped employees the full state minimum wage before tips.

Find out what other states increased the minimum wage and the tipped wage in 2019 at "Toast" now.

So what does this ultimately mean for the restaurant industry?

Well, the average 5-6 % profit margin is tough enough for restaurant owners. When the minimum wage increases, the less profitable restaurants will be.

Many operators have argued that increases in labor costs, especially large ones like $15 an hour, like this would not only be detrimental to their business, but the employees would ultimately suffer from weekly hour cuts and even may lose their jobs entirely.

Not to mention, it encourages operators to invest in technology like self-ordering kiosks to cut labor costs.

Watch The Barron Report episode above where Host Paul Barron discusses how this affects the restaurants and that other changes will operators will make to counteract the increase in labor costs.