The minimum wage in California increases to $13 an hour on January 1, or $12 an hour for businesses with 26 employees or fewer. This is undoubtedly good news for workers. It’s not such great news for some business owners, not because they’re stingy (or not just because they’re stingy) but because, with rising rents and other costs of doing business, they simply can’t afford it.
The CBS affiliate in Sacramento profiled a pair of restaurants there, one that was scheduled to close at the end of the month and another that had already closed, because the owners couldn’t afford the wage increase.
“The wages are definitely a heavy pressure on us,” Phil Courey, owner of Opa! Opa!, a Greek restaurant on the city’s east side, told CBS. “About 40 grand a year every time they jack up the minimum wage.”
Opa! Opa! had been open since 2006 and had been scheduled to close this past Sunday until a social media campaign convinced Courey to remain open another week, through the holiday season.
Original Perry’s, which had been a late-night mainstay in South Sacramento since 1968, has already closed. The current owner, Paul Fraga, who’d started at the restaurant as a busboy, had bought the place from Perry himself 10 years ago. He said that he knew of several other restaurants in the area that were planning to close after the first of the year.
Everybody deserves a living wage. But the minimum wage laws favor larger corporations and chains that can afford the increase to the payroll. What can a small business already operating on a dangerously narrow profit margin do? Restaurants need people in the kitchen and in the dining room to stay open. Owners could forego paying themselves a salary, but they have their own personal rent and living expenses, too. It’s something that the industry will need to address as workers in more states win minimum wage increases. (And it’s worth noting that, depending on the city you live in, $13 an hour is often not a comfortable or even sustainable living wage.)
“California is a rough state to do small business,” Fraga said. “They want everybody to make $20 an hour, but for the smaller guy, I can’t afford that.”