You win some, you lose some.
As we head into the fall, franchise owners from Dunkin’ Donuts and other QSR systems have some reasons for optimism and some things to worry about as well. Increasing the minimum wage has been all the rage over the past few years, with union and other activists successfully pushing increases in city after city and state after state. But there may be signs now that the big wave of increases has started to peak.
There is also new research that should provide the quick service sector with some badly needed political ammunition. New studies, detailed below, point to job cuts and automation in the wake of minimum wage increases.
Yet other trends are more concerning, with the soda tax making a comeback, years after it was defeated soundly in the Big Apple.
Read on for the details.
Tide turning on minimum wage?
The last few years has seen a relentless push by union activists and others to boost minimum wages in cities and states from New York to California. But now governors and lawmakers in Republican-controlled states are starting to push back and score a few wins.
While St. Louis’ minimum wage hike survived a challenge in the state’s highest court, the Missouri Legislature had the last say, passing a bill that preempts local communities from fiddling with the minimum wage.
Missouri is not alone. Fifteen states have passed laws since the beginning of 2016 preventing local cities and towns from taking various actions to intervene in local labor markets, including raising the minimum wage, the Washington Examiner reports.
Republicans have led the charge, with the GOP controlling more than 67 percent of state legislative chambers in the country and 33 of 50 governorships, according to the paper.
Meanwhile, in Illinois, Republican Gov. Bruce Rauner recently vetoed a bill that would have raised the minimum wage
in the Prairie State to $15 an hour, arguing it would kill jobs and damage business.
He cited a University of Washington study that found that low-income workers wound up losing hours and making $125 a month less after Seattle boosted its minimum to $13 an hour. Yet that study was contradicted by one from the University of California-Berkeley, which found no change, according to Forbes Magazine.
Seattle franchise owners hit with new scheduling regs
Speaking of Seattle, franchise and restaurant owners in the tech hub are grappling with new city-mandated scheduling regulations that went into effect in July.
Critics in the business community complain the law is too complex and onerous to comply with, requiring employers to keep records of every formal interaction related to shift scheduling for three years, the Seattle Times reports. Franchise and restaurant owners who are part of major chains must provide each employee with a “good faith estimate” of the median hours per week they can expect to work.
However, before posting the schedule, unless there is a “bona fide business reason,” employees must be granted schedule changes related to major issues such a health problem, housing, transportation, other jobs or caregiving duties. After that, business owners are required to give employees a copy of their schedules two weeks in advance.
There are also a number of pay-related rules as well, including time-and-a-half for any time worked if it falls between ten hours from closing to opening. Under this “premium pay” requirement, the franchisee must pay for half the hours taken off an employee’s shift or an extra hour, if time is added.
A legal opinion by K&L Gates argues the interactive nature of the scheduling process – and trying to determine how to accommodate what could turn out to be myriad scheduling requests from employees – is likely to prove to be a scheduling nightmare.
Hit with multiple requests from workers all citing significant work/life/health issues, business owners will struggle to determine whose request should carry greater weight, the law firm warns in an advisory.
“Human resources personnel and managers will likely face scores of requests from multiple employees with minimal guidance as to how those competing requests should be handled,” attorneys at K&L Gates argue. “However, it is unclear how employers should prioritize competing employee requests for those major life events.”
Robots may be the wave of the future amid rising wage rates
Hiking the minimum wage increases the likelihood that some workers in “automatable” jobs will get replaced by robots, finds a new study by a pair of economists from the London School of Economics and the University of California at Irvine.
The researchers, Grace Lordan and David Neumark, look at U.S. wage data stretching across 35 years, from 1980-2015.
The findings come amid growing signs that some quick service restaurant chains are exploring automation, including Wendy’s, which is rolling out touch screens for ordering in 1,000 of its restaurants, Forbes notes in a piece on the study.
“The findings imply that groups often ignored in the minimum wage literature are in fact quite vulnerable to employment changes and job loss because of automation following a minimum wage increase,” the economists write.
Soda tax re-boot
Michael Bloomberg famously flopped when he tried to get a soda tax passed as mayor of New York. Undaunted, a growing number of cities are managing to do what New York could not, according to the National Restaurant Association.
While proposals on the state level have typically foundered, activists have had more success passing soda taxes at the city level. Five major cities and Cook County, IL have passed soda taxes. They are San Francisco, Boulder, Berkeley, Oakland, and last but not least, New York’s regional neighbor, Philadelphia.
Boulder has the highest tax, with 2 cents per ounce on sugar sweetened drinks. Philly went with 1.5 cents per ounce but added in diet drinks for good measure. Others, like Berkeley, Oakland and San Francisco, went with a penny per ounce.
Soda sales may have declined by as much as 50 percent in Philadelphia, the New York Post reports, citing retailers and distributors. Some companies in the soft drink business, like Pepsi, have announced plans to lay off workers.
While such taxes are billed as efforts to promote public health, the National Restaurant Association sees other drivers behind this cash grab by city governments.
“Politicians are looking to tax sugar-sweetened beverages that retailers and restaurants sell,” the NRA notes. “They say it’s to curtail consumption, but there’s no denying it creates extra revenue to support budget shortfalls and public works programs.”
Topics of discussion
These and other issues will be topics of discussion at the upcoming DDIFO National Conference, October 30 and 31 at Foxwoods Resort and Casino. While small business owners had been slammed with onerous rules and regulations during the Obama years – minimum wage hikes, scheduling mandates and new health insurance requirements to name a few – there are signs that the pendulum may be finally swinging the other way, thanks to the election of more anti-regulation Republicans at the state and federal level. If we have learned anything over the years, it is that franchisees and other small business owners need to be vigilant and communicate their positions to elected leaders.