A key Senate vote on Wednesday blocked a bill that set out to raise the federal minimum wage from $7.25 to $10.10 per hour — a result supported by restaurant industry associations including the National Restaurant Association and National Council of Chain Restaurants.

The minimum wage proposal, sponsored by Sen. Tom Harkin, D-Iowa, and largely backed by Democrats, was expected to fall short. The vote landed 54-42 and is now unable to move forward. Many Republicans and business leaders, including some in the foodservice industry, had fought the proposal, saying such a drastic wage increase would force employers to pull back on hiring and even eliminate jobs.

“Dramatic increases to the minimum wage, like the proposed legislation put forth by Sen. Harkin, would significantly hurt restaurant owners’ ability to create jobs and limit the opportunities restaurants can provide to current and future employees,” said Scott DeFife, the National Restaurant Association’s executive vice president, policy and government affairs. “Policy makers should focus on pro-growth policies and other necessary reforms — such as increased access to education and job training opportunities — in order to help restaurants continue to provide opportunity to millions of American workers.”

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The nonpartisan Congressional Budget Office, or CBO, in a recent study said the wage increase would impact about 16.5 million Americans, lifting about 900,000 above the federal poverty threshold and boosting their average family income by about 3 percent. The CBO study did caution that the $10.10 per hour wage increase could put as many as 1 million Americans out of work.

A coalition of business leaders that support Harkin’s bill say the current minimum wage of $7.25 per hour — and not the proposed increase — is what is hurting businesses and the economy.

Chris Sommers, co-owner of Euclid Hospitality Group, which includes the Pi Pizzeria concept of St. Louis and Washington, D.C., supports the wage hike.

“Too many people forget that the lower the wage, the higher the turnover, which costs businesses time and money in recruiting and training new workers,” he said in a statement.

“We raised our minimum wage to $10.10 without raising prices, knowing that employees who can make ends meet stay longer and are more productive,” the statement continued. “It’s a win-win when employees can concentrate on serving customers, without worrying about how they are going to make rent or put food on their own table.”

Senate Democrats pledged to continue highlighting the issue during this year’s elections.

“I’m confident that if we don’t raise the minimum wage in Congress before the election, the American people are going to speak about this at the ballot box in November,” Harkin told The New York Times.

Restaurant industry lobbyist Rick Berman, who orchestrated with the support of many restaurant companies, a concerted effort to block the wage increase — including the use of billboards, full-page newspaper advertisements and radio commercials — told Nation’s Restaurant News he agreed the campaign isn’t over.  

“I remain wary that over time the Democrats, unions and the President will try a second vote after seeking a wave of public opinion to pressure Republicans who stood for sound economics rather than cheap political posturing,” he said in an e-mail. Berman is a frequent contributor to Nation’s Restaurant News.  

Harkin’s bill also would also have increased the wage for tipped workers, who in tip-credit states can be paid $2.13 per hour so long as their tips bring hourly pay rates to at least the minimum.

The Employment Policies Institute, a nonprofit research group that has long been a vocal opponent of the proposed minimum wage hike, placed ads in various Capitol Hill-focused publications on Wednesday arguing that the bill attempts to fix a problem that doesn’t exist. EPI contends that tipped employees earn more than $13 per hour on average, and many make more than $25 per hour or more.

The National Council of Chain Restaurants, or NCCR, estimates tipped workers earn between $16 to $22 per hour as a national average.

In a letter to the Senate Wednesday prior to the vote on Harkin’s bill, the NCCR expressed strong opposition to what it called an “ill-timed and flawed proposal.” Arguing the bill would harm local businesses at a time when the nation is still recovering from the great recession, NCCR said most workers earning minimum wage are teens living with their parents, adults living alone or second-household earners.

“Moreover, as minimum wage workers gain important skills, they receive significant raises,” said the letter from Robert Green, NCCR’s executive director. “As such, the legislation before the Senate fails to recognize that the federal minimum wage is a starting wage, and that most employees don’t stay on this starting wage for very long.”

Contact Lisa Jennings at lisa.jennings@penton.com.
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