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State of the Union puts minimum wage, 30-hour work week, joint employer issues in the spotlight

It's been a busy week in Washington. From the State of the Union address to the Supreme Court to more on the minimum wage, here's a round-up of hot public policy topics for restaurants.

January 22, 2015 by Brenda Rick Smith — Editor, Networld Media Group

With the State of the Union address taking center stage, it's been a busy week in Washington, D.C. Here's a roundup of what's happened in public policy in recent days:

The State of the Union address

During his State of the Union address on Wednesday, President Barak Obama put forth several policies that will likely have a direct impact on employers. He called on Congress to send him "a bill that gives every worker in America the opportunity to earn seven days of paid sick leave."

He also challenged Congress to raise the mimimum wage, saying: "[T]o everyone in this Congress who still refuses to raise the minimum wage, I say this: if you truly believe you could work full-time and support a family on less than $15,000 a year, go try it."

President Obama also celebrated to rollout of the Affordable Care Act, saying that millions are now insured who previously could not afford insurance, and warned against action that would take away insurance.

"To give working families a fair shot, we'll still need more employers to see beyond next quarter's earnings and recognize that investing in their workforce is in their company's long-term interest," said Obama.

In a response issued in anticipation of the State of the Union Address, International Franchise Association President & CEO Steve Caldeira urged policymakers to reject the National Labor Relations Board's declaration that franchisors and franchisees are "joint employers," calling it a threat to the franchise relationship that could undermine traditional employment structures.

Caldeira also called on the Administration and Congress to amend the definition of full-time employment under the Affordable Care Act to the traditional 40 hours per week. He also asked policymakers to simplify the tax code and reduce rates.

Caldeira also called for immigration reform that "strengthens our borders, includes an effective employment eligibility verification (E-Verify) that provides safety and certainty for employers, and vastly improving our visa program to allow temporary and low-skilled workers to enter the United States legally."

Scott DeFife, the National Restaurant Association's EVP for Policy and Government Affairs, also responded to the State of the Union Address in a statement.

He voiced support for the president's proposals related to training and skill development and immigration, but voiced concern over sweeping mandates that he said don't take into account the diversity of the restaurant industry.

"Recent history has shown the unintended consequences of overly prescriptive mandates, such as those embedded in the ACA's employer mandate, as negatively impacting employment opportunities, especially for those with little or no work experience," said DeFife in the statement.

Supreme Court decides not to hear swipe fee case

The National Restaurant Association also voiced its disappointment over the Supreme Court's decision not to hear its appeal protesting the Fed's setting of the standard debit card transaction fee at $.21. 

"Inflated swipe fees are a serious business concern for restaurant operators and the business community at large. Allowing higher fees on low-ticket bills was not the intent of Congress and an unintended consequence of the Federal Reserve's flawed implementation of the law. We will continue to fight for a solution and hope the Federal Reserve will exercise its existing authority to reconcile this and ensure the major card brands cannot continue to levy exorbitant debit card fees on restaurateurs nationwide," said DeFife in a statement.

Minimum wage

As President Obama reiterated his support for a minimum wage hike, and restaurant operators continue to explore ways to deal with the inevitable, researchers from the University of Massachusetts Political Economy Research Institute (PERI) waded into the fray with research that they say shows fast food restaurants can increase the minimum wage to $15 per hour without unemployment losses or a decline in profits.

Using data gathered from previous studies and U.S. Economic Census reports, economists Robert Pollin and Jeannette Wicks-Lim said they have found that at the standard rate of industry sales growth the savings from a decrease in workforce turnover added to revenue generated from moderate annual three percent price increases and could support a two-stage increase in the minimum wage from its current level of $7.25, first to $10.50 and then to $15 three years later.

Published on the PERI website, the working paper, "A $15 U.S. Minimum Wage: How the Fast-Food Industry Could Adjust Without Shedding Jobs," describes how this increase in wages can be accomplished without generating employment losses within the industry and without these businesses facing a decline in profitability.

"We conclude that the fast-food industry could indeed absorb the increase in its overall wage bill without resorting to cuts in their employment levels at any point over the four-year adjustment period," explained Pollin, Distinguished Professor of Economics at UMass Amherst and Co-director of PERI, and Wicks-Lim, a PERI research assistant professor, in a press release. "The fast-food industry could fully absorb these wage bill increases through a combination of turnover reductions, trend increases in sales growth and modest annual price increases over the four-year period. We also show that fast-food firms would not need to lower their average profit rate during this adjustment period. Nor would the fast food firms need to reallocate funds generated by revenues away from any other area of their overall operations, such as marketing."

Corn Ethanol Mandate

Sens. Pat Toomey, R-Pa., and Dianne Feinstein, D-Calif., have introduced an amendment to the Keystone pipeline bill that would end the requirement that gasoline be blended with corn-based ethanol, according to the Des Moines Register. 

In a statement praising the senators for their action, the National Council of Chain Restaurants (NCCR) said, "The RFS has wreaked havoc on food commodity markets for almost a decade, raising food prices for local chain restaurant businesses and consumers alike. It's time the Congress took action on this broken policy, and this amendment, which would allow corn ethanol to compete without a government mandate, is a welcome step in the right direction."

Image courtesy of the White House Press Office.

About Brenda Rick Smith

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Brenda has more than 20 years of experience as a marketing and public relations professional. She invested most of her career telling the story of entrepreneurial non-profit organizations, particularly through social media.

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