The Rising Dough: Fighting for $15

dough for pizza or bread

Getting a Slice of the Pie

By James Bailey, CPA

For the first time in more than a decade, the U.S. House of Representatives passed an increase in the federal minimum wage. This bill, known as “The Raise the Wage Act,” would more than double the current federal minimum wage of $7.25 to $15 by incorporating annual minimum wage increases until 2024. The separate minimum wage for tipped employees, known as a tip credit (wages less than $7.25 per hour), would also be eliminated.

Although the bill passed in the House of Representatives, it’s unlikely to pass in the Senate any time soon.  Without argument, though, this is big.  But what does it mean?

According to Heidi Shierholz, senior economist and director of policy at the Economic Policy Institute, impacted workers would include those in restaurants, bars, hotels, frontline retail, and healthcare.[1]

 

One Side Says:

The National Restaurant Association (NRA) has stated its strong opposition to the $15 per hour minimum wage.  Sean Kennedy, EVP of public affairs for the NRA, noted: “We need a common-sense approach to the minimum wage that reflects the economic realities of each region because $15 in New York is not $15 in Alabama.”[2]

Few would argue that $15 per hour is the same state by state. There are significantly different economic realities by cities, states, and regions. Legislating increases for smaller American towns would have unintended consequences.

Matt Ensero, CEO and founder of Wing It On Franchising LLC, isn’t a fan of the bill.  “An artificially manipulated wage increase forced upon restaurant and food truck operators that is not in lockstep with our economic reality will only result in increased investment in automation and a reduction in the number of entry-level jobs offered.”[3]

 

The Other Side Says:

In the restaurant industry, Mr. Ensero’s comments are echoed by many, but certainly not by all.  In March 2019, McDonald’s announced their support of a wage increase in all industries and halted collaborative efforts with the National Restaurant Association in lobbying against the wage hike.  McDonald’s and proponents of the wage increase note that an increase would bring families out of poverty, reduce welfare, and income inequality.

 

Can They Agree?

Without a doubt, the battle for a minimum wage increase will play out in public view during the 2020 elections.  Can we come to some sort of consensus?

Author and journalist Anna Quindlen once wrote, “Ideas are like pizza dough, made to be tossed around.”  So, the question must be asked, does a little yeast make an entire batch of dough rise? Stay tuned as more unfolds!

 

 

James Bailey, CPA, Senior Manager, leads Adams, Brown, Beran & Ball, Chtd.’s Restaurant Industry niche.  With over fifteen years of public accounting and restaurant consulting experience, he strategizes with ABBB’s Restaurant clients on the unique challenges they face. Additionally, James is a keen researcher of cutting-edge technologies in the industry.  For more information, visit www.abbb.com or contact him at jbailey@abbb.com.

 

 

 

 

 

[1] https://www.cnbc.com/2019/07/18/business-groups-slam-house-for-passing-15-minimum-wage-bill.html

[2] https://www.restaurantbusinessonline.com/workforce/restaurants-warnings-about-15-minimum-wage-have-merit-government-study-finds

[3] https://www.restaurantbusinessonline.com/workforce/restaurants-warnings-about-15-minimum-wage-have-merit-government-study-finds