A National Restaurant Association member today told a Senate panel that a federal minimum wage increase would have a negative effect on the predominantly small-business restaurant industry and ultimately harm employees – possibly forcing restaurants to reduce employee hours, postpone plans for new hiring and expansion, and reduce the number of employees in restaurants.
Melvin “Mel” Sickler, a multi-store Auntie Anne’s Pretzels and Cinnabon franchisee owner from Williamstown, N.J., testified before the U.S. Senate Health, Education, Labor and Pensions Committee hearing on recently introduced legislation that would increase the federal minimum wage rate by 39 percent, from $7.25 an hour to $10.10 per hour.
“The restaurant industry is dominated by small businesses – more than seven in 10 eating and drinking establishments are single-unit operations,” Sickler said. “Food and labor costs are the two most significant line items for a restaurant. With average pre-tax margins of roughly four to six percent, increases in food and labor costs can have a dramatic impact on a restaurant’s bottom line. Only a small minority of restaurants will be able to handle a 39 percent minimum wage increase without taking actions that will harm workers.”
In his testimony on behalf of the National Restaurant Association, Sickler noted the decline of restaurant job opportunities in Oregon after the state began raising its minimum wage above the federal level in 1997. All restaurants in the U.S. employed an average of 16.9 workers in 2011, unchanged from 1996. Oregon’s restaurants, however, employed an average of only 13.8 workers in 2011, or 2.6 fewer employees than they did before the state’s minimum wage began rising above the federal level in 1997.
In addition, Sickler pointed to Bureau of Labor Statistics data which shows that the vast majority of minimum wage restaurant employees are young. Forty-six percent of federal minimum wage restaurant employees are teenagers, while 70 percent are under the age of 25 –most of them, 80 percent, working part-time. The majority of restaurant employees who earn the federal minimum wage are also not the heads of their households.
“The restaurant industry provides millions of Americans with their first job and the critical skills needed for a successful and rewarding career,” Sickler said. “And while serving as the gateway for many young people to enter the workforce, we also provide great opportunities for advancement regardless of background. The National Restaurant Association calls on members of this committee and all of those serving in Congress to focus on policies that encourage more people, not fewer, to enter the workforce. Our collective goal should be to get our young people hired and on the path to achieving the American Dream.”
Sickler’s complete written testimony for the hearing can be found here.
Founded in 1919, the National Restaurant Association is the leading business association for the restaurant industry, which comprises 980,000 restaurant and foodservice outlets and a workforce of more than 13 million employees.