$15 Minimum Wage is Unrealistic and Would Jeopardize Franchise Ownership and Job Opportunities
FOR IMMEDIATE RELEASE
Matthew Haller, 202-662-0770
$15 MINIMUM WAGE IS UNREALISTIC AND WOULD JEOPARDIZE FRANCHISE OWNERSHIP AND JOB OPPORTUNITIES
WASHINGTON, Aug. 29, 2013—In advance of labor groups organized efforts for employees to walk off their jobs in quick service restaurants in protest for higher wages, the International Franchise Association continues to educate key policymakers why the franchise industry, and the jobs created every day, would be at risk with an unrealistic $15 an hour minimum wage.
"Mandating increased wages would lead to higher prices for consumers, lower foot traffic and sales for franchise owners, and ultimately, lost jobs and opportunities for employees to become managers or franchise owners,” said International Franchise Association President & CEO Steve Caldeira. “The franchise industry is a proven job creator and career builder, yet efforts to double the minimum wage to $15 would clearly jeopardize opportunities for existing and prospective employees.”
"Many franchises have developed successful programs designed to help employees rise from entry level to management and ultimately, ownership," Caldeira added. “Arbitrarily mandating a higher minimum wage will only reduce the amount of entry level jobs that workers need to gain the skills to move up the employment ladder.”
Some of the calls for a higher minimum wage ignore the fact that franchisors do not determine wages. Franchisees do. These franchisees are small business owners that are already operating on thin margins due to a still very sluggish economic recovery, rising commodity and energy costs (which directly and negatively affects foodservice distribution pricing), while also trying to navigate through Obamacare with minimal negative impact to their businesses. With high unemployment, higher costs on small business owners are not what this economy needs. Unfortunately, low-cost meal options for consumers and entry-level opportunities for employees would almost certainly shrink if so-called “living wage” efforts were implemented.
“This campaign is also designed to pressure employees into organizing, generating much-needed headlines and revenue for labor unions who have faced a sharp decline in private-sector membership for years,” Caldeira concluded.
Further Background On The Negative Impact Of Increasing The Minimum Wage
The Most Recent Minimum Wage Hikes Resulted In 550,000 Less Part-Time Jobs According To Economist Michael Hicks Of Ball State. "The minimum wage increase accounts for roughly 550,000 fewer part-time jobs now than would otherwise be the case without the most recent three minimum wage increases… The most consistent finding of researchers into the dis-employment effects of the minimum wage are that teenagers, especially low skilled, male and minority suffer disproportionate job losses as a consequence of an increase in the minimum wage." (Michael Hicks, "Who Lost Jobs When The Minimum Wage Rose?," Ball State University , 2/10)
A 10 Percent Hike In The Minimum Wage Could Result In A 9 Percent Reduction In Teen Employment At Small Businesses According To San Diego State University Economist Joseph Sabia . "A 10 percent increase in the minimum wage is associated with a 4.6 to 9.0 percent decline in teenage employment in small businesses and a 4.8 to 8.8 percent reduction in hours worked by teens in the retail sector." (Joseph Sabia, "The Effect Of Minimum Wage Increases On Retail And Small Business Employment," Employment Policies Institute , 5/12/2006)
The Last Time The Minimum Wage Was Increased, 58 Percent Of Restaurant Owners Had To Raise Prices, And Many Cut Hours And Postponed Hiring. "In 2007, the last time the minimum wage was increased, National Restaurant Association research revealed that 58 percent of restaurant owners had raised prices following the wage increase. Many – 41 percent – also reduced employee hours. In addition, 26 percent postponed plans to hire new employees, and 24 percent reduced the number of employees in their restaurants." ("Minimum Wage Overview," National Restaurant Association )
According To Cato's Mark Wilson, The DOL's Analysis Of The First Minimum Wage Rule In 1938 Showed The Result Was Less Jobs. "The Department of Labor’s own assessment of the first 25-cent minimum wage in 1938 found that it resulted in job losses for 30,000 to 50,000 workers, or 10 to 13 percent of the 300,000 covered workers who previously earned below the new wage floor." (Mark Wilson, "The Negative Effects Of Minimum Wage Laws," CATO , 6/21/2012)
These Jobs Help People Gain Skills They Need To Move Up; In Fact, Nine Out Of 10 Managers Of Restaurants Got Started As Hourly Employees. "Eight in 10 restaurant owners got their first industry job at entry-level, and more than nine out of 10 managers started as hourly employees. One-half of American adults have worked in the restaurant industry at some point in their lives, and one out of three got their first job experience in a restaurant." ("Restaurants Add 560,000 Jobs In Past Two Years, According To New National Restaurant Association Analysis", National Restaurant Association , 4/9/12)
About the International Franchise Association
The International Franchise Association is the world's oldest and largest organization representing franchising worldwide. Celebrating over 50 years of excellence, education and advocacy, IFA works through its government relations and public policy, media relations and educational programs to protect, enhance and promote franchising. Through its media awareness campaign highlighting the theme, Franchising: Building Local Businesses, One Opportunity at a Time, IFA promotes the economic impact of the more than 825,000 franchise establishments, which support nearly 18 million jobs and $2.1 trillion of economic output for the U.S. economy. IFA members include franchise companies in over 300 different business format categories, individual franchisees and companies that support the industry in marketing, law and business development.
1900 K St., N.W., Suite 700 Washington, DC 20006 USA
Phone: +1 202/628-8000 Fax: +1 202/628-0812 www.franchise.org