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Minimum Wage Is 'Existential' Issue for Restaurant Owners


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More cities and counties are taking up the fight for a $15 minimum wage.

“I’m going to start at the city halls because that’s where the action is,” said Dan McElroy, president and CEO of Hospitality Minnesota who gave a legislative update to open the Foodservice News’ (FT’s sister publication) Restaurant Business Summit last week.

He was referring specifically to Minneapolis and St. Paul, where city councils are considering proposals to raise the minimum wage and have already approved ordinances to mandate paid sick and safe leave. But he also noted cities and counties across the United States are increasingly at the center of workforce regulation while the U.S. House and Senate dither.

 “People are frustrated because Congress is gridlocked,” he said. “The desire for a higher minimum wage is not new but it’s gotten more active in the last four years.”

McElroy scoffed at a new study from a University of Minnesota economist, which says that going from $9.50 an hour to $15 an hour with no more than a 5 percent increase in menu prices will not result in a significant loss of jobs, according to McElroy.

“I’ve heard of the new math but this is fantasy math,” McElroy said.

He points to Seattle, where the minimum wage has now risen to $12.25 an hour, the highest in the nation to date. A University of Washington study said “it’s a wash for low-income families, who make marginally more per hour but work marginally fewer hours per week,” McElroy said. The study also noted there are dramatically fewer prep cooks in Washington and Oregon today, as restaurants turn to buying prepared food from suppliers, among other moves.

“The message is not that restaurants go out of business—they don’t,” when higher minimum wages are mandated, he said. “But they change their model to reduce labor, and move to fast-casual and quick-service.”

Minimum wage remains McElroy’s top priority. “The minimum wage makes a major, even existential” difference to restaurant owners,” he intoned.

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Tom KaiserTom Kaiser is associate editor of Franchise Times. He can be reached at 612.767.3209, or send story ideas to tkaiser@franchisetimes.com.
 
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Mary Jo LarsonMary Jo Larson is the publisher of Franchise Times Magazine and the Restaurant Finance Monitor.  You can find her on Twitter at
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Nancy WeingartnerNancy Weingartner is editor-at-large of Franchise Times magazine and the editor of the Food On Demand media project. You can reach her at 612-767-3200 or at nancyw@franchisetimes.com.
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