Our nation’s capital was one of the primary battlegrounds for the “Fight for Fifteen” movement. The minimum wage was raised to $11.50/hour in July (thanks to 2014 legislation signed by former Mayor Vincent Gray), and will increase to $15/hour by 2020 (thanks to current D.C. Mayor Muriel Bowser).
While progressives celebrated their political victory, employees are learning the hard way that labor costs don’t exist in a vacuum.
Increased labor costs are resulting in a loss of 8 D.C. restaurant jobs a day. To make matters worse, these disappearing jobs affect low income households the most.
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Restaurants in the nation’s capital experienced their worst hiring period in 15 years, fueling speculation that wage hikes are reducing employment opportunities. Employment in the food service industry fell in Washington, D.C. even as it continued to increase in the region. Restaurants shed 1,400 jobs in the first six months of 2016, a three percent decrease and the largest loss of jobs since the 2001 recession, according to an analysis from American Enterprise Institute scholar Mark Perry.
The steep drop was isolated to D.C. Neighboring suburbs in Virginia and Maryland added nearly 3,000 jobs over the same period, a 1.6 percent increase in hiring.
Perry said the hiring slowdown can be tied to recent minimum wage hikes in the city. Washington, D.C. began the year with a higher-than-average wage for tipped employees in the restaurant industry. Tipped employees in the nation’s capital earn a base wage of $2.77, almost 30 percent above the federal minimum of $2.13 that is used by Virginia. The city also mandated a $10.50 minimum hourly wage for non-tipped employees in January—higher than Virginia’s $7.25 and Maryland’s $8.75 rate.
It shouldn’t take a scholar to realize this, but when government forces an increase in the cost of labor, employers respond by either: 1) raising prices or 2) reducing their cost of labor (ie. firing people). If they didn’t, they would run out of money and have to close their doors for good.
Washington D.C.’s minimum wage after the latest hike is $11.50 per hour. When the city government officially raises the minimum wage to $15, we can only expect the unemployment to get worse.