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Industry fights back as Congress eyes a federal $15 wage

Minimum Wage Increase
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Although pundits say a proposal raising the federal minimum wage to $15 an hour has little chance of getting through Congress, opponents are taking no chances, blasting the measure as a potential killer of jobs and small businesses such as foodservice operations.

Still, their efforts have failed to derail the initiative, which was voted out of committee yesterday. The bill will be put to a floor vote in the House of Representatives in the next few weeks.  It is expected to win passage there and then be defeated in the Senate.

To coincide with the proposed legislation’s first review yesterday in the House of Representatives, the pro-industry Employment Policies Institute (EPI) issued a study citing opposition to a $15-an-hour federal wage by 74% of 197 economists surveyed by the think tank.

According to the EPI, 84% of the respondents believe the higher pay floor would negatively affect the employment of young people, and that only 6% believe a $15 wage is the best way to pull individuals out of poverty. The EPI noted that 64% of the economists cited the Earned Income Tax Credit, a break for employers of certain population segments that have traditionally struggled to land jobs.

Two out of three economists expressed a preference in the study to keep the minimum wage below $10 an hour.

The EPI is a nonprofit policy and research group run by Berman & Associates, the public affairs firm of former Steak & Ale executive Rick Berman. Earlier, the group had aired research showing that a $15 minimum wage would kill as many as 2 million jobs.

Earlier, to air the industry’s position as the $15 Raise the Wage Act was about to be marked up by the House Education & Labor Committee, the National Restaurant Association sent letters to committee Chairman Bobby Scott and ranking committee Republican Virginia Foxx.

“Mandating a $15-per-hour starting wage across the country fails to recognize the simple economic reality that not all communities are the same,” wrote Shannon Meade, VP of public policy and legal advocacy for the association. “What would be right for California or New York would have stifling impacts to restaurants and other small businesses in areas where workers do not face the cost of living they do in major cities.”

It addressed in particular the component of the act that would eliminate a tip credit, a break that allows restaurants and other employers of tipped employees to count gratuities toward the workers’ minimum wage. If the act were to pass in its current form, full-service restaurants in all but a few states would have to directly pay servers and bartenders roughly double what they currently receive.

Meade’s letter said the tip credit currently enables servers to make far more than the minimum wage without wiping out restaurants’ profit margins.

“We encourage the committee to consider a common-sense, balanced approach to this debate over the federal minimum wage,” Meade wrote.

The Raise the Wage Act, H.R. 582, would raise the lowest legal federal wage from the current $7.25 an hour to $15 over a five-year, staged process. It would also require all restaurants nationwide to pay servers the full minimum wage while also allowing them to keep any tips they collect.

A virtually identical bill has also been introduced in the Senate, where it is expected to be blocked from passage by that chamber’s Republican majority. Democrats have a majority in the House.

Scott seemed determine to push through the bill, which he has sponsored. In opening yesterday’s mark-up, he called for “one fair wage for all employees,” a statement of support for killing the federal tip credit, and said that Congress will break a record if it doesn’t raise the minimum wage by June. If action isn’t taken by then, he said, the gap from the prior increase will be “the longest period of time in which Congress has not raised the minimum wage since it was created about 80 years ago.”

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