The Register Citizen (Torrington, CT)
Wage hikes on the menu
Connecticut restaurant owners look to coming increase in payrolls
While many Connecticut restaurant owners are dreading the first of several annual wage increases, Will Hamer at the newly opened Bean N Batter in Bridgeport said he and his partners are prepared.
“It’s your responsibility (as a restaurant owner) to plan for things that could happen like this,” he said.
It’s been a few months since Gov. Ned Lamont signed legislation meant to boost the minimum wage, following suit with states like New York, New Jersey and Massachusetts.
The first of five wage hikes is set to happen in October, increasing minimum wage from $10.10 to $11 an hour. Minimum wage will continue to increase by $1 each year until it hits $15 in June 2023.
On Jan. 1 of each year thereafter, the minimum wage will be adjusted by the percent change in the federal Employment Cost Index for all civilian workers’ salaries and wages for the oneyear period ending on June 30 of the previous year.
The restaurant industry traditionally employs the most workers paid at or below the minimum wage, according to U.S. Census data.
After roughly a month in business in their downtown Bridgeport coffee shop, Hamer and his partners said they won’t feel much of a sting as the state heads to a $15 minimum wage because they already pay their employees above what the minimum wage is currently and what it will be for the next couple of years.
Nail in the coffin
Prepared or not, many restaurant owners said they are still worried that wage hikes — coupled with
recently passed Family and Medical Leave legislation — may a deal a crippling blow to Connecticut’s restaurant industry.
“We are extremely concerned with most food service restaurants that are trying to find the dollars needed to pay the back of the house,” said Scott Dolch, executive director of the Connecticut Restaurant Association. “Some (owners) are worried that the increases will ultimately lead to them having to shut down.”
Connecticut has 8,200 eateries statewide which employ 162,000 people, according to Dolch.
That number could remain stagnant or even decline in coming years, according Kelvin Ayala, owner of Moe’s Burger Joint in downtown Bridgeport.
“The sad reality is that the food and hospitality industry has seen so many increases and changes in so many areas that the wage increase is potentially the nail in the coffin, and that’s what the legislators did not understand,” he said.
While wages will increase gradually, Ayala said many operators will have to find ways to offset the added costs, including raising prices about 5 to 10 percent.
With a 10 percent ticket increase, a burger with fries at Moe’s Burger Joint would go from about $7.78 before sales tax to about $8.56 for the order.
“As restaurateurs, we have not been able to increase our menu pricing because people are struggling and it’s already difficult enough to try and get people in the door,” he said.
Connecticut continues to lag in personal income growth since the last recession, according to an analysis from Pew Charitable Trusts.
Connecticut’s growth was the weakest of any state, the equivalent of 0.8 percent a year since the end of 2007.
Sink or swim
Opponents to the wage hikes have maintained that the speed that Connecticut will grow to a $15 minimum wage would result in thousands of jobs lost, especially among small business owners. Options, they said, are limited.
“They are going to find ways to adjust to live within a different cost environment,” said Peter Gioia, chief economist of PGEcon.com. “Unlike other industries like manufacturing, restaurants can’t just move out of the state so they are stuck here … they can go out of business, but they can’t move out of the state.”
Gioia predicted that the industry would ultimately settle down to fewer staff and fewer restaurants.
Along with job loss, he said that people can expect to see an increased use of automation as owners look to offset the cost of labor — traditionally the highest cost for restaurant operators.
Chain brands have already begun introducing tech to thousands of restaurant locations nationwide, adding kiosks and other automation with a goal of fewer human workers and more selfservice formats.