Labor costs, regulations wrecking area restaurant business

Michael Saltzman of the Employment Policies Institute investigates why the SF restaurant business is shrinking.

"San Francisco was once known for trendy restaurants with lines out the door. Today, the city's restaurateurs are concerned with keeping the doors open at all. Restaurant closings outpace openings by 9%, according to the Golden Gate Restaurant Association.

"How did the outlook get so bleak? Start with labor costs. In 2003 residents passed an initiative that set the minimum wage almost $2 above the state level and then linked it to rise with inflation. A decade later, another initiative incrementally lifted the wage floor to $15 an hour by 2018. On top of this, the city has separate ordinances regulating paid sick leave, employee health-care spending,and workplace scheduling.

"These costs are magnified by a quirk in California law that prohibits tip income from counting toward a restaurant employee's hourly wage requirement....

"Rising rents, exacerbated by the city's hostility to new development burden, employers and employees alike. Requirements for permits can keep restaurants closed for months...

"When all the options have been exhausted, many restaurants are forced to close. San Francisco lost nearly 1,000 full-service restaurant jobs last year. Annual employment growth in the industry has declined every year since 2012, and turned negative the past two years."

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