California: $15 Minimum Wage, $30 Per Pizza, Massive Fail

Small businesses are already struggling to survive the spate of minimum wage increases to $15 per hour in parts of California.

Last month, the small Bay Area town of Emeryville, California, (population 10,000) decided to act as flag-bearer for raising the minimum wage in California, hiking its minimum wage to $14.44 per hour.

Even though businesses with less than 56 workers are exempt from the $14.44 rate and do not have to raise their wages to $15 until 2018, Vic Gumper, who owns Lanesplitter Pizza, with outlets in Berkeley, Oakland, Albany and Emeryville, decided not only to bite the bullet but swallow it, paying his workers $15 to $25 an hour while eschewing tips or raising prices.

He advertised his $30 pizzas and other food items as “sustainably served, really … no tips necessary,” according to the Los Angeles Times.

Sales at Gumper’s locations have plunged 25% in the last few months, forcing Gumper’s to close during lunch hours at some locations.

Gumper admitted, “The necessity of paying people a living wage in the Bay Area is clear, so it’s hard to argue against it, and it’s something I’m really proud to be able to try doing. At the same time, I’m terrified of going out of business after 18 years.”

Other businesses are experiencing similar strains.

The owners of the business are not the only ones complaining about the wage hikes; one worker for Gumper pointed out that the wage he paid her was less than the money she earned eliciting tips at her former bar job in San Francisco.

Minimum wage hikes are planned all over Northern California. Berkeley plans to raise its wage to $19 by 2020.

In 2014, the California chapter of the National Federation of Independent Business (NFIB) estimated that the state’s 2013 legislation raising California’s minimum wage rate to $9 per hour in 2014 and $10 by 2016 would shrink the state’s economy by $5.7 billion in the next 10 years and would cost the state roughly 68,000 jobs–63% of which would come from small businesses.

This article has been corrected to reflect the fact that Gumper’s is not forcing workers to take lunch off, but rather closing during lunch altogether.

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