Welcome to Government Watch, a weekly Restaurant Business column focused on regulation, legislation, labor mandates and other governmental issues of relevance to the restaurant industry. This week's edition looks at what's likely to come next from California's Fast Food Council and the tax break Ohio is giving restaurants this year.
Another wage hike could be set this month for California QSRs
Members of California’s Fast Food Council characterized the wage-setting body’s initial meeting back in March as more of a meet-and-greet than a roll-up-your-sleeves working session. They expect that won’t be the case when the panel meets again at the end of this month, with Topic One being how much to raise the minimum wage of most fast-food workers in the state as of Jan. 1.
Before that first meeting even took place, the union controlling four of the Council’s nine seats had declared its intention to seek a 3.5% increase in the minimum for employees of quick-service restaurants (QSRs) with at least 59 sister units nationwide. The hike, the highest permitted under the law that created the Council, would raise the pay floor for the more than 500,000 covered workers to $20.70 an hour, from the level as of April 1, 2024, of $20.
Several of the Council’s labor representatives reaffirmed that intention while being interviewed for a recent Restaurant Business story on the panel’s inner workings. Not surprisingly, at least one of the proxies for fast-food employers in the state was leaning toward holding the fast-food minimum at its current level, noting the group is not obliged to change the wage. The law that created the panel permits the group to adjust the pay level once a year but doesn’t require a change.
If the hike is approved, the strongest impact could be on managerial pay. By law, salaried employees in California are entitled to overtime pay if their compensation works out to less than double the hourly minimum wage in their field. A 3.5% hike in the fast-food minimum wage would expand eligibility for time-and-a-half pay as of Jan. 1 to any salaried quick-service employee earning less than about $87,000 annually.
When the Council meets on July 31, it can also recommend changes in the workplace standards policed by the state Department of Industrial Relations. Worker representatives on the panel indicated to RB that new employer mandates for protecting fast-food workers from excessive heat will likely be on the roster of suggestions that’s passed along to the department.
Ohio gives restaurants a tax break
Every year, Ohio suspends the state sales tax for several mid-summer days to help residents pay for back-to-school supplies. This year, for the first time ever, the Buckeye State is expanding the exemption to include on-premise restaurant meals.
It’s also forgoing sales tax collection this year for 10 days, or from July 30 through Aug. 8. By law, the exemption period can run for as few as three days. The tax-free stretch has to include the first Friday, Saturday and Sunday of August.
The suspension applies to restaurant meals eaten on-site, and alcoholic beverages are not covered. Nor are individual meals exceeding $500.
To-go and delivered meals are already exempt, since sales taxes aren’t collected on food purchased for at-home consumption.
Republican ticket now includes a wage-hike champion
After just two years in public office, J.D. Vance is still a mystery to many political pundits. At least the Republican vice presidential candidate has aired his stance on raising the federal minimum wage. Kinda, sorta.
In a recent interview with conservative New York Times columnist Ross Douthat, Vance was asked what economic policies he’d pursue if his party should win the White House come November (he hadn’t been named as Donald Trump’s running mate by that point).
The Ohio senator replied with what he called his “populist vision”: Putting as much upward pressure on wages as possible while trying to hammer down the price of services used by a typical American.
It’s the inverse, he suggested, of what American business has aimed to do since World War II. It also turns the traditional viewpoint of the restaurant industry on its head.
Indeed, he blasted efforts by employers to replace workers earning a good wage with someone less expensive, like a newly arrived immigrant. Far more preferable, he said, is replacing the higher paid employee with technology.
He cited the hypothetical example of McDonald’s replacing a worker with a self-ordering kiosk.
“That’s a good thing, because then the workers who are still there are going to make higher wages,” Vance told Douthat. “What is not good is you replace the McDonald’s worker from Middletown, Ohio, who makes $17 an hour with an immigrant who makes $15 an hour.”
Huh?
It makes no more sense to me than it likely does to you.
Vance also showed little sympathy for employers grousing about the difficulties of finding employees. He noted that 7 million “prime-age American men” have opted out of the workforce.
“My response is that there are people who could do those jobs if the incentives were there,” said Vance.
The onetime venture capitalist has already won the support of the International Franchise Association for his support of pro-franchising measures during his two-plus years in the U.S. Senate.
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