By Sen. James Libby

Are you concerned about the closure of some of your favorite Maine restaurants?

If you listen to some candidates, both nationally and here in Maine, the economy is portrayed as being all sunshine and roses. Inflation is cooling. Bidenomics is supposedly working. So there is no reason to feel downright anxious about the $400 electric bill that just arrived, or down about the closure of your favorite restaurant. Right?

Ask any Mainer how they’re feeling economically right now. They will likely say that inflation has taken its toll. In fact, this so-called economic pessimism was the subject of an article that appeared in the Bangor Daily News this week.

Hello, this is Senator Jim Libby of Cumberland County. Thank you for joining me for this week’s Republican Radio Address.

The Bangor Daily News piece by a vice president at First National Bank and former Bangor city councilor highlights the closure of an alarming number of restaurants across Maine, including one in Bangor that shut down just two months after it opened. Some of my favorite restaurants, including the Muddy Rudder in Yarmouth, have closed for good.

The author linked the closures to several economic factors such as inflation, labor costs and the end of pandemic relief that saved many businesses during the shutdown. He also said this has led to a negative sentiment about the economy that is shared by both businesses and consumers alike.

What he didn’t mention, though, is how government policies have as much to do with this pessimism as anything else he outlined. Using the article’s example of the rash of restaurant closures, it’s obvious that Democrat control of Maine’s government has made it painful for many of the state’s restaurants to operate over the past few years.

The writer first points to the cost of labor, which represents a third of the operating expenses for a typical restaurant. According to the National Restaurant Association, labor costs have gone up 31 percent over the past four years. Yet Maine has forced restaurants and every other business for that matter to absorb a massive minimum wage hike since 2016. This itself creates inflation.

Restauranteurs sometimes cite the difficulty of finding good help when they close their restaurant, but the truth of the matter is they also can’t afford to staff at requisite levels. Most economists agree – higher wages in the service sector lead to a labor supply shift leftward where costs are higher, wages are higher, staffing is more difficult, wait staff cover twice as many tables, cooks and dishwashers are shorthanded, and so on. Menu prices rise and the result is higher prices is less customers. It is a vicious cycle.

We have also artificially increased their energy costs with solar subsidies. Electric rates are 66 percent above pre-pandemic levels and poised to go even higher, as Maine has approved subsidies for solar farms that come online before the end of the year. Energy touches everything, from the processing cost of raw supplies and materials to the cost of keeping a restaurant’s lights on.

The cost of fuel is still 50 percent higher under the Biden/Harris Administration than what we were paying before the pandemic. High fuel prices add to the cost of everything that requires transportation.

Because of high energy and fuel prices, Democrat-led policies have increased restaurants’ food inventory costs much like consumers are paying $4 or $5 a pound for ground beef at the grocery store right now. It’s hard for consumers to absorb that, but it’s even harder for restaurants since food costs represent another third of their operating expenses.

Finally, have you looked at your home or car insurance bill, your property tax bill or even the interest rate on your credit card statement lately? Imagine what those cost increases have been for businesses.

The bottom line is that the Federal Reserve has printed too much money; and the President’s “Inflation Reduction Act” was the biggest misnomer in the history of federal policymaking. And Democrat policies here in Maine have made inflation that much worse.

It’s no wonder why our restaurants are feeling the pinch. If consumers are feeling this pessimistic now and cutting back where they can, especially with winter on the way, eating out or seeing a show becomes the first thing to go. Now those high costs that restaurants are bearing are magnified.

When businesses close, workers lose their jobs. Is it worth having one of the highest minimum wages in the nation if there is nowhere to earn it? The downward spiral will strengthen.

As one partner of the Muddy Rudder admitted to the Portland Press Herald, and I quote, “Restaurants are getting killed on the operations side.”

Instead, we need balance in Augusta and a focus on good economic policy that promotes growth. Maine’s residents and businesses deserve no less.

Again, this is Senator Jim Libby of Cumberland County. Thank you for listening.

Dr. James Libby represents the communities of District 22 in the Maine State Senate. He is the Senate Republican Lead for the Legislature’s Education Committee and Taxation Committee.