Minimum wage hikes trigger 'payroll tsunami,' as small businesses cut back

[WestVirginiaRebel]

Fox News

Small business owners across the country are beginning to feel the pinch as more states move toward a $15 minimum wage.

While proposals to raise pay are intended to help workers, several mom-and-pop coffee shops as well as restaurants are responding by cutting hours, eliminating jobs or closing down entirely because they can't keep up with rising wages under the law.

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It's the ugly side to the highly touted wage hikes, economists say, adding that the bumps can unleash a "payroll tsunami" for smaller businesses already stretched thin from rising rents and soaring health care costs.

"For some of these businesses, the minimum wage hikes tip the balance between staying in business and going out of business," Panos Mourdoukoutas, professor of economics at LIU Post in New York, wrote in Forbes.

Boston's iconic restaurant Durgin-Park in Faneuil Hall was forced to shutter its doors in January after nearly two centuries in business. The owners said they couldn't keep up with the wages and health care premium hikes.

“We’d been thinking about [closing] for the last year,” Michael Weinstein, CEO of Ark Restaurants, which purchased Durgin-Park in 2007, told Boston.com. “First of all, our landlords are terrific. It’s an expense problem that we’ve been facing. We [own] several venues across the country that are facing a minimum wage increase. As part of that, we’re facing an increase in liability, property and health insurance.”

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Fifteen dollar follies come home to roost.