New Higher Minimum Wage is Crushing Oakland's Chinatown
Economic Policy Journal
This is what happens at the edges when minimum wages are raised, where it is difficult for businesses to raise prices. I have already reported on the problems in the childcare sector in Oakland, here's what is going on in Oakland's Chinatown sector.
Cheryl Hurd at NBC Bay Area reports:
"With this minimum wage kicking in, it's the final nail to the coffin," said Carl Chan, a board member for the Chinatown Chamber of Commerce.
The new minimum wage forced owner of the Legendary Palace restaurant to close its doors on Feb. 26. Officials said four restaurants and six grocery stores have closed since January.
Many business owners are blaming the 36 percent wage hike, while some said the businesses were already in financial distress.
"Business owners are angry," said KC Lam, a business owner. "They can't cope too much."
Lam said he will keep the New Gold Medal restaurant open by being creative -- possibly opening an hour later and closing an hour earlier.
Oakland City Councilmember Abel Guillen said it is too early to panic over the new minimum wage.
"It was just implemented two weeks ago," Guillen said. "In the long run it will benefit the entire community."
The San Francisco Chronicle reports:
Vuong’s Delicieuse Princesse Bakery isn’t the only business that’s foundering after a new law raised the hourly minimum wage in Oakland from $9 to $12.25 — pushing the bakery’s payroll costs up by 36 percent overnight.
According to Carl Chan, a board member of Oakland Chinatown Chamber of Commerce, four restaurants and six grocery stores in and around Chinatown have already shuttered since January, at least partly for fear that the wage increase was going to put them over budget...
Chinatown restaurateurs are in a more perilous position than many of their counterparts in Oakland. Most of the establishments, with the exception of large banquet halls like Legendary Palace and Peony Seafood Restaurant, operate on high volume and low profit margins. Customers expect to pay very little per entree, and it’s very difficult for the owners to raise prices.
“I want to, but I can’t,” Vuong said, adding that her only big-ticket item is wedding cake, and she only sells that on weekends.
“I'm dying,” she lamented to other small-business owners at a forum on Thursday, clutching her chest for emphasis...
“You are putting people on the chopping block,” an import business owner named Taylor Chow told city officials....Chow...runs his business in East Oakland, said he felt as though his hands were tied. “The next thing, they ask for $100 an hour,” he griped. “And what can we do?”
Vuong, who lives in Hayward, faces the same predicament. If she doesn’t close the Delicieuse Princesse Bakery, she might cope by cutting her workforce in half: two immigrant employees might be enriched by the minimum wage hike, while two would lose their jobs.
Link:
http://www.economicpolicyjournal.com/2015/03/new-higher-minimum-wage-is-crushing.html
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