NRA concerned over progress of minimum wage mandate

July 30, 2006

WASHINGTON D.C. — Efforts by the National Restaurant Association (NRA) to block the progress of a bill increasing the federal minimum wage could not stop the July 28 passage of H.R. 5970, the Estate Tax and Extension of Tax Relief Act of 2006, by the U.S. House of Representatives.

According to a news release, the bill would increase the federal minimum wage by 41 percent, from $5.15 to $7.25 over the next three years. It passed by a vote of 230-180.

"The restaurant industry has long been opposed to a federally mandated wage increase, as it would target small businesses that employ people in entry-level positions, ultimately impeding job creation and hurting those that it is intended to assist," said Steve Anderson, NRA president and chief executive officer. "We are pleased that there are several provisions that will benefit small businesses, including restaurants, although we strongly object to the wage increase in this package."

A federal wage increase to $7.25 per hour is the largest increase in the entry-level wage rate ever proposed. In the past, increases in the federal minimum wage have had a dramatic impact on restaurant industry employment. An analysis based on a nationwide survey of 1,000 restaurant operators showed that over 146,000 jobs were cut from restaurant payrolls, with operators postponing plans to hire an additional 106,000 new employees after previous federal wage increases.

Nationally, 85 percent of those who would benefit from a minimum-wage hike are teens living with their working parents, adults living alone, or second earners. Just 15 percent of people who earn minimum wage are sole earners in households with children.

The bill included provisions that are important to small businesses: a two-year restaurant building depreciation relief (including new construction); a two-year extension of the Work Opportunity Tax Credit; and tip credit relief for the seven states without tip credits. In addition, the bill also includes a permanent tax reduction for most estates subject to the "death tax," which will provide significant relief to many family-owned restaurants.

Topics: Associations , Operations Management

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