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Comment by stavros | Hacker News Reader

This assumes that the company can't absorb the raises.

As an example, average restaurant profit margins are between 2% and 6%. They cannot absorb labor rate increases without raising prices or going bankrupt. Margins tend to be similarly low for many other industries as well. Tech is a massive outlier in its ability to absorb large wage increases.

Their landlords can though.

Evidence from LA suggests that this has happened as restaurants negotiated cheaper rents in response: https://anderson-review.ucla.edu/a-15-minimum-wage-may-have-...

Restaurants do also have a tendency to be run out of business and replaced by other restaurants when the minimum wage gets hiked though. Restaurant owners take hikes extremely personally. The market can be an unkind mistress.

McDonalds, Dollar General, Chick-fil-a, and many others are really in the real estate/property space. They just have an affiliated model that supports their (real estate) investments and reduces their risk (of holding vacant commercial property).

They go backrupt landlord rents space at lower value cycle repeats. Place does well rent goes up. Wages are a small part of a larger process.

What's the cost of not being willing to pay employees enough to care about doing a good job and hiring enough people to enable good work? I know plenty of people who've stopped eating out or order less because overworked and underpaid employees keep making mistakes.

Truth is they need to either renegotiate their lease or buy commercial real-estate instead and profit on the new restaurant owners coming to town.

There's a reason most new restaurant close after 1-5 year. [0]

[0] https://www.cnbc.com/2016/01/20/heres-the-real-reason-why-mo...

lots of smaller ones can't in fact.

this also gives rise to ununionized outfits as well. as theyre able to keep wages lower and bid more competitively.

Only one in fifteen private sector jobs in the US is unionized, you do not "give rise to ununionized outfits", that is the standard.

Ford has been unionized since before World War II. Actually the opposite happened in its case, unionizing GM and Chrysler made unionized Ford easier.

Companies raise prices to what the customers are willing to pay. It's not related to costs unless the cost exceeds price.

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