The National Restaurant Association (NRA) has blasted a proposed federal minimum wage hike, warning it will be another blow to the foodservice industry, which is already dealing with significant economic fallout due to the COVID-19 pandemic.
The Raise the Minimum Wage Act, introduced by Democrats in the U.S. House of Representatives, would increase the federal minimum wage from the current USD 7.25 (EUR 6.00) per hour to USD 15.00 (EUR 12.50) per hour over five years and eliminates a separate minimum wage for tipped workers.
According to a national survey conducted by the NRA, 82 percent of restaurant operators said the initial wage increases would have a negative impact on their business’ ability to recover from the pandemic, the organization said in a press release. For franchisee-owned restaurants, 90 percent indicated the initial wage increases would have a negative impact on their ability to recover.
Nearly all (98 percent) of restaurant operators say they would have to increase their menu prices if the measure is passed. Eighty-four percent say they would have to cut jobs and employee hours from normal levels; and 75 percent would have to cut employee benefits. In addition, 65 percent of operators are likely to add labor-reducing equipment or technology.
“Passage of this bill this year would lead to job losses and higher use of labor-reducing equipment and technology,” NRA Executive Vice President for Public Affairs Sean Kennedy said. “Nearly all restaurant operators say they will increase menu prices. But what is clear is that raising prices for consumers will not be enough for restaurants to absorb higher labor costs.”
Restaurants are already struggling financially. More than 100,000 shut their doors either temporarily or permanently in 2020, according to the NRA.
In addition, 92 percent of New York City restaurants could not afford to pay their rent in December, according to a new NYC Hospitality Alliance survey. Eateries in most areas of the city were closed for indoor dining throughout the month.
“Before COVID-19, New York City was home to over 25,000 restaurants, bars, and nightclubs that employed 325,000 people,” the group said in a press release. “Thousands of eating and drinking establishments have already permanently closed as a result of the pandemic and accompanying restrictions, and the industry shed more than 140,000 jobs in the last year.”
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