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How the industry is fighting back against a rising minimum wage

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The call to increase minimum wage is ringing louder and louder across the country. Los Angeles will raise the rate to $15 per hour by 2020, and Chicago will increase the hourly pay to $13 by 2019. New York state will raise its minimum pay to $15 for quick-service-chain workers in New York City by late 2018 and in other parts of the state by 2021. Governor Andrew Cuomo promised all restaurant workers he will bring them up to $15 an hour, too, along with all hourlies, but needs the state legislature to go along.

Just days after Cuomo announced his intent to push an across-the-board increase into law, Berkeley, Calif., challenged its minimum pay rate. The city is eyeing a labor panel’s recommendation to hike the lowest pay to $19 an hour, but an outcry prompted a delay in the vote until November.

A $19 wage would be the highest in the nation and would mark the first time a major American city redefined a “living wage” above $15 an hour. Additionally, Berkeley’s Commission on Labor urged Mayor Tom Bates and the City Council to regulate service charges levied by restaurants as a replacement for tips and to require all employers to provide paid sick leave.

In many of these jurisdictions, the restaurant industry doesn’t plan to just accept the boost. Even before Cuomo pledged a statewide hike, a restaurant alliance that includes the National Restaurant Association hired Randy Mastro, a former deputy mayor of New York City, to lead the legal challenge of the governor’s unconventional route to raising QSR employee wages.

Outside of the courtroom, pro-restaurant lobbyist and labor lawyer Rick Berman is turning to guerrilla tactics. His Center for Consumer Freedom commissioned a billboard for New York City’s Times Square that plays to a negative public impression of fast-food workers, an image the industry has struggled to improve. The ad blasts Cuomo’s planned hike as a giveaway to slackers who have neither the education nor the skill to command $15 an hour. While Cuomo’s camp dismissed it, New York’s ABC News10 wrote that the ad “[showcases] the unfairness and unintended consequences of the dramatic fast food wage hike that Cuomo’s wage board recommended last month.”

Arguments of resulting layoffs and closures by restaurants have been the standard retort. According to a poll of quick-service operators in New York state by the Employment Policies Institute, 22 percent said a $15 minimum would force them to shut their doors and nearly half said they’d be forced to cut employee hours.

At least one operator is talking specifics. Wendy’s CFO Todd Penegor said in its earnings call in August that it will use machines for the jobs once done by now-too-expensive people. “We continue to look at initiatives and how we work to offset any impacts of future wage inflation through technology initiatives, whether that’s customer self-order kiosks, whether that’s automating more in the back of house in the restaurant,” he said. 

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