Restaurants Can’t Sustain Minimum Wage Hike

Representing an industry that will feel the greatest financial impact of a wage hike as one of the nation’s largest private sector employers providing jobs to 12.8 million individuals, the National Restaurant Association has concerns about the $2.10 federal minimum wage increase proposal. Without tax offsets (such as those supported by Rep. Howard P. “Buck” McKeon and Rep. Jim McCrery) or other measures to mitigate the negative financial impact a wage hike would have on the nation’s 935,000 restaurants and other small businesses, the industry cannot support this bill.

Seventy percent of all restaurants are small businesses, so a minimum wage increase without sufficient targeted offsets will severely impede job creation. The restaurant industry is predicted to create an additional 2 million positions in the next decade, and an increase in the starting wage will hamper that growth.

According to a nationwide survey of 1,000 restaurants that the Association conducted following the last increase, restaurants reported that more than 146,000 jobs were cut from restaurant payrolls, with operators postponing plans to hire an additional 106,000 new employees.

The total employment impact was 252,000 jobs in the restaurant industry. Although the overall restaurant industry continued to post employment growth following the last wage increase, the annual net increase in jobs was significantly lower than in the two years prior to the wage hikes.

Also, a wage hike will end up hurting the individuals it is supposed to help, as lesser-skilled employees would suffer most – a higher wage would attract workers with more skills and experience, and the lesser-skilled employees would have to compete with them for jobs.

The National Restaurant Association has been a leader in the debate on minimum wage on behalf of the restaurant industry. The Association chairs the Coalition for Job Opportunities, a group of more than 30 business organizations opposed to government-mandated increases in the entry-level wage. Additional information about the restaurant industry, its employees and the Association’s pro-employee/pro-employer public policy agenda is available at the National Restaurant Association’s website.