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Minimum Wage Debate Demands Realistic Solutions, Not Empty Rhetoric

America doesn’t need more easy answers; it needs well thought-out reforms that facilitate growth, innovation and entrepreneurship.

Over the last few years, there has been a great deal of debate surrounding efforts to increase the federal minimum wage. Both President Barack Obama and Sen. Harry Reid (D-Nev.) have publicly supported an increase to the wage floor. In December, labor unions staged demonstrations at several franchise locations. The protestors, most of whom were not even employees of the businesses they picketed, demanded that the hourly minimum wage be more than doubled, from $7.25 to $15.00.

Sen. Tom Harkin (D-Iowa), chairman of the Senate Health, Education, Labor and Pensions Committee, introduced the Minimum Wage Fairness Act, which would incrementally increase the wage to $10.10, followed by annual adjustments for inflation. A vote on this bill could take place as early as the first quarter of 2014. Nearly every major poll seems to indicate that public support for these efforts is high.

Minimum Wage Increases Hurt Employees and the Economy

Although it is undeniable that many are struggling during the economic recovery, evidence simply does not support the notion that raising the minimum wage is an effective tool to help working families. According to recent research conducted by Public Opinion Strategies, raising the minimum wage to $9.00 an hour would force 68 percent of franchise businesses to make personnel decisions to adjust for the cost increases. These decisions include halting entry-level hiring, cutting back on training opportunities, automating some positions and reducing hours or even staff. None of these outcomes would benefit low-skilled or unemployed workers, the people who are suffering the most in the current economy. Rather than offer the nation’s most vulnerable citizens a way out of poverty, raising the minimum wage would make it much more difficult for them to find a job.

Not only would raising the minimum wage harm workers with the least amount of economic resources, it would also disproportionately impact the businesses least equipped to deal with the changes. Although major brands are often the target of minimum wage protests, the increases in cost invariably hit individual franchisees the hardest. The implementation of the Affordable Care Act has already forced many businesses to make dramatic changes to their work force management practices. Raising the wage floor would result in even lower margins and could force some employers out of business entirely. The business owners harmed by these measures are not the nameless, faceless corporations that labor groups like to demonize, but rather entrepreneurs working with low budgets, fixed costs and limited resources in a difficult economic climate.

IFA Organizing Effort to Educate Lawmakers

Jay Perron is vice president of government relations & public policy for the International Franchise Association.

Jay Perron is vice president of government relations & public policy for the International Franchise Association.

IFA is taking steps to ensure that the nation’s most vulnerable workers and businesses are not harmed by an increase to the minimum wage. We have organized a coalition of industry leaders and other prominent associations and are meeting with the offices of legislators who will be important allies in the coming debate.  Furthermore, we have commissioned several pieces of research which clearly illustrate the harmful impact that raising the wage floor would have on businesses, workers and consumers alike. By responding to labor groups’ appeals to emotion with evidence, analysis and the stories of small-business owners, we can ensure that lawmakers are equipped with the best information available when they make their decisions.

While blocking an increase to the minimum wage is a critical part of IFA’s legislative efforts, we are also working to proactively address the challenges facing the working poor and small-business owners. IFA’s current policy objectives include raising the threshold for full-time status in the Affordable Care Act to 40 hours per week, reforming the nation’s broken immigration system, and fighting the onerous new labor rules issued during the Obama administration. Unlike raising the minimum wage, these important reforms would make it easier for businesses to grow in the United States, providing employers with more resources to invest in their employees through new hiring, job training and opportunities for promotion.

It is easy to call for an increase to the minimum wage. The proposal is popular and likely going to stay popular for some time.  It is also easy to come up with catchy slogans, march outside a place where you don’t work or “call out” multi-national corporations. It’s much more difficult to come up with solutions that actually address the very serious problems facing unemployed and low-skilled workers.

Though they may be well-intentioned, efforts to raise the hourly wage floor would harm those who need help the most, creating new barriers to employment, burdening struggling businesses with substantially increased costs and compounding the economic problems already facing our country. These effects would be particularly pronounced on the franchise community, making it all the more important to stand together against this legislation. America doesn’t need more easy answers; it needs well thought-out reforms that facilitate growth, innovation and entrepreneurship.

Jay Perron is the vice president of government relations & public policy for the International Franchise Association. Find him at fransocial.franchise.org.

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