Senior Editor, Digital Content, U.S. Chamber of Commerce
March 13, 2017
You may have noticed a new line on your restaurant bill—a labor surcharge [subscription required]:
This is a good reminder that customers often foot the bill in the form of higher prices. For instance, Chipotles in San Francisco raised burrito prices in response to a minimum wage increase in 2015.
Advocates for higher minimum wages push a myth that businesses have a magic pot of money lying around. They mistakenly believe businesses can afford the higher wage by pulling money out of that pot.
But restaurant owners know better. There is no hidden stash of cash. With profit margins in the single digits, even seemingly small labor cost increases can push a profitable business into the red.
About the authors
Sean writes about public policies affecting businesses including energy, health care, and regulations. When not battling those making it harder for free enterprise to succeed, he raves about all things Wisconsin (his home state) and religiously follows the Green Bay Packers.