The cost of doing business has become increasingly expensive. It’s the product of repeated bad policies by elected officials following an aggressive agenda by organized labor. Ironically, the economic havoc they leave in their wake will eliminate the very jobs they proclaim to protect.
Earlier this month, the National Labor Relations Board overturned a 30-year rule that gave local franchisees, including many that operate in Atlanta, the freedom to run their day-to-day business practices independently of their franchiser.
The franchising model has successfully created millions of jobs; it did so by helping aspiring business owners realize their dream by offering resources to launch a locally owned operation underindividual management. This includes everything from capital investment to hiring employees and setting shift schedules to disciplinary actions and terminations.
Unions, dissatisfied with declining numbers, would much rather target big corporations than a small, locally owned business with fewer employees. It has pushed to remove the traditional division between them and make franchisers liable for franchisees’ employment practices, though franchisers have no control over these practices. By tying franchisees to the hip of their parent company, labor unions can redefine a “small business” as “big business” and go after the parent in their organizing efforts.
This dissolution of the “joint-employer standard” will have a chilling effect on job creation, particularly in Atlanta, which leads the nation as home to the most franchise headquarters. Aspiring business owners will be less likely to pursue their dreams, since they will face a lot more hurdles as a franchisee. Franchisers will have to be more involved in the day-to-day activities of local employment practices, which will add to their franchisees’ costs. In the end, jobs will be impacted.
But it doesn’t end here. Unions are emboldened by the NLRB ruling and have begun a renewed push to demand minimum-wage hikes from business — as high as $15 per hour, more than double the current federal minimum wage.
Any hike in the minimum wage comes with an undesirable price tag. Restaurants are low-profit, low-margin operations. On average, a third of their budgets goes to wages and benefits. When the cost of labor rises for a restaurant operator, hard choices follow. Entry-level job opportunities are diminished, and employee hours are scaled back or, worse, eliminated altogether.
In an economic study on the impact of a $10.10 minimum wage, labor economist David Macpherson of Trinity University found more than 21,000 Georgians would lose their jobs at the $10.10 wage level. A total of 12,700 of these jobs are held by women.
This is not just bad news for restaurants; it’s bad news for the still-struggling Georgia economy. Macpherson estimated that both the straight wage cost of a $10.10 minimum wage and the total compensation cost of Social Security, Medicare, workers’ compensation and unemployment insurance would cost Georgia taxpayers $164 million if the base wage was increased to $10.10 an hour and public employees were covered by the new wage.
In 2014, restaurants account for 405,800 jobs in our state. When restaurants do well, we also help boost Georgia’s economy. For every $1 million spent in Georgia’s restaurants, 26.1 jobs are created.
A minimum-wage hike, coupled with a complete overhaul of the franchise model, would only jeopardize the well-being of a large portion of Georgia’s economy. It would also prevent the state’s restaurants from creating the nearly half-million jobs we’re expected to bring to the table over the decade.
Our elected officials would be wise to consider the economic ramifications of their policies, rather than blindly following the wish list of organized labor.
Karen Bremer is executive director of the Georgia Restaurant Association.
