Restaurant Closing Time

Sometimes, notwithstanding our wishes and hopes, we just can’t change or escape the basic laws of economics.  California restaurants are learning this lesson — one that so many other businesses have learned in so many other settings for so many years.

A number of California communities, including San Francisco, have decided that they should legislate substantial increases to the minimum wage, so that the minimum wage will reach $15 — a number that was picked not through the guidance of the invisible hand of supply and demand, but because it sounds goods when politicians promise it.  Basic laws of economics will tell you that if you increase the costs for a business, the business has only a few options:  either absorb the increase by cutting costs in other areas (or accepting lower profits), or increase their prices to make up for the extra costs, or recognize that you just can’t make the economics of the business work and close your doors.  In California, a number of restaurants have decided that the latter route is the only viable option.

o-restaurant-worker-facebookIn the Bay Area, at least 60 restaurants have closed since September, and as a result a number of line cooks, car valets, dishwashers, table bussers, and waiters — the people who were supposed to be helped by the $15 minimum wage initiatives, incidentally — have lost their jobs.  These results in the San Francisco area, where wages for starting workers are higher than in less affluent parts of the state, are leaving some Californians who aren’t living in economic dreamland wondering what the effects will be when a statewide minimum wage takes effect and inland areas, which already have higher unemployment numbers and where starting pay is correspondingly lower, are affected.

This restaurant closing effect shouldn’t be a surprise.  Many restaurants run on very thin margins as it is, trying to find that magic balance between quality food and reasonable prices and cool ambiance that diners are looking for.  They don’t have big profit margins that can simply absorb higher wages.  If minimum-wage legislation substantially increases their costs, most restaurants just don’t have the option of jacking up their prices because they know they are going to lose their more cost-sensitive patrons.  And there really aren’t many other areas in which restaurants can make up for increased labor costs.  Tinker with the quality of the food, or the ingredients, or the portion size, and you’ll likely end up losing your more discriminating patrons — and many restauranteurs who are passionate about food probably wouldn’t want to change how they prepare dishes, anyway.  So the logical option, unfortunately, is closing.

In short, the five-star joints, where there is less price sensitivity and where the wages may already be higher, will survive, but many of the more basic restaurants will struggle and close.  The cause-and-effect relationship is so predictable that a recent academic study found that every $1 hike in the minimum wage brings a 14 percent increase in the likelihood that a 3.5-star restaurant on Yelp! will close its doors.

The people who are advocating for large increases in the minimum wage no doubt are well-intentioned, but their efforts ultimately are misguided because you simply cannot ignore, or legislate away, the laws of economics.   How many times do we have to see this play before people start getting the plot?

Publishing Actors’ Ages

Let’s say you were concerned about age discrimination in Hollywood, where male stars seem to get roles no matter their age, while female actors — other than the peripatetic Meryl Streep — seem to have difficulty getting cast once they hit 45 or 50.  Would you:

(a) notify everyone in the film industry that you were assigning an extra investigator to specifically focus on enforcing existing laws against age discrimination in the industry;

(b) decide that current federal and state law wasn’t sufficient and therefore enact new legislation directly regulating age discrimination at the movie studios that make the films; or

(c) enact a law preventing internet sites, including specifically the IMDb website, from publishing actors’ ages and date of birth information.

Weirdly — or maybe not so weirdly — California chose option 3.  Yesterday a federal judge issued a preliminary injunction against the law, finding that “it’s difficult to imagine how AB 1687 could not violate the First Amendment” because it bars IMDb from publishing purely factual information on its website for public consumption.  And, the court found that although preventing age discrimination in Hollywood is “a compelling goal,” California did not show the new law is “necessary” to advance that goal.  The judge added:  “In fact, it’s not clear how preventing one mere website from publishing age information could meaningfully combat discrimination at all. And even if restricting publication on this one website could confer some marginal antidiscrimination benefit, there are likely more direct, more effective, and less speech-restrictive ways of achieving the same end. For example, although the government asserts generically that age discrimination continues in Hollywood despite the long-time presence of antidiscrimination laws, the government fails to explain why more vigorous enforcement of those laws would not be at least as effective at combatting age discrimination as removing birthdates from a single website.”  You can read the judge’s pointed, three-page ruling here.

This conclusion is not surprising to anyone who understands the First Amendment, and presumably didn’t come as a surprise to the lawyers trying to defend California’s law, either.  All of which begs the question of why California legislators enacted it in the first place — and that’s where the “maybe not so weirdly” comment from above comes in.  I’m sure the Hollywood community is, collectively, a big-time contributor to political campaigns on a California state level, just as it is on a national level.  If you were a politician who wanted to say that you had done something to address age discrimination in Hollywood, but without doing anything that might actually, adversely affect the rivers of cash flowing to your campaigns from the big studios, supporting a law that affects only an internet website that actors hate because it discloses how old they really are is a much safer bet.

It’s nice to know that we have federal judges who understand what the First Amendment means, even if California’s elected representatives are clueless.  And if those legislators are so concerned about age discrimination in Hollywood, maybe they’ll actually do something about it — rather than just taking steps to block speech they don’t like.

Lessons From A Crumbling Spillway

People have been holding their breath and keeping their fingers crossed out in northern California.  Thousands of residents from a number of communities have been evacuated after a spillway from the massive Oroville dam was determined to be on the brink of failure.  As of early this morning, fortunately, it looks like the spillway will hold.

oroville-dam-side-view-associated-press-640x480The Oroville Dam story is an interesting one.  California has been struggling with drought conditions for years, but then recently got hit with lots of rain and snow that has filled its reservoirs and allowed officials to declare that drought conditions are over.  Now, though, the spillway failure raises questions about whether the state’s water control infrastructure is up to the task of dealing with water flow in non-drought conditions.

It’s a story that you probably could write about much of America’s infrastructure from the east coast to the west coast, and all points in between.  As you drive under bridges that look to be cracked and crumbling, with chunks of concrete missing and rebar exposed, travel through airports that are beat up and obviously overtaxed, and walk past retaining walls that are bowed out, you wonder about whether the folks in charge are paying much attention to the basics.  And, of course, that doesn’t even begin to address “hidden” infrastructure, like dams and reservoirs, sewer piping and spillways, electrical grids and stormwater drains, that are underground or removed from population centers.  There is a lingering sense that the concrete, steel, and piping that holds the country up has been neglected — perhaps because bridges, tunnels, dams, and reservoirs don’t vote, lobby legislators, or fill council chambers, demanding their share of tax dollars.

President Trump has talked about addressing these infrastructure issues — such as our “third world” airports — and it’s an issue about which there seems to be some consensus among both Democrats and Republicans in Washington, D.C.  But there’s more to it than that.  Not every bridge or reservoir is a federal issue that requires federal tax dollars or federal bureaucrats issuing approvals.  Local and state governmental officials need to recognize that they have responsibility, too, and they can’t continue to shortchange maintenance and improvement of core infrastructure.  Rather than just holding their hands out to Uncle Sam, they need to look to their own budgets and tax revenues to fund the repair and refurbishment effort, too.

Perhaps the Oroville Dam story will get people to start paying attention to what they should have been paying attention to all along.

Sunday Sour Savor

It’s been a busy weekend, but now the chores are done, the groceries have been put away, and the car is refueled.  With a good book to enjoy — Echoes of Sherlock Holmes, a terrific collection of short stories inspired by the world’s first, and forever foremost, consulting detective — and only a few idle hours remaining before the work week begins again, it’s time to lean back and crack open a sour.  Today, it’s a Farmer’s Reserve Nectarine brewed by the Almanac Beer Company in Northern California.  Try it before California secedes from the Union and import duties make it crushingly expensive.  It’s light and tart and very fine, indeed.  (Thanks, Emily!)

Sunday afternoons are to be savored, even in a crazy world.

Getting Him Off His Rock

Say you want to propose to your long-time girlfriend.  Should you (a) go to the place you first met, fall to one knee and present an engagement ring as in old-time movies, (b) pop the question at the end of a romantic meal at a fine restaurant that is a mutual favorite, or (c) ignore a climbing ban and scale a 600-foot outcropping called Morro Rock on the California coastline so you can make your marriage proposal via the Facetime app?

morrowrockModern times being what they are, of course one guy chose (c).  Although his girlfriend said yes, the whole exercise didn’t work out so well for him.  He got stuck on the way down, became stranded on a sheer ledge 80 feet off the ground, and had to be rescued by a California Highway Patrol crew and helicopter; then he was arrested for suspicion of possession of methamphetamine because he was acting “strangely.”

Acting strangely?  You think?  When it comes time to ask someone to spend the rest of their life with you, you decide the best way to do it is to scale a rock and do it remotely, via an app?  That doesn’t exactly send a message about “we” rather than “me,” does it?

The BBC report on this story says that the rock climber will be asked to pay for the cost of his rescue, and I certainly hope that is true.  I’m heartily sick and tired of adventurers and thrill-seekers deciding to take unnecessary risks by parachuting into remote mountain ranges or climbing sheer rock faces or helicoptering  to inaccessible ski areas, getting trapped or stranded, and then becoming the subject of massive and expensive search-and-rescue operations.  They’re taking stupid risks for their own self-aggrandizement, and the taxpayer shouldn’t end up paying the bill for their folly.

As for the girlfriend who said yes, I hope she reconsiders.

Santa Barbara Scene

  
I’ve spent a fair amount of time in San Francisco, Los Angeles, Sacramento, Long Beach, and San Diego, but much of California north of LA — such as Santa Barbara — is unknown to me.

It’s nice to get a chance to visit a new place and experience the geography firsthand.  I’d heard that Santa Barbara was pretty, but I had no idea the coastline was so rugged. It reminds me a bit of Maine, but it offers its own rocky charms — and a few offshore platforms to boot.  After a flight seated next to a screaming kid and a two-hour taste of LA-area traffic, the charms of Santa Barbara beachfront were much appreciated.