$15 Minimum Wage Drives 50-Year-Old Seattle Restaurant Chain Into Bankruptcy


A California restaurant chain has gone into bankruptcy because the government-mandated $15 an hour minimum wage helped drive it to insolvency.

The Seattle-based restaurant chain, Restaurants Unlimited, has closed down and cited the artificially enforced high cost of labor as a chief reason. The $15 minimum wage killed them, they said.

The chain, which has operated restaurants since the 1960s, said the government-mandated wages made margins far too tight. And then, when a few restaurants had soft openings, that was all it took to drive them under. There was just no margin for loss, they said.

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“Over the past three years, the company’s profitability has been significantly impacted by progressive wage laws along the Pacific coast that have increased the minimum wage,” Chief Restructuring Officer David Bagley said in court filings. “As a large employer in the Seattle metro market, for instance, the company was one of the first in the market to be forced to institute wage hikes.”

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The bankruptcy follows eatery trends in every state with the artificially high minimum wage, according to Fee.org.

The announcement, however, mirrors labor trends on the east and west coasts. BLS data show that New York City experienced its sharpest decline in restaurant jobs since 9/11 following its passage of a $15 minimum wage law. In California, a local newspaper recently detailed how an entire business district virtually disappeared following the city’s aggressive minimum wage push.

Restaurants Unlimited’s announcement came a day before the Congressional Budget Office released a report estimating that a House bill designed to raise the federal minimum wage to $15 an hour would cost 1.3 million jobs.

Fortunately, Donald Trump’s gangbuster economy has helped create jobs in other areas for those employees, but industries that rely on the minimum wage in liberal states are finding the rollicking economy is doing little to help their bottom line, not because it hasn’t touched them, but because liberal government policies have been so destructive that they have outpaced the positive effects of the Trump economy.

While the issue may be popular with voters ignorant of economic matters, economists are generally dour on artificially enforced minimum wage hikes.

As economist and educator Walter Williams recently wrote:

While there is a debate over the magnitude of the effects, the weight of research by academic scholars points to the conclusion that unemployment for some population groups is directly related to legal minimum wages. The unemployment effects of the minimum-wage law are felt disproportionately by nonwhites. A 1976 survey by the American Economic Association found that 90 percent of its members agreed that increasing the minimum wage raises unemployment among young and unskilled workers. It was followed by another survey, in 1990, which found that 80 percent of econo­mists agreed with the statement that increases in the minimum wage cause unemployment among the youth and low-skilled. Furthermore, whenever one wants to find a broad consensus in almost any science, one should investigate what is said in its introductory and intermediate college textbooks. By this standard, in economics there is broad agreement that the minimum wage causes unemployment among low-skilled workers.

Wages are best when they are market driven, not government mandated.

Follow Warner Todd Huston on Twitter @warnerthuston.

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