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Comment by stevejohnson | Hacker News Reader

Well, assuming the small coffee shops are well-managed, then we still have to ask ourselves which is more important, the cheap good coffee or a living wage for the workers?

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The customer cares about good cheap coffee, and regionalized regulation like this ensures that local businesses can never compete.

I'm not against a minimum wage increase, but the country is watching places like SF and Seattle to see how a higher minimum wage plays out. The big players can always recoup loses in other markets, but the small businesses are unable to compete. Small businesses close, people lose jobs, and the wage hike is declared a failure. To me, if you really want to support a living wage, then don't support experiments that are doomed to fail.

> The big players can always recoup loses in other markets

If it's unprofitable for Starbucks to continue operating in SF, why would they do so? Big businesses can recoup short-term losses, sure, but if a given market is going to be unprofitable for the foreseeable future, there's not much reason to keep operating in that market.

That said, companies like Starbucks may see this as an opportunity to reduce competition, by operating at a loss until the smaller businesses close, and then raising prices to make the market profitable again. But if they actually do that, once they raise prices, small businesses can start competing again.

I doubt it Starbucks will see any significant loss. They typically have both higher volume and lower material costs than a typical coffee shop, so they can absorb cost increases better.

If they are even close to breaking even, then it's probably worth it to stay open in the area for marketing value.

Experiment? It's not like this is the first time this sort of thing has happened. There's piles of data and research on this, and it's not hard to make an estimate of the impact yourself. Just make an Excel spreadsheet with past minimum wage increases and the change in unemployment X years later.

Or you can just look at news articles from the past. There is long history of people predicting dire employment impacts that never materialize.

However, minimum wage hikes in the past have generally been small increments usually below the existing prevailing wage for a lot of entry level labor. Partially as a result you had to squint hard to see any kind of effect.

Just as customers at this book store didn't just care about a good selection of books for low prices, good coffee for low prices isn't always the impetus for a visit to a specific cafe. Some places are just cool for whatever reason, and people will hang out there despite the coffee being crappy or the prices being high. Coffee shops sell coffee, sure, but for many of them, that's not the point of going. I can get free coffee from my workplace, and we actually have nitrogen cold-brew, espresso machines, half a dozen types of milk, syrups, half a dozen different drips in pumps, ice, blenders, RO filtered water...and I still go out to buy coffee. Many of my coworkers also go out for coffee. Sometimes it's nice to go somewhere else, and coffee is a great excuse. Sometimes we'll hang out at whatever coffee place we end up at for a good conversation.

Back in high school, there was a big old dirty cafe all the kids hung out at. It had room for maybe 200 people on busy nights, which was probably over what fire code allowed. The coffee was made by stoned hippies on rarely-cleaned equipment and was pretty bad. It was normal coffee shop prices. It was the place to be because they were open 24 hours and had open-mic nights, where angsty teens could play guitar in front of their friends.

Another place in that same state was super tiny (seating for about 10 people) and had a line out the door most mornings. Their coffee was good, as was their pastry. It wasn't cheap at all. The service was pretentious and rude, but mostly in a funny way. Being a regular there felt cool, and you'd chat with other customers in line.

There are places in Chicago that charge >$6 for a cup of pour-over. These are typically fantastic. They could charge $7 and likely lose very little business. People who go to these types of places aren't cross-shopping Starbucks.

I'd bet that a place charging $10 for a cappuccino in SF would do just fine assuming it had something else going for it as well. Build a business that is Instagram-worthy and charge whatever you like for your product, and you'll still get lines around the block if it's a good enough gimmick.

A gimmick can work in a place with a large population: even if most customers only go a couple of times, there's enough of them to keep the place running. But SF isn't that big.

Losing your job because your employer couldn't afford to stay in business is better?

Low minimum wage = not enough to survive on, so you're typically working multiple jobs, which is insane. A high minimum wage is one key element of a strategy to ensure that nobody has to do that.

Anyway, there's extremely little hard evidence of minimum wage raises leading to higher unemployment. Studies generally show no effect. There's no shortage of dubious anecdotes from people with a political ax to grind, though.

I see this cited a lot, my problem is that these studies (from what I've seen, happy to accept more data) are done on a state or nation scale where most every business is then on a somewhat equal playing field. My problem with what SF and Seattle are doing is that it is easy for large companies to compensate in other markets. I'd be really interested to see a study done somewhere comparable to that dynamic.

Also, how many people transitioned from a job at a small business to a larger one? Unemployment could remain unchanged, but competition could drop drastically.

As I've said elsewhere, I'm in support of paying a living wage, but I don't think it can work on a city scale and these experiments only hurt the cause by producing bad data.

Just do the easy math first: 2000 hours (40 hours x 50 weeks) per year. Multiply by $10.00 per hour. Annual salary of $20k.

I think the assumption is that the demand for coffee stays relatively similar, and so the coffee shops that have been displaced by rising costs will be replaced by Starbucks.

If that is the theory, total employment would stay the same.

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