Calif. Restaurants Close Ahead of Minimum Wage Hike

‘You’ll see a few more closing just after the first of the year…’

Calif. Restaurants Close Ahead of Minimum Wage Hike

Fat City Bar & Cafe in 2015/PHOTO: Facebook

(Claire Russel, Liberty Headlines) A number of long-standing Sacramento restaurants are closing their doors ahead of California’s mandatory minimum wage hike.

In January, California’s minimum wage will rise to $13 per hour for businesses that employ 26 workers or more, and $12 per hour for smaller businesses.

The state hopes to raise the overall minimum wage to $15 per hour by 2023.

But several small business owners told KMAX-TV that they can no longer afford to operate because of how the increased labor costs will affect day-to-day operations.

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“California is a rough state to do small business,” Paul Fraga, who has owned a diner off of Highway 99 for the past 30 years, said. “They want everybody to make $20 an hour, but for the smaller guy, I can’t afford that.”

The “iconic” Fat City Bar in Sacramento’s downtown has also shut down after 43 years of business. The bar’s owner, Jerry Fat, said he had no choice.

“We’ve had a great ride,” he told ABC-10. “But due to the steady decline in Old Sacramento business, coupled with rising costs and increased competition for those shrinking dollars, we made the decision to close.”

Phil Courey, who owns a Greek restaurant that has operated for the past 14 years, said his restaurant is going under because of the minimum wage hike.

“Most of our margins have been consumed by the minimum wage pressures,” Courey said. “We close our doors one-by-one. Perry’s after 50 years, today Fat City and others…you’ll see a few more closing just after the first of the year.”

Bigger companies have also raised concerns about the minimum wage hike.

Houman Salem, owner of ARGYLEHaus of Apparel, said he’s moving his company from California to Nevada because he can no longer afford his large staff.

“When the $15 minimum wage is fully phased in, my company would be losing in excess of $200,000 a year (and far more if my workforce grows as anticipated). That may be a drop in the bucket for large corporations, but a small business cannot absorb such losses,” he wrote in the Los Angeles Times. “Today, it’s cool to be a tech startup in Silicon Valley, but not to be an apparel industry startup in the San Fernando Valley. That needs to change.”