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Businesses find creative ways to cope with minimum wage hikes

When the minimum wage in San Jose went from $8 to $10 an hour in 2013, Adolfo Gomez started sending kitchen staff at his Mexican restaurant home early. His mother and brother handled the extra work.

In Albuquerque, Myra Ghattas told cooks and hostesses to come in later when the wage there increased from $7.50 to $8.50 the same year. Down the road, Steve Paternoster started closing the bar early at his Italian restaurant.

"You just schedule as tight as you can," said Paternoster, who owns Scalo Northern Italian Grill. "I put the emphasis on being there fishing when the fish are biting."

As political leaders in Los Angeles look to raise the minimum wage, some business owners have argued the move would force layoffs for workers and price increases for customers. But a look at how businesses fared after minimum wage hikes elsewhere offers a more nuanced portrait of how businesses cope with higher labor costs.

Many owners who at the time predicted their business would close are still in operation. Mass layoffs weren't an option, business owners said, because service would suffer.

Still, the wage increases ate into profits at businesses in San Francisco, San Jose, Albuquerque and Santa Fe, N.M. And that fundamentally changed the way they did business. Owners couldn't simply absorb the costs, so they scrubbed their budgets to preserve profits.

Many question whether workers benefited.

"The thought process is that you're going to put more money in people's pockets," said Ghattas, who owns the Slate Street Café, a wine bar and restaurant in Albuquerque. "In theory, that makes sense. But people end up getting hours cut, and they don't actually make any more money."
 

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