Senate Passes Minimum Wage Bill

National Restaurant Association Commends Senate for Including Tax Relief for Restaurants in Minimum

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. October 14, 2008

FEBRUARY 5, 2007. The National Restaurant Association, representing one of the nation's largest private-sector employers with 12.8 million workers and 935,000 restaurant-and-foodservice locations, today commended Senators for including tax relief for restaurants in its minimum wage legislation.

"Restaurants are found in every city across the country and serve as the cornerstone of our economy, rewarding career opportunities and community involvement," said Steve Anderson, president and chief executive officer of the Association. "One out of six new jobs in the economy are in eating and drinking establishments; more than eight out of 10 salaried employees at table service restaurants - including owners, operators and managers - started as hourly employees; more than nine out of 10 restaurateurs contribute food, money or other resources to their communities."

Opposed to a wage hike, the National Restaurant Association worked to include provisions that would provide assistance to the nation's restaurants.

The Small Business and Work Opportunity Act of 2007, which passed by a vote of 94 to 3, includes several beneficial provisions for small businesses, including restaurants. The provisions include $1.7 billion for a 15-year restaurant depreciation schedule (including new construction, leaseholds, and improvements); a five-year extension of the Work Opportunity Tax Credit (WOTC); and a one year extension through 2010 for small business Sec. 179 small business expensing.

"While no package can completely mitigate the impact of a minimum wage increase, we commend the Senators for recognizing the importance of granting small businesses the necessary resources to partially offset the consequences," said Anderson.

"The nation's restaurants will serve over 70 billion meals in 2007 and have an overall economic impact of more than $1.3 trillion. By allowing restaurateurs to deduct the cost of renovations or new construction on a shorter schedule, this legislation will help many restaurateurs to continue to grow their businesses and create more jobs," said Anderson.

"Seventy percent of the nation's restaurants are small businesses," said Anderson. "The impact of the proposed minimum wage increase is expected to be significant, affecting restaurant employers, employees and the millions of customers they serve. Research indicates that when the minimum wage is raised, prices go up and job opportunities go down."

After the last wage hike in 1996 and 1997, according to a nationwide National Restaurant Association survey of 1000 restaurants, 146,000 jobs were cut from restaurant payrolls and operators postponed plans to hire an additional 106,000 employees. In nationwide surveys conducted in October 2006, restaurant operators reported that they plan to take a number of actions if the federal minimum wage was increased from $5.15 to $7.25 over the course of 30 months:

o The most common action planned by restaurant operators would be an increase in menu prices, with nearly nine out of 10 operators saying they would increase menu prices as a result of a $2.10 minimum wage increase. Ninety-eight percent of quick service operators said they would increase menu prices, compared to about three out of four family dining and casual dining operators.

o In addition to job losses, roughly one-half of restaurant operators said they would reduce the number of employee hours worked.

o Approximately one out of four restaurant operators said they would postpone plans for new hiring if the federal minimum wage rose to $7.25 over the course of 30 months.

o Approximately three out of 10 restaurant operators said they would cut employee benefits as a result of a minimum wage increase from $5.15 to $7.25.

In general, the largest impact would be seen in the quick service, family dining and casual dining segments, with fine dining experiencing a comparatively smaller impact.

"We look forward to working with the House and Senate to ensure that restaurant-specific provisions remain intact, enabling restaurants and other businesses to continue effectively planning for the recruitment and training of employees, despite an increase in the minimum wage," said Anderson.

The National Restaurant Association has been a leader in the debate on minimum wage on behalf of the restaurant industry. The Association chairs the Coalition for Job Opportunities, a group of more than 30 business organizations opposed to government-mandated increases in the entry-level wage.

The National Restaurant Association, founded in 1919, is the leading business association for the restaurant industry, which is comprised of 935,000 restaurant and foodservice outlets and a work force of 12.8 million employees - making it the cornerstone of the economy, career opportunities and community involvement. Along with the National Restaurant Association Educational Foundation, the Association works to represent, educate and promote the rapidly growing industry. For more information, visit our Web site at www.restaurant.org.