Sins of Wages

Living wages, killing restaurants


Between ever-expanding "estimated" tax targets for tip income, draconian restaurant licensing restrictions, and proposals for menu labeling laws, you might think governments had already done their utmost to eliminate waiting tables for tips as a viable form of employment. But the San Francisco Board of Supervisors is, as always, one step beyond the rest.

The City by the Bay recently upped its minimum wage to $8.50 an hour, a hike that includes waitresses' and waiters' pay. Restaurateurs, who have until February to comply with the new law, are already discussing plans to cut back benefits and freeze hiring to offset the new expense.

San Francisco isn't alone in its commitment to "living wage" requirements. Santa Fe went to an $8.50 minimum wage earlier this year. Madison, Wisconsin, is aiming for $7.50, while the Wisconsin state legislature is considering a proposal to make that minimum statewide. New Orleans passed a $6.15 minimum last year, only to see it struck down in court.

Aside from making life difficult for small-business owners, and by extension their employees, these efforts have another thing in common: Their proponents all cite a discredited New Jersey-Pennsylvania study by economists David Card and Alan Krueger that appeared to find that minimum wage laws have no effect on low-skill employment. Although based on skewed and in many cases false data, the Card-Krueger study, a favorite of Clinton Labor Secretary Robert Reich, refuses to die. Alas, the same can't be said for a restaurant or shop expensed out of business.