Now Is the Wrong Time for an Increase

Minimum Wage -

Now is the Wrong Time for an Increase

Background

The restaurant industry continues to be an engine of growth for America’s economy.

·  Restaurants have been the third-largest private-sector job creator since the employment recovery began in March 2010.

·  Eating and drinking places – the primary component of the restaurant industry, which accounts for roughly three-fourths of the total restaurant and foodservice workforce – added jobs at a strong 3.4 percent rate in 2012.

Despite growth, the restaurant industry is still in recovery after the recession.

·  The restaurant industry was certainly not immune from the effects of the Great Recession, with job losses in 2009 and 2010 representing just the second and third years on record that the industry cut staffing levels.

·  Unfavorable economic trends or ill-advised legislation could hamper industry’s continuing recovery.

Analysis

·  Restaurant industry wages grow naturally, without legislative mandates. The average hourly earnings of non-supervisory eating and drinking place employees increased at a 2.2 percent rate in 2012, compared to a 1.6 percent gain in wages of non-supervisory employees in the overall private sector.

·  The average household income of restaurant workers that earn the federal minimum wage is $62,507. The vast majority of restaurant workers that earn the federal minimum wage work part-time and are not the heads of their household.

·  A majority of minimum wage restaurant workers are just beginning their professional lives. Forty-six percent of federal minimum wage restaurant workers are teenagers, while 70 percent are under the age of 25.

·  Many restaurant employees earn significantly more than minimum wage. Nationally, the median hourly earnings of waiters and waitresses range from $16 to $22 depending on experience.

·  Minimum wage increases negatively impact restaurant jobs and drive up consumer costs. When labor costs rise, employers in labor-intensive industries such as ours are forced to raise prices to maintain profitability. According to an industry survey conducted after the 2007 federal minimum wage increase, 58 percent of restaurant operators increased menu prices, while 41 percent reduced the number of hours their employees work. Further, twenty-six percent of operators postponed plans for new hiring, while 24 percent of operators reduced the number of employees in their restaurants. Only 23 percent of restaurant operators took no mitigating actions as a result of the 2007 minimum wage increase.