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What restaurants can expect under Biden

In a flurry of activity and a host of public addresses, the new president has revealed plans with significant implications for the industry.
Photograph: Shutterstock

From the moment Joe Biden uttered the words, “so help me God,” the nation’s 46th president has sounded the message that his administration will break sharply from the policies of the Trump White House.

With Republicans also losing the Senate after six years, giving Democrats control of legislative and regulatory processes for the first time since 2011, few pundits dispute that a redirection is afoot, whether they’re broadcasting from Fox or MSNBC.   

So, what can restaurateurs expect from this newly sworn in agent of change?

Restaurateurs needn’t consult the mystics. Biden issued 14 executive orders and 13 policy-setting memoranda or staff directives during his first two days in office, with a slew more already previewed or promised by his transition team. Those actions, coupled with campaign speeches and insights gleaned from a lifetime spent in public office, provide reliable clues about what the industry can expect.

Here are the indications of what’s ahead.

Higher labor costs.  Back when the campaign for the Democratic presidential election was still a horserace, Biden was already pledging to push through a doubling of the federal minimum wage, to the so-called living-wage level of $15 an hour. He’s reaffirmed that vow repeatedly in the months since, leaving little doubt that the federal pay floor, currently at $7.25 an hour, will rise significantly. Indeed, the chief executive has already set $15 an hour as the new minimum for federal workers through an executive order.

Proponents note that many states are already on a path to a $15 minimum wage, and that a sizeable portion of the industry is already paying far more because of labor supply and demand.  Biden noted in a speech shortly before his inauguration that even Florida, a state that went against him in the November election, is raising its minimum to $15, suggesting that he expects to prevail in doubling the nationwide rate.

No more tip credit?
While campaigning, Biden would usually mention a disallowance of the tip credit in the same breath he used to call for a $15 minimum wage. The goal he set, a direct echo of a key union objective, was one wage of $15 an hour for all, including servers. Wait staffers could still keep their tips, but the gratuities would be on top of a directly paid $15 wage—a dynamic that could widen the pay gap between front-of-house and back-of-house workers.

Scuttling the tip credit would be a significant blow to full-service restaurants in the 43 states where the break for restaurant employers is allowed. Under current federal law, they can pay servers as little as $2.13 an hour if those individuals are collecting at least $5.12 in tips, bringing them up to the federal minimum of $7.25. That direct payment would jump sevenfold.

More employer obligations. Biden’s 200-page plan for easing the nation through the pandemic calls for several new employer mandates. One of the more impactful would be the requirement that all employers provide up to 14 weeks of paid sick leave for employees who have COVID-19 or need the time to care for a stricken family member. That compares with the six weeks of paid leave that was provided as a now-expired emergency measure under Trump.

Almost unnoticed in Biden’s policy plan is a directive that the Occupational Health and Safety Administration (OSHA) update its guidance for protecting workers. Among the possibilities specifically cited was a “temporary emergency requirement” that face masks be worn.

The section raises the possibility that OSHA could develop new safety guidelines for “public workers on the frontlines,” a broad and loose category where some state and federal leaders have placed restaurant workers.

Biden has already acted on the pledge with one of the executive orders he released Thursday, the day after his inauguration.  It notes that the emergency mask standard could be implemented by March 15.

In addition, the Office of Management and Budget has been directed to hit the brakes on a number of executive orders that were issued by President Trump to ease the business community’s regulatory burden.

More union activity. Biden has routinely described unions as the catalysts that ushered past generations of blue-collar workers into the middle class. He has characterized organized labor as crucial in realizing his goal of closing the nation’s income gap.

In November, in an address to big-corporation CEOs, the son of Scranton, Penn., called himself “a union guy” and flatly pledged to increase the power of unions.

He has already acted on that vow by nominating Marty Walsh as U.S. secretary of labor. Walsh held a variety of union leadership positions before being elected mayor of Boston in 2013.

Biden has already appointed Lauren McFadden chairman of the National Labor Relations Board, the independent federal agency that monitors relations between employers and employees seeking collective-bargaining power. McFadden, a one-time labor counsel to the late union champion Kennedy, succeeds John Ring, who showed a decidedly pro-employer bent during his time in that role.

Faster vaccinations.  One of the four crises Biden has pledged to resolve is the nation’s economic plight. Part of the remedy, he avows, is solving a second crisis, the pandemic.

Biden hopes to attack both fronts by accelerating the inoculation of the U.S. population against COVID-19. Toward that end, he plans to invest $25 billion in the development of domestic facilities to produce the vaccines. The aspirational goal he’s set is administering 100 million doses of the Pfizer or Moderna serum in the first 100 days of his administration, which would take the nation to April 30. Each would be administered for free.

To make that happen, Biden’s new director of the Centers for Disease Control and Prevention has already pledged to use the military to distribute and assist with the injections. The president has also cleared the way for state governors to use local National Guard forces to help in the process.

In addition, Biden has already directed the Federal Emergency Management Agency (FEMA) to set up 100 federal vaccination centers across the nation, with manpower coming in part from the establishment of a 200,000 person corps of citizens who have been trained to give the shots.

Deeper immigrant pool?  One of Biden’s first actions as president was reinstating the Deferred Action for Childhood Arrivals (DACA) guidelines that had been implemented for immigration authorities while the new chief executive was vice president under Barack Obama.   The policy called for deferring deportation or other actions against immigrants who were brought into the country as young children—colloquially known as Dreamers—provided they’d obeyed the law and either gone to school or joined the military. Research and anecdotal evidence indicate that many of the covered individuals ended up in restaurant jobs.

The policy was quashed by President Trump in one of his more controversial acts. The move came as the industry was struggling to find enough workers to fuel its growth.

The move by Biden, along with his directive to stop work on the wall Trump pledged to build between Mexico and the United States, are part of the president’s immigration reform plan. The initiative calls for creating an eight-year path to citizenship for what are believed to be more than 10 million immigrants residing in the U.S. without legal documentation. Participants would be granted legal residency after five years and citizenship after three more.

The plan has won praise from the industry. “The National Restaurant Association continues to support comprehensive immigration reform that expands opportunities for businesses seeking employees and immigrants pursuing the American Dream, and we applaud President Biden for making it a top priority,” Sean Kennedy, EVP of public affairs for the association, said in a statement issued on Inauguration Day.

Direct COVID relief.  One of the issues that has yet to be addressed in much detail by Biden is direct aid for restaurants and other small businesses that have been devastated by the pandemic. Before the inauguration, the incoming president revealed the broad strokes of his $1.9 trillion pandemic relief plan, which included a call for direct financial relief for mom-and-pop enterprises. Immediately beforehand, Biden told The Washington Post and other mainstream national media that he would earmark $15 billion for that effort. But his administration has yet to spell out how that money will be channeled to businesses in need, and how they might qualify.

Other provisions of the plan would likely benefit the industry indirectly. Most American households would receive $1,400 per resident in a direct payment, raising an earlier allocation of $600 to $2,000. When payments of that size were issued under the relief bill passed by Congress early in the pandemic, restaurants enjoyed an uplift in sales.

Biden’s plan might also raise consumers’ disposable income by raising supplemental unemployment payments by another $100 per week, to $400.

 

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