Business groups are preparing for a lobbying fight after Democrats in both chambers reintroduced a bill Tuesday to raise the federal minimum wage to $15 by 2025.
The Raise the Wage Act, spearheaded by incoming Senate Budget Committee Chairman Bernie Sanders (I-Vt.), would raise the minimum wage to more than double the current rate, which is $7.25 an hour.
The restaurant industry quickly pushed back on the legislation, saying it creates an impossible challenge for restaurants, which have already been hit hard by the coronavirus pandemic.
“Far too many restaurants will respond by laying off even more workers or closing their doors for good. As the pandemic has highlighted, the economic realities of each state are very different,” said Sean Kennedy, National Restaurant Association executive vice president of public affairs.
Kennedy added, “A nationwide increase in the minimum wage will create insurmountable costs for many operators in states where restaurant jobs are most needed for recovery.”
The U.S. Chamber of Commerce also has concerns over the economic damage a $15 minimum wage could do in the middle of “this K-shaped recovery, where so many of the jobs that have been lost are those jobs that tend to be on the lower end of the wage scale,” said Neil Bradley, chief policy officer at the Chamber.
“We remain open to sitting down with the new administration, and Democrats and Republicans to talk about a more sensible approach on minimum wage. But I can guarantee you there’s nothing sensible about $15,” Bradley said.
The Employment Policies Institute, a fiscally conservative think tank, released a study Tuesday that estimates that raising the federal minimum wage to $15 an hour would result in 2 million jobs lost.
The institute estimates the plan would cost employers more than $99 billion.
“This will probably be the most serious fight on the minimum wage since the mid to late 2000s when it went up the last time. I think the pressure on the left is probably as strong as it’s been in a long time to do something on this,” said Michael Saltsman, the institute’s managing director.
Opponents to the legislation stressed that the coronavirus pandemic and resulting economic recovery are the wrong time to force employers who are already struggling to keep staff on payroll to pay higher wages.
“I think it’s particularly irresponsible right now given what restaurants have been going through,” Saltsman said.
The franchise industry, represented by the International Franchise Association (IFA), is also anxious about the impact on struggling small businesses.
“We do have concerns about more than doubling the federal minimum wage particularly so quickly, and even more, concerns about doing it while small businesses are still dealing with the pandemic and coming out of this economic downturn,” said Matthew Haller, IFA senior vice president of government relations and public affairs.
Haller said IFA is open to a conversation about what the appropriate federal minimum wage is.
“The real issue is that doubling the minimum wage will be more harmful to the people it’s intended to help in places where the cost of living is lower,” he said. “$15 makes sense in New York City or San Francisco, but it doesn’t work in Wheeling, West Virginia.”
The bill would also phase out the tipped minimum wage for restaurant service workers, a proposal President Biden has made.
The National Restaurant Association argues that eliminating the tip credit would cut the wages of restaurant workers.
“The elimination of the tip credit will cut the take-home wages of thousands of tipped employees who make far above the proposed minimum hourly wage. These skilled hospitality professionals generally earn between $19-25 dollars per hour and have made clear many times before that they support a tipped minimum wage,” Kennedy said.
Massive restaurant chains are already voicing concerns about the future of their companies under the legislation. TGI Fridays CEO Ray Blanchette told CNBC on Friday that eliminating the tipped minimum wage would result in fewer hours for waitstaff and higher menu prices.
The Restaurant Workers of America, a group formed in 2017, will lobby Congress to keep the tip credit.
“The tip credit is a non-partisan issue, it is common sense pragmatic legislation. Our organization is strictly designed and hopes to preserve the tip credit as we know it,” said Joshua Chaisson, co-founder and vice president of Restaurant Workers of America.
They plan on starting a “fervent” email and phone campaign to contact lawmakers about their opposition to the provision.
“We have to share with lawmakers and educate lawmakers on why it’s important to lift up their workers now and why workers have a vastly different voice from ownership and associations of ownerships,” Chaisson said.
There is some skepticism on K Street whether the bill can get passed. It is expected to face pushback from Republican lawmakers as well as moderate Democrats.
A similar effort failed in 2013 when then-President Obama proposed raising the federal minimum wage to $9 from $7.25 by the end of 2015, but progressives called for a $10.10 minimum wage under three years.
One K Street source noted that the push for a $15 minimum wage has been an effective “political and messaging weapon” but questioned whether Democratic lawmakers overall wanted such a hike.
Still, labor unions have been vocal in the fight. The Service Employees International Union’s Fight for $15 campaign has led to $68 billion in raises for 22 million workers since it launched in 2012, according to the union.
Raising the minimum wage is also expected to increase income for nearly 32 million Americans, with larger effects for Black, Latino and female workers, according to the left-leaning Economic Policy Institute.