Politics of inequality to challenge restaurants in 2014Politics of inequality to challenge restaurants in 2014

This article does not necessarily reflect the opinions of the editors and management of Nation’s Restaurant News.


Traditional labor unions, quasi-union worker centers and their allies in elected office are in the midst of a multiyear campaign to achieve wage and benefit victories for groups of workers they hope to organize. The effort kicked off with the chain restaurant rallies in November 2012 in New York and will reach a crescendo with this November’s midterm elections – which will include a number of Democrat-friendly ballot initiatives intended to drive labor voters to the polls. And like any well-planned campaign, this effort has an overarching theme that guides its message: eliminating economic inequality. Clearly a laudable goal, but how we get there is where the debate begins.

The policy issues at stake here are not new to the restaurant industry. From minimum wage and paid sick leave to the outright unionization of the service sector, victory is clearly defined for labor activists. The pro and con justifications are also well-documented: Activists claim increased pay and benefits will boost the economy by putting more dollars in employees’ wallets to spur spending, ignoring the bottom-line implications of increased labor costs on the very workers these mandates are meant to help.

To address economic inequality, the folks waving signs in front of your stores would prefer a redistribution of existing incomes. Some have bluntly suggested paying for a doubling of minimum wages and paid sick leave by capping restaurant executive salaries at some multiple of the lowest paid workers in a company. That idea is unlikely to be taken seriously in the near future, as even the socially conscious voters of Switzerland last year soundly rejected a measure that would have capped executive salaries at 12 times the company minimum wage. Adherents to this school of thought also place a priority on workers’ needs rather than their skills and value to the employer, meaning a worker with greater financial burdens would deserve a higher wage than an equally skilled and efficient worker with less personal debt.   

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The alternative to this redistribution is to increase economic opportunities for all workers by growing the economy and increasing access to educational programs, thereby making low-wage workers qualified for higher paying jobs in the economy.

Beyond the dollars and cents of the new laws being pushed by labor and its allies, the tightly choreographed, years-long effort is also exacting a reputational toll on the industry. Restaurants are quickly losing their image as a good place for young people and recent immigrants to start their working lives, gaining skills needed to move up the escalator of opportunity. Thanks to the nationwide protests and specious “studies” over the last year and a half, restaurant employers are starting to be viewed as corporate tyrants who use indentured servitude to maintain shareholder satisfaction. An understanding of the tight margins on which the industry operates is virtually nonexistent in the public debate.

The next phase of the “inequality campaign” occurs Jan. 28, when President Barack Obama delivers his State of the Union address to Congress. Last year Obama called for a $9.00 per hour minimum wage, but with a year of restaurant and retail protests financed by his allies at the Service Employees International Union and AFL-CIO, the president now has the cover to go bigger. Late last year he signaled support for legislation by Sen. Tom Harkin, D-Iowa, and Rep. George Miller, D-Calif., to boost the federal minimum wage to $10.10 per hour, with indexing to the Consumer Price Index and a hike in the tipped wage to 70 percent of the full minimum – a more than 300 percent increase over the current federal tipped wage of $2.13.

Concurrently, dozens of states are convening their annual legislative sessions, dropping minimum wage and paid sick leave bills from Massachusetts to Washington and back to Florida. Meanwhile, campaigns are ramping up to place some of these same business mandates before voters in November.

Whether it’s being called the wealth gap, the wage gap or, more pejoratively, “the 99 percenters versus the 1 percenters,” the issue of economic inequality has landed on the doorstep of the restaurant industry. By riding a wave of frustration among young, unemployed and underemployed Americans, some of the same old wish list items of big labor have been repackaged for the post-Great Recession decade.  

The protests over the last 15 months and the looming policy debates in 2014 have ignited a healthy dialogue about the relationship between workers and wages. Whether need should trump value in the setting of wages and benefit packages has been thrust into the public debate, but unfortunately, the concept of a free and open market for labor seems to be losing out. This conversation is no longer focused on the profit and loss of a small business. It has quickly become a national conversation about whether we will abandon the economic model that has guided our country for the last 238 years for a system that no longer rewards hard work and risk taking.

Joe Kefauver is managing partner of Parquet Public Affairs, a national issue management, communications, government relations and reputation assurance firm that specializes in service sector industries. Parquet's clients include Fortune 500 corporations, trade associations, regional businesses and nonprofit organizations. For more information, go to www.ParquetPA.com.