Minimum-Wage Hike Leads to Maximum Cuts

Multiple hospitality-industry executives believe a series of minimum-wage increases, which culminated with a 70-cent-per-hour boost in 2009, have created new challenges for visitor-driven businesses in San Antonio that were already dealing with the effects of a national recession.

The hourly-wage-earner is one of the key sectors of a workforce that has helped sustain the city’s multibillion-dollar hospitality industry.

And it's a trend that's being felt nationwide by businesses big and small.

But while supporters applaud the higher wages some of these workers now earn, critics warn that businesses are responding by cutting workers’ hours and hiring fewer people.

David Macpherson, professor of economics at Trinity University and co-author of a recent study on the effects of the minimum-wage increases, says the hospitality industry’s concerns are justifiable.

“That industry will be disproportionately affected,” he says.

Clay Stewart, general manager of a pair of Ripley Entertainment Inc.’s San Antonio attractions—Ripley’s Believe It or Not! and Louis Tussaud’s Waxworks—says the 40 percent hike in the minimum-wage rate over the last three years, coupled with an economic downturn, has forced businesses in his industry to make some difficult cuts. He says his attractions have had to reduce workers’ hours in an effort to cope with rising costs.

“This will become even more serious,” he says, if the minimum wage is raised again.

“All we can do now,” he adds, “is hope that the economy improves.”

For more on the troubled hospitality industry, click here for the full story from the San Antonio Business Journal (subscription required).