Ever since last April when Sen. Patrick Murphy and Rep. Bobby Scott introduced the Raise the Minimum Wage Act, which would surge the national hourly wage from $7.25 to $12 within the next five years, organizations are speaking out against it.
To address this problem, there was a panel discussion on Capital Hill, sponsored by the Competitive Enterprise Institute (CEI.) Alfonso Amador, the senior vice president of labor and workforce policy at the National Restaurant Association (NRA,) expressed his group’s concerns stating “There seems to be a perception that every job needs to be able to maintain a family of four. Not every job is there to sustain a family of four.”
His statements correspond with the NRA’s stance against this act. Here’s what the trade association states on its website: “As businesses struggle to recover from the economic recession, dramatic, mandatory wage increases would place yet another financial burden on business owners who are already feeling the pressures of a weak economy and additional costs and regulatory complexity associated with the Affordable Care Act.”
The NRA speaks on the behalf of the foodservice industry, which is the second-largest private-sector employer with over 14 million workers. Foodservice employees make up a whopping 10 % of the country’s entire workforce.
Restaurant operators have low profit margins and are already devoting one third of their sales to employee wages and benefits. According to research from the NRA, the last time the minimum wage was increased in 2007, the industry reduced costs elsewhere. This had a negative impact not only on consumers, but also on the workers. 48% of restaurant operators increased menu pricing and 41% reduced employee hours.
So with a wage raise like this, all businesses will cut corners in other ways. “Millions of workers are getting a raise, but those raises come at a cost. Other workers directly pay for those raises through reduced hours, firings, benefit cuts, and other harms. Those workers and would-be workers have few defenders,” said Ryan Young of the CEI.
We are already seeing this happen on a state level. In New York, where the minimum wage recently made a jump from $8.75 to $9 an hour, this has caused businesses to eliminate employee hours. So consider this, at a $8.75 wage for 40 hours, that equals roughly $350 a week before taxes. While, at a $9 an hour for 29 hours that equals roughly $261 a week before taxes. So, that means that they will either have to get another part time job to make what they made previously.