Restaurants Urge Congress to Forgo Minimum Wage Hike

February 16, 2021 by TWN Staff
Sidewalk seating at a local restaurant. (Photo by Dan McCue)

The National Restaurant Association is urging Congress not to increase the federal minimum wage as part of President Joe Biden’s $1.9 trillion COVID relief package.

The association said in a letter sent to congressional leaders Tuesday that fast-tracking a minimum wage hike to $15 an hour would only cause more suffering for its members who have struggled throughout the coronavirus pandemic.

The letter goes on to say that raising the federal minimum wage right now would have the unintended consequence of pushing more employees off payrolls, raising menu prices, and forcing more restaurants to close permanently.

The Raise the Wage Act was introduced by Sen. Bernie Sanders, I-Vt., last month. It calls not only for raising the minimum wage from $7.25 to $15, but also for phasing out the tipped minimum wage for restaurant service workers.

Senate Democrats are divided on the issue, many contending that the wage hike has nothing to do with COVID relief.

According to the restaurant association, “passage of this bill this year would lead to job losses and higher use of labor-reducing equipment and technology.”

“Nearly all restaurant operators say they will increase menu prices. But what is clear is that raising prices for consumers will not be enough for restaurants to absorb higher labor costs,” Sean Kennedy, executive vice president for Public Affairs for the National Restaurant Association, continued.

As for Sen. Sanders tip proposal, Kennedy said eliminating the tip credit “will hurt millions of servers who rely on the current system where they earn between $19-$25 an hour with tips.”

The bolster its point, the association pointed to a recent survey of its members that found 82% of restaurant operations say the initial wage increase would negatively impact their ability to recover from the pandemic.

The percentage is even higher among franchisee-owned restaurants, 90% of whom said the initial wage increases would have a negative impact on their ability to recover.

The survey also found that raising the federal minimum wage and eliminating the tip credit would force 98% of restaurant operators to increase their menu prices; 84% to cut jobs and employee hours; and 75% to cut employee benefits.

Full service and franchisee owned restaurants are most likely to have to make changes that impact their workforce if the federal minimum wage is increased or the tip credit is eliminated, the association said.

Nearly 65% of operators said they would be likely to add labor-reducing equipment or technology if the law went into effect.

“The survey results make it crystal clear that the restaurant industry and our workforce will suffer from a fast-tracked wage increase and elimination of the tip credit,” Kennedy concluded. “Restaurant jobs will be critical to every local community recovering from the pandemic, but the Raise the Wage Act will negate the stimulative impact of a worthy plan. We share your view that a national discussion of wage issues for working Americans is needed – but the Raise the Wage Act is the wrong bill at the wrong time for our nation’s restaurants.”

To assess the potential impact of a proposed increase in the federal minimum wage, the National Restaurant Association conducted a survey of 2,000 restaurant operators February 2-9, 2021.

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