We all know that politics and religion are considered the “stay away from” topics if the goal is to come out of a conversation unscathed. However, with an election looming, it’s hard to follow that advice, as good as it may be.
So, how will the upcoming election and ballot choices affect the restaurant industry? Let’s get out our crystal ball and take a look.
The Minimum Wage for Tipped Workers
Several states and cities have challenged the tipped minimum wage in the last few years. These include Chicago and the District of Columbia, where voters opted to phase it out slowly. The National Restaurant Association is adamantly opposed to this legislation, believing it increases labor costs to the point of shutting down some restaurants and eliminating staff.
About 13 states and three localities agreed, stopping legislation from moving forward that would end the tipped wage strategy. Not only are restaurants speaking out against the practice, but many tipped workers are also opposed, believing their wages will go down if the minimum wage for tipped workers is implemented.
According to the Marketplace, since Washington D.C. began phasing out the tipped minimum wage, over 1,800 full-service restaurant employees have lost their jobs, while QSRs added 300. The question is: Were the jobs lost due to increased wages or a slowdown in consumer spending?
Currently on the ballot is an initiative to phase it out in Massachusetts, with the tipped work wage, currently $6.75, increasing until it meets the minimum wage of $15 over the next five years. If it passes, the state will be one of seven that has a single minimum wage, with Michigan soon to join.
Arizona is going in a different direction. Their proposal preserves the tipped minimum wage. Tipped employees’ base pay is currently $11.35 an hour or $3 less an hour than other workers. The new measure, if passed, changes their minimum wage to 25% below the regular minimum wage as long as their pay with tips is $2 above the minimum wage of $14.35. Raise the Wage Arizona is spending millions in an attempt to defeat the measure. I’ve developed a headache just writing about it.
Fourteen states pay the federal minimum wage for tipped workers, just over $2 an hour.
Other states with minimum wage measures on the November ballot include Alaska and Missouri, where, if passed, the minimum wage would gradually raise to $15 an hour. In California, voters will decide if the minimum wage increases from $16 to $18 by 2026.
How Election Cycles Affect Restaurants
Uncertainty is never good for an industry that relies on consumer goodwill and a positive outlook. The election is yet another headwind, a period of unknown when customers usually tighten their belts.
The good news is that restaurants tend to fare better than others in retail. Also, with less than two weeks to go, if you’ve noticed a slowdown, you may be able to look forward to a resurgence once everyone has cast their votes. Of course, that depends on which way your guests tend to lean and the outcome.
Which Party Is Better for the Restaurant Industry?
According to Restaurant Dive, the major political parties are essentially leaving restaurants out of the mix, and the National Restaurant Association (NRA) is not endorsing either presidential candidate. The Republican party mentioned the industry once in relation to eliminating taxes on tips and other tax cuts. The Democratic party mentioned us twice, both in retrospect, a job well done due to its hand in the Restaurant Revitalization Fund and the Paycheck Protection Program.
The Harris campaign may be edging toward eliminating the tipped sub-minimum wage, a policy the NRA does not support. They may also favor immigration reform, a policy the NRA does support. Both parties are leaning toward increasing credit card processing competition, which could significantly lower swipe fees.
So, what does this tell us? If you are still on the fence about which candidate gets your vote, how they support the restaurant industry will be little help. Of course, in a race like this, most of us made up our minds several years, if not several decades ago.
