IFA Responds to Protests at Quick Service Franchise Restaurants

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FOR IMMEDIATE RELEASE


Contact:

Matthew Haller, 202-662-0770

Jenna Weisbord, 202-662-0766

mhaller@franchise.org

jweisbord@franchise.org


IFA RESPONDS TO PROTESTS AT QUICK SERVICE FRANCHISE RESTUANTS


WASHINGTON, Dec. 5, 2013—International Franchise Association President & CEO Steve Caldeira released the following statement responding to protests at quick service franchise restaurants organized by labor unions and led by the Service Employees International Union advocating for an increase in the minimum wage.


“Arbitrarily increasing the cost of labor in the current economy and on top of the costs already being levied on franchise owners by Obamacare’s employer mandate and recent tax increases will result in higher prices for consumers, lower foot traffic and sales for franchise owners, and ultimately lost entry-level jobs.


“These protests are clearly orchestrated and paid for by unions to generate headlines and grow union membership, which has been declining in the private-sector for years. There is no demonstrable evidence that employees of any fast food franchises are walking out of their jobs on their own volition. Unions should find other ways to grow their membership instead of on the backs of small business owners, the actual hard-working folks who create two-thirds of all net, new jobs and opportunities for advancement in this country.


“These union–driven efforts ignore the fact that the federal minimum wage was created for entry-level, low-skilled workers, and never intended to be a living wage. Franchise restaurant brands have developed training programs that enable entry-level employees to rise into management and ownership–opportunities a living wage will take away.”


Background


New survey research commissioned by the International Franchise Association and the U.S. Chamber of Commerce released this week shows that raising the minimum wage will hurt employees and the economy. The survey, conducted by Public Opinion Strategies, shows that 82 percent of decision makers at franchise businesses report they will make personnel adjustments to a living wage, while 68 percent will adjust personnel decisions to a $9.00 minimum wage. Survey respondents state that these adjustments include reducing entry-level hiring, reducing hours, cutting training and raising prices.



 Some calls for a higher minimum wage ignore the fact that it is not CEOs of franchise brands who set wages at their franchise units but the franchisee small business owner. In addition, franchise and non-franchise businesses alike invest in training programs designed to give entry-level workers the skills they need to grow. Research shows the high majority of managers began as entry-level hourly workers and two-thirds of minimum wage workers receive a raise within a year.


Anthony Davies And James Harrigan Argue The Minimum Wage “Hurts The Very People It Aims To Help .”

“In a bizarre twist, raising the minimum wage hurts the very people it aims to help. As detailed in a forthcoming paper to be published by the Mercatus Center, national employment data from 1975 through 2012 show that on average, a 10 percent increase in the minimum wage has been followed by no change in employment among college-educated workers, a half-percentage point increase in unemployment for those with high school diplomas, and a one percentage point increase in unemployment for those without high school diplomas. Young people who have yet to finish high school are hit hardest of all. They have to contend with a two percentage point increase in unemployment, and as a result many are unable to find summer employment – employment that would help them acquire the skills to find better work in the future.” (Antony Davies & James Harrigan, Raising The Minimum Wage Is No Free Lunch,


US News & World Report , 10/21/13)


A 10% Increase In The Minimum Wage Reduces Net Job Growth By 25 Percent Of Net Job Growth According To Meer And West .

“Because the outcome is defined as a growth rate, the result in Column (4) indicates that a real minimum wage increase of ten percent reduces job growth in the state by around 0.53 percentage points (during these years, the average state employment growth rate was 2.0 percent annually). In other words, a ten percent increase to the minimum wage results in a reduction of approximately one-quarter of the net job growth rate.” (Jonathan Meer & Jeremy West, Effects Of The Minimum Wage On Employment Dynamics,


Texas A&M , July 2013)


MEER AND WEST: “We find that the minimum wage reduces net job growth, primarily through its effect on job creation by expanding establishments.” (Jonathan Meer & Jeremy West, Effects Of The Minimum Wage On Employment Dynamics,


 Texas A&M , July 2013)


States With Minimum Wages Higher Than The Federal Level Experience Lower Job And Economic Growth According To Mark Wilson

 “State-imposed minimum wages that are higher than the federal minimum place workers and businesses in those states at a competitive disadvantage. If other factors are equal, labor-intensive industries will tend to shift their investment to states that don’t impose those extra cost burdens. Thus, states with relatively high state minimum wages may have lower job growth and lower economic growth than would otherwise be the case. Also, workers whose employment prospects are impinged by high state minimum wages have an increased incentive to migrate to other states to find jobs.” (Mark Wilson, The Negative Effects Of Minimum Wage Laws,


Cato Institute , 6/21/12)


Disadvantaged Workers Suffer The Most From A Higher Minimum Wage Says David Neumark And William Washcher.

“Studies that focus on the least-skilled groups that are likely most directly affected by minimum wage increases provide relatively overwhelming evidence of stronger disemployment effects for these groups.” (David Neumark & William Wascher, Minimum Wages And Employment,


UC Irvine , 2007)


While Starting At Minimum Wage, Most Entry-Level Workers Receive Raises Within One Year According To James Sherk

 “Over two-thirds of workers starting out at the minimum wage earn more than that a year later… While very few Americans currently work for the minimum wage, a substantial number once did so. Over half of American started their careers making within one dollar of the minimum wage. Most quickly get promoted as their productivity increases.” (James Sherk, Testimony – What Is Minimum Wage: Its History And Effects On The Economy,


Heritage Foundation , 6/25/13)


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 )


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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.


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Phone: +1 202/628-8000 Fax: +1 202/628-0812 www.franchise.org

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