Even though he turns 94 on June 30, the economics wisdom from Thomas Sowell strikes again. You can want fast food or restaurant workers to have enough to live on but if the economy doesn’t support it, that worker is now jobless. An iconic San Francisco McDonald’s in place for 30 years is the latest casualty of the $20 minimum wage law. The restaurant closed permanently last weekend partially due to that law.
Economics will make or break
If a facility can’t afford to pay it’s workers the wage the law requires, it closes. It might move to another location in which the laws say it can operate and maintain a profit.
Sowell wrote in his 2000 book “Basic Economics: A Citizen’s Guide to the Economy.”
“Unfortunately, the real minimum wage is always zero, regardless of the laws, and that is the wage that many workers receive in the wake of the creation or escalation of a government-mandated minimum wage, because they lose their jobs or fail to find jobs when they enter the labor force. Making it illegal to pay less than a given amount does not make a worker’s productivity worth that amount — and, if it is not, that worker is unlikely to be employed.”
A letter was posted outside the restaurant, “It has been a pleasure for my entire team and I to serve the 19th Avenue and Ingleside neighborhoods for more than 30 years. We are thankful to have been part of your daily meal routine, either for an Egg McMuffin in the morning or a Happy Meal with the kids after an afternoon of shopping at Stonestown.”
Economics forced the closure
Franchise owner Scott Rodrick said there was two reasons for closing the restaurant. The less obvious one was the rent was unsustainable and the landlord wouldn’t negotiate.
It’s unknown as to whether this was due to renovations being done. A vibrant new community was hoped for, according to the website. The owners have
“been working with the community for four years to create a vision to build a vibrant new neighborhood around the mall on what is now a vast expanse of parking lots. That vision will transform Stonestown from a retail center to a town center.”
Unfortunately things in that area were already expensive. Rodrick spoke about “the property taxes and shared tenant mall fees were the highest paid for a single location for the company.”
The economics of an overly high minimum
This is the elephant in the room you can’t work with. “This is a gut wrenching day for my family.” Rodrick said employees were offered positions at other locations.
The law took effect in April. Restaurants have been closing ever since.
Mod Pizza had to close five locations. The popular restaurant Fosters Freeze in Lemoore, CA abruptly closed within days of the new law, leaving 20 people jobless. Hollywood isn’t immune. An Arby’s that was a local landmark had to close last week. The restaurants that remain open are giving customers sticker shock. So the minimum wage drops to zero because the location closes. California doesn’t learn from its own mistakes and certainly doesn’t want to listen to conservative wisdom.
