While those in the workforce may welcome the increasing minimum wage in L.A. County, concerns are growing among business owners about the rising payroll.
From July 1, businesses with at least 26 employees in the unincorporated area of L.A. County will have to pay each employee $12 an hour from the current $10.5. For businesses with 25 employees or less, the hourly wage will rise from $10 to $10.5. The upcoming change will undoubtedly affect Korean barbecue restaurants, moving companies and more.
“It’s hard to simply start charging the customers more to compensate for the rising minimum wage,” a business owner said. “The only ways to save on our payroll is to reduce the number of work hours and downsizing our staff.”
Phillip Won, the owner of L.A. Koreatown restaurant Meat Love, said: “About 33 percent of our revenue goes into paying our staff of 20 employees. The number will only grow once the minimum wage rises in July, but there’s not much we can do about that.”
Won added that the minimum wage rise will also increase the costs of Medi-Cal, workers’ compensation and income tax. That also means that a $0.50 rise in minimum wage for a business employing 20 people will have to pay an additional $10 per hour. Also, as the wage rises, the operational cost including overtime pay will also increase substantially.
“At this time, we aren’t even thinking about raising the price of our menu as sales tax is also set to increase to 9.25 percent from the current 8.75 percent,” Won said.
Restaurant owners agreed that downsizing the staff to cut costs is even tougher as less servers mean lower customer satisfaction.
One barbecue restaurant owner revealed that he is considering an option of letting the customers cook their meal on the grill to compensate for insufficient number of servers. Other possible options include cutting down on the number of business hours and hiring part-time employees designated to work only during peak hours.
Moving companies are also under pressure to react to the rise of minimum wage.
“We’re already paying more than the minimum wage given the intensive labor of our business,” said 365 Fast Moving president Henry Kwon. “Hiring inexperienced employees is the easiest way to cut down on payroll, but that could backfire as customer satisfaction would be driven down.”
Business owners agree that increasing the minimum wage so rapidly makes their lives too difficult. They argued that looking after the employees will eventually be costly for those responsible for cutting their checks.
“Increasing minimum wage could have consequences for businesses themselves as well as the employees and even the customers as owners will seek ways to compensate for their losses,” said an expert.
A Korean-American man in his 30s said: “Rise of minimum wage is not something one can simply be happy about. The higher cost I charge also means that I’ll have to pay more when I’m playing the role of a customer elsewhere. The increase will have to be reasonable.”
By Hyunwook Chung
