Consequences of $15 minimum wage ... bad news for Cleveland and Ohio

Activists and labor unions delivered a petition last week to Cleveland City Council calling for a steep minimum wage hike.

On Monday, Cleveland City Council met to discuss the proposal that would hike the city’s minimum wage to $15 per hour. The giant increase is 85% over the state’s current $8.10 per hour and would start in 2017. (See the story from WKYC-TV in Cleveland.)

ORA members tell me all of the time that drastically raising the minimum wage would significantly harm their businesses – and ultimately employees and job seekers. It would force restaurants to dramatically change the way they do business to remain solvent.

The ORA has been very busy meeting with state politicians, city mayors and councils throughout Ohio to explain the impact a major wage hike would have:

1. Fewer employees per restaurant and fewer hours – which means fewer opportunities for jobseekers.

2. Rising menu prices and inflation, as restaurant owners and managers try to adjust their P&L to hold onto thinmargins that are prevalent in our industry.

3. Lack of expansion by restaurant owners, who fuel redevelopment in our cities.

4. Replacing staff with automated servers, an increasingly likely scenario as restaurant owners confront rising labor costs from a wide variety of federal and state level mandates. Dublin, Ohio-based Wendy’s said last week it is testing self-service order kiosks to help mitigate labor costs, with plans to make this technology available to its franchise system by the end of 2016.

The ORA has been sharing this information with the news media and in social media for months. I urge our members in Cleveland to contact their local government representatives. This is important because what is bad for Cleveland’s restaurants is bad for Cleveland and Ohio.

Restaurants are the pulse of our communities, bringing Ohioans together with their friends, families and neighbors every day. They’re also some of our communities’ most stable employers, where 21,921 restaurant locations currently employ 557,200 Ohioans. That’s 10 percent of our state’s workforce.

These jobs aren’t only pillars for a strong local economy, they’re also the training ground for our workforce, providing countless individuals of all ages the opportunity for a rewarding job or fruitful career from the front of the house to the back to management – or even other sectors. Restaurants provide Ohioans of all ages, education levels and skillsets with the training they need to succeed.

Our industry is unique in inviting people with little to no experience to start a career and provides a proven path to the middle class. Activists like to cast steep wage hikes as a silver bullet. Yet this plan is nothing more than a politically opportunistic effort by labor unions to score a victory at the expense of our Cleveland economy.