President Obama laid out a proposal to increase the federal minimum wage to $9 during Tuesday night's State of the Union address. The idea is sure to have a big impact on the foodservice industry, which employs about 13 million people, many of whom make the current $7.25 level.
"Today, a full-time worker making the minimum wage earns $14,500 a year. Even with the tax relief we've put in place, a family with two kids that earns the minimum wage still lives below the poverty line. That's wrong," the President said. "That's why, since the last time this Congress raised the minimum wage, 19 states have chosen to bump theirs even higher."
At the start of the New Year alone, the minimum wage increased in 10 states, most between 10 cents and 35 cents per hour, or an extra $200 to $500 per year.
Washington now has the highest minimum wage in the country, at $9.19/hour. On the federal level, minimum wage has remained at $7.25 since 2009. There are 31 states that don't mandate a cost-of-living adjustment, a key missing piece addressed by President Obama.
"Let's declare that in the wealthiest nation on Earth, no one who works full-time should have to live in poverty, and raise the federal minimum wage to $9 an hour. This single step would raise the incomes of millions of working families. It could mean the difference between groceries or the food bank; rent or eviction; scraping by or finally getting ahead. For businesses across the country, it would mean customers with more money in their pockets. In fact, working folks shouldn't have to wait year after year for the minimum wage to go up while CEO pay has never been higher. So here's an idea that Governor Romney and I actually agreed on last year: let's tie the minimum wage to the cost of living, so that it finally becomes a wage you can live on," he said during Tuesday's SOTU.
The minimum wage has been the focus of a handful of protests by foodservice employees in cities such as New York and Chicago within the past few months. New York's efforts have even spawned a "Fast Food Forward" movement.
A bill was introduced by Democrats in the House and Senate last year that would have raised the federal rate to $9.80 per hour and indexed the wage to inflation, however the bills failed and are unlikely to pass if reintroduced to a Republican-controlled House, according to a late-December story in the Huffington Post. Additionally, some have expressed concern that the proposal doesn't address wage issues for tipped employees, another big chunk of the restaurant industry.
Saru Jayaraman, National Labor Leader and co-director of Restaurant Opportunities Centers (ROC) United, responded Tuesday to President Obama's call for a minimum wage increase, saying: "It's wonderful that President Obama backed raising the federal minimum wage tonight. But that alone won't help all low wage workers. The President must also call on Congress to ensure that this Congress' minimum wage increase bill includes an increase for tipped workers — which has been frozen at $2.13 an hour since 1991. Then, and only then, can we ensure that all workers earn a fair day's pay for a hard day's work."
Jayaraman and other members of ROC United with join Rep. Donna F. Edwards for a Capitol Hill briefing today on the reintroduction of the WAGES act. The legislation would raise the tipped minimum wage to $3.75 per hour over the first three months, with incremental increases and adjustments after that period.
Other relative topics covered in the SOTU
The minimum wage wasn't the only topic covered by President Obama Tuesday night that would have big implications on the restaurant industry, the country's second-largest private sector employer.
Dawn Sweeney, CEO and president of the National Restaurant Association, said restaurants are affected by immigration, tax and health care policies and regulations as well. The NRA, she says, supports federal immigration reforms that include an accurate and reliable employment verification system.
"But it's only a first step — eventually, worksite enforcement must be accompanied by provisions that give employers who have made every reasonable effort to hire Americans a way to hire legal foreign workers to keep their businesses open and contributing to the U.S. economy," Sweeney added.
International Franchise Association President & CEO Steve Caldeira agreed, stating that the challenges with the immigration system need to be addressed.
"IFA agrees with the president and bipartisan members of Congress that the current immigration system is untenable and actions must be taken to address the various employment needs of the franchise industry, particularly for lower-skilled workers where franchise businesses are concentrated, such as restaurants, hotels, and service-related businesses. IFA encourages a plan that includes a pathway for unauthorized immigrants to gain legal status, a better legal immigration system which recognizes employer needs and an effective easy-to-use employment verification system that safeguards employers," he said.
The NRA and IFA also both advocate for tax code reforms. The NRA is asking Congress to examine corporate and individual tax reform simultaneously due to the "variety of smaller partnership arrangements" that make up a bulk of the restaurant industry.
The NRA also has called on Congress to enact a permanent 15-year depreciation schedule for restaurant buildings and improvements and make permanent the Work Opportunity Tax Credit.
Caldeira added that "changes to the tax code should be done through a comprehensive package and not with piecemeal fixes. Any effort for reform that removes important business tax deductions should lower the overall tax rate for both corporations and individuals."
Finally, the NRA pointed out that it has worked for more than two years to highlight the industry's challenges in complying with the health care law, ensuring operators have the maximum flexibility to meet the goals of the legislation while continuing to grow jobs.
"Restaurants provide quality jobs in every state and every Congressional district, and the National Restaurant Association will continue our efforts advocating for policies that create an environment conducive to job creation and growth for our industry," Sweeney said.
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Alicia has been a professional journalist for 15 years. Her work with QSRweb.com and PizzaMarketplace.com has been featured in publications around the world, including Good Morning America, Voice of Russia radio, Consumerist.com and Franchise Asia magazine.