Chinese Businesses Worry About Minimum Wage Hike

Diners at a Chinese restaurant (Photo via World Journal)

“After the rise of minimum wage, we have to pay an extra $6,000 to $7,000 in labor costs every month. It’s a huge pressure on us,” said a Chinese restaurant manager in Chinatown. He is not the only one. Since New York state’s minimum wage increase became effective on Dec. 31, many employees in Chinatown have been awaiting a fatter check. But many employers have been spending their days and nights worrying about how higher labor costs will suppress their profits and possibly even lead to losses. And as the third party, consumers also find that they are affected too because many restaurants and groceries seem to have already reacted to the higher minimum wage by jacking up prices.

Mr. Chen, the manager of the Joy Luck Palace on Mott Street, said the higher minimum wage will cost the restaurant, which has more than 70 employees including 20 or so waiters and waitresses, an extra $6,000 to $7,000 per month. Chen said the minimum wage for tipped workers in New York City was $5 before. Now it is $7.50, a 50 percent increase. The minimum wage for overtime has also jumped to $13, almost doubling the previous $7.50.

“We often serve wedding banquets. So we have extended our business hours and we frequently run into overtime for workers. When we try to hire more people to reduce the working hours of the employees, we have to fight with the union. So we have no other choice but to pay overtime wages,” said Chen.

Chen said the new law also requires the wage for waiters and waitresses to be at least $11 per hour with tips. This means restaurants that are not doing well have to pay more to the employees to make up for lower tips, a double whammy for employers.

The manager of the Royal Seafood Restaurant on Mott Street said that business has not been good since New Year’s partly because of the very cold weather. Meanwhile, it has to pay more to employees. This really worries her. “The government has a lot of protections for workers, but it never thinks of the owners of small businesses,” she said. “Now I have to do cleaning and other work myself because I don’t dare to ask the employees to do more.” She predicted that when the minimum wage is raised to $15 as planned in 2018, there will be a lot of restaurants shutting down in Chinatown.

“One medium-sized restaurant supports 50 families on average. If many restaurants here are closed, more workers will suffer from poverty. The government’s new law is really short-sighted,” she said.

Employers are not the only ones who raise their eyebrows in response to the new law. Many consumers, who thought the new law had nothing to do with them, also found they have become “victims” too. Chanqin Hu, a frequent customer of the Deluxe Food Market, a grocery shop on Mott Street, said she found that the price of processed foods such as braised beef and cold dishes have all gone up from 10 percent to 20 percent recently. She suspects it is related to the minimum wage hike.

Employees at the shop said it should not be a surprise that more labor costs cause a chain reaction. “The prices of food ingredients are all going up. So we have to raise our prices too. We try our best to make them affordable to Chinatown residents. But the owner is really under enormous pressure,” an employee said.

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