Los Angeles Business Journal

Businesses See Little Gain in Minimum Wage Hike

GOVERNMENT: Proposed state bill seen as ‘job killer’ by some employers. By Howard Fine Monday, April 15, 2013

Earlier this month, the California chapter of the National Federation of Independent Business released a study claiming that if AB 10 passes, employers in California would shed 68,000 jobs from their payrolls and tens of thousands of potential jobs would be lost.

“One thing that is impossible to quantify is the job opportunities that are lost by increasing the minimum wage,” NFIB California Executive Director John Kabateck said in an email blast titled “Main Street Menace of the Week.”

Kabateck noted that the bill comes after years of recession and tax increases passed by voters last November.

Another statewide business leader, California Restaurant Association Chief Executive Jot Condie, said that indexing the minimum wage to the inflation rate could bring more burdens to restaurants.

“Indexing will inevitably result in minimum-wage increases at times when the economy is ill-suited to absorb new outlays and many restaurants would be doomed to buckle under the cost pressures,” Condie said in a statement when the bill was introduced in December.

David Houston, who owns six Barney’s Beanery restaurants in the county, said this was just one of his concerns about indexing the minimum wage to inflation.

“Every year, the minimum wage would increase, until one day, maybe 10 or 15 years from now, we wake up to find the minimum wage is at $15 an hour or $20 an hour,” Houston said. “A minimum wage that high is simply not tenable, especially in industries like ours where we clear 5 percent or 6 percent profit margins each month.”

Houston said that when the minimum wage was last increased in January 2008, he eliminated jobs, reduced work hours and raised prices.

“Sure, I want my staff to make more money,” Houston said. “But it should be because my business is thriving, not because government tells me to. All this would do is drive up my costs and reduce my margins, which means laying people off.”

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