I predicted this from the start. Oh, okay, I didn’t predict exactly *this*, per se, but, on the occasion of a popular San Francisco bookstore closing because of the minimum wage hike, I wrote the following:
Labor is a cost, because the business owner has to provide wages and, often, benefits that cost him more money. When a government mandate increases that cost, the business owner has three choices: pass the cost along to the customer, who may decide it’s too much and stop shopping there; cut employee hours and stop hiring to save on labor costs, thus costing potential jobs and putting a burden on workers still employed; and, finally, just decide it’s not worth it anymore and close up shop. In the low-margin bookseller business, Borderlands’ owner chose the last course as the only one viable.
Borderlands Bookstore chose option three: close the doors and put everyone out of work. It just wasn’t worth it to fight to stay in business anymore.
Let us not be surprised, then, that the Chipotle’s restaurant chain chose option one: pass the costs on to the consumer.
• In our weekly survey of ten of Chipotle’s markets, we found the company implemented price increases in half of the surveyed markets this week—San Francisco, Denver, Minneapolis, Chicago, and Orlando. In most markets, the price increases have been limited to beef and average about 4% on barbacoa and steak, toward the lower end of management’s expectation for a 4% to 6% price increase on beef.
• San Francisco, however, saw across-the-board price increases averaging over 10%, including 10% increases on chicken, carnitas (pork), sofritas (tofu), and vegetarian entrees along with a 14% increase on steak and barbacoa. We believe the outsized San Francisco price hike was likely because of increased minimum wages (which rose by 14% from $10.74 per hour to $12.25 on May 1) as well as scheduled minimum wage increases in future years (to $13 next year, $14 in 2017, and $15 in 2018).
Say it after me, kiddies: Economics wins; math wins. Rinse, repeat. No matter what the progressive tooth fairy told the San Francisco Board of
Commissars Supervisors, when you mandate a wage increase, something has to give. In this case, the “giver” is “Workaday Joe,” the poor sap who has to bear the brunt of this and other increases to his cost of living.
Not that the limousine liberals of the Bay Area will notice, however: they either can afford higher prices, or they have expense accounts that can afford them. Regardless, they can continue feeling good about themselves.
And that’s all that matters to them.
via Moe Lane
RELATED: At Power Line, Scott Johnson looks at the killing of a woman by an illegal alien taking advantage of San Francisco’s “sanctuary” laws and meditates on its deep meaning.