NRA: Operators say wage hikes will cost jobs, hurt customers

WASHINGTON, D.C. — A recent survey of restaurant operators by the National Restaurant Association (NRA) shows restaurateurs believe any mandated increases in minimum wages will result in higher prices for consumers and work reductions for employees.

 

According to a news release, a nationwide survey of 600 operators was published as voters in Arizona, Colorado, Missouri, Montana, Nevada and Ohio prepare to decide whether to raise their state's minimum wage.

 

"When (restaurant operators) are hit with increased costs, they have to make painful decisions," said Hudson Riehle, senior vice president of research and information services for the NRA. "Unfortunately, in the case of a minimum wage hike, everyone pays."

 

The October 2006 survey examined the potential impact of a $7.25 federal minimum wage phased in over 30 months. While wage hikes in the six ballot initiative states range from $1 to $1.70 above the current $5.15 per hour in the first year, every state will be indexed to inflation every year beyond that. Based on historical spikes in those indices, each of these states could see a minimum wage, and similar economic impact, at or higher than $7.25 per hour within a few years.

 

In general, respondents said, the largest impact of the potential wage hike would be seen in the quick-service, family-dining and casual-dining segments, with fine dining experiencing a comparatively smaller impact.  The survey found:

 

* Forty-one percent of family-dining and casual-restaurant operators said they would cut jobs.

* Two out of five family-dining and casual-dining operators said they would postpone plans for new hiring.

* Three out of 10 quick-service, family-dining and casual-dining operators said they would cut employee benefits.

* Operators of nearly nine out of 10 restaurants in general indicated that they would raise menu prices; ninety-eight percent of quick-service restaurants reported the same.

* Roughly one-half of the quick-service, family-dining and casual-dining segments stated that they would reduce the number of employee hours worked.

 

"Whether the minimum wage is raised at the federal or state level, you can't ignore the laws of economics — prices go up and job opportunities go down," said Tom Foulkes, NRA vice president for state relations. "On election day, voters will be deciding on the most aggressive wage hikes ever proposed. They should strongly consider these harsh effects before saying yes to a minimum wage hike in their state."