Election Day may have come and gone, but don’t expect big changes soon, especially when it comes to the bottom-line issues that matter most to franchise owners.
While the national election is crucial for determining our country’s overall direction, pocketbook issues like the big three of minimum wage hikes, sick leave benefits, and scheduling mandates are mostly being pushed on the local and state level.
Sure, minimum wage legislation in Congress would be a big deal, but even with a deadlock on the issue in Washington, wages have been going up – and bottom lines have been tightening– for a couple of years now.
That’s due in part to the torrent of minimum wage proposals and referendums in cities and states in just about every region, but, to be fair, it’s not the whole story. A national economy that has been slowly and steadily building up steam is making it harder for businesses across the board to find the workers they need, with franchise owners definitely feeling the pinch.
And as competition for workers goes up, so do wages. While a new administration will certainly have an impact on growth, it’s unclear exactly how the economic dominos will fall.
The same can be said for issues like sick leave and scheduling mandates. These two issues are being driven by activists and unions on the local level, and will continue to be fought over and pushed, regardless of who occupies the White House.
As we wrap up 2016, action is percolating on all these fronts, from a potentially trend setting move by New York Mayor Bill de Blasio to require businesses to provide a two-week warning before changing a workers shift, to a proposal in Minneapolis to boost the minimum wage to $15 an hour.
“The outcome is going to be increased costs at the end of the day,” said Ben Litalien, founder and principal of FranchiseWell LLV, a consulting firm. “I expect we will see a fairly significant potential for inflation.”
“Fair Scheduling” the next big thing?
The headline in Atlantic Magazine just about says it all: “Predictable Schedules Are the New $15 Minimum Wage.”
More than a year after San Francisco passed a wide-ranging set of regulations mandating how businesses can schedule shifts, the idea appears to be gaining traction nationally.
The Seattle City Council passed a “secure scheduling ordinance” in late September that takes its lead from San Francisco’s controversial regulations and includes all major quick-service chains and retail stores.
The new rules require franchise owners and others to provide new hires with an estimate of the hours they can expect to work and post shifts at least two weeks in advance. Restaurant and retail store owners must also provide at least a 10-hour breather to workers between opening and closing shifts, and give part-timers first dibs on new hours. What’s more, it calls for shelling out an hour’s worth of wages if they make scheduling changes within the two-week window. If additional hours are added, the franchise owner would have to pay the employee an extra hour’s pay; if hours are reduced, then the employee would get half the hourly rate for each hour lost.
Now the first big East Coast city is about to jump on the fair scheduling bandwagon.
In New York, de Blasio’s communications office recently sent out an epic, 5,200+-word press release announcing the mayor’s intentions of passing new rules that would regulate shifts at the city’s “fast food” establishments.
Despite the length of the release – about five times the typical press announcement and packed with endorsements from various activist and labor groups – New York’s mayor stopped short of unveiling an actual plan.
Instead, he announced plans to work with the City Council to draft legislation that would regulate the schedules of quick-service restaurant workers.
The proposal is aimed at 65,000 quick service restaurant workers and the franchises and chains that employ them, city officials stated.
The few details de Blasio has released are straight out of the San Francisco and Seattle “secure scheduling” playbooks.
Franchise owners and chain operators would have to put up shift schedules two weeks in advance; provide extra compensation for last-minute changes; and address problems created by the practice of “clopenings,” which refers to a schedule that require employees to work consecutive closing and opening shifts with fewer than ten hours between them.
A newly created city watchdog will be in charge of enforcing the new “Fair Workweek” regulations, de Blasio’s office also announced. New York City’s new Office of Labor Policy and Standards is touted as the “first-ever municipal office dedicated to addressing the needs of workers.”
The new unit’s job will include “enforcement of important workplace laws, such as the City’s Paid Sick Leave and Commuter Benefits Laws, in addition to any future municipal workplace-related laws,” according to de Blasio’s press office.
Back on the West Coast, Portland may be next.
A city commissioner in Portland reportedly wants to follow Seattle’s lead, but must wait until mid-2017, since the Oregon Legislature has temporarily banned local communities from passing scheduling ordinances.
Coming to a city near you: $15 minimum wage
Minneapolis, Cleveland and Palo Alto may become the next big cities to boost their minimum wage to $15 an hour.
Minneapolis: Supporters of hiking the minimum got a big boost from a University of Minnesota study whose researchers included the AFL-CIO’s chief economist and others from a union-backed think tank.
The 200-page study declared raising the minimum wage to $15 would help workers without harming local businesses. The report argued the number of restaurant employees might decline by as much as three percent, while wage increases could jump as much as 28 percent, according to the Star Tribune newspaper. Menu prices, in turn, might increase by as much as five percent, the study found.
However, that assessment was challenged by local business leaders.
The head of the Southwest Business Association said his members fear losing tens of thousands of dollars.
“When I read this report and it says there will be minimal or no cost to the business, that just doesn’t jibe with what we’re hearing back from business owners,” Matt Perry told the Star Tribune.
Minneapolis officials are now planning to make a recommendation by mid-2017 on whether to move forward, with plans to consult with business owners and other stakeholders, the paper reported.
Cleveland: City voters will go to the polls on May 2, 2017 to decide whether to hike the minimum wage to $15 an hour. If passed, the proposal would start by hiking the minimum to $12 an hour in January, 2018. Supporters, led by the SEIU, had pushed for raising the minimum to $15 in one single increase, only to have to back off amid concerns that it would be too much, too fast for city businesses to handle. (The minimum wage in Cleveland and across Ohio currently stands at $8.10 an hour.) Instead, after the initial jump to $12 in 2018, the minimum would rise $1 each year for the following three years, after which increases would be tied to the cost of living.
Palo Alto: The city at the heart of Silicon Valley is now moving to match San Francisco’s $15 an hour minimum. The Palo Alto City Council recently voted to boost the minimum to $15 by 2019, according to the Mercury News. The minimum, which currently stands at $11 in Palo Alto, could jump to $12 an hour in January, and then $13.50 in January 2018, followed by a final jump to $15 a year later. The move came despite strong opposition from some restaurant owners, with one warning that it would boost his costs alone by $8,000, the paper reported.
Sick leave gains traction
Of course, no round-up of issues that could affect the bottom lines of Dunkin’ franchise owners would be complete without a look at sick leave.
It’s a jump ball as to what’s spreading faster right now, sick leave proposals or $15 minimum wage bills.
Chicago and its suburbs are the latest to require franchisees and other business owners to provide sick leave. Cook County, which includes Chicago and its suburbs, recently voted to require all businesses to provide at least one hour of sick leave for every 40 worked.
The new law, passed Oct. 5, goes into effect on July 1 of next year and is similar to one already passed by Chicago. It caps total sick leave in a single year at 40 hours and allows employees to use it for a range of reasons, including taking care of family members.
All told, 38 cities, counties and states have passed sick leave laws, the Associated Press has reported, citing Family Values Work, an advocacy group.
And the pace at which these proposals are being passed is accelerating dramatically, with 31 in just the last three years, the news service reports.
Many of the new laws, however, tend to have a bigger effect on smaller businesses which are less likely to already offer this benefit, according to the AP story.
The list of jurisdictions mandating sick leave now includes California, Oregon, Massachusetts and Connecticut as well as cities ranging from Washington, D.C. and Philadelphia to San Diego and Los Angeles.
A tidal wave of new mandates, laws
During these politically volatile times, the only certainty is that costs are going up for Dunkin’ Donuts franchisees and other business owners across the country. While an improving economy has contributed to a shortage of workers, the growing number of cities, states and counties instituting scheduling restrictions, minimum wage hikes and sick leave bills is pushing up payroll costs.
While the business community has had some success in a few cities forcing a phased-in approach to wage increases, the momentum clearly is sustaining the efforts to press harder for the big three of wage hikes, sick leave and fair scheduling. The question remains how franchise owners will have to balance their bottom lines with these increased pressures and whether big labor’s momentum will stall if customers start waiting in longer lines or paying more for their coffee and snacks.