Minimum wage increases came with the new year in 20 states, plus the District of Columbia, boosting wages for 4.4 million workers. Some as a result of ballot initiatives in the 2016 Election, while others had already been slated to occur. As expected, the restaurant industry is among those most impacted. What will Trump do (WWTD)?
The states have now taken the lead on this issue, as the U.S. Federal Minimum Wage has been on hold since 2009 at $7.25. Inaction at the Federal Level means that only 21 states now follow the Federal Standard, with 29 others and the District of Columbia mandating higher levels. Among DC & the 29 states following their own wage levels, a majority require annual increases tied to the Consumer Price Index (CPI), resulting in ongoing increases in future years.
Meanwhile, a number of major cities such as Los Angeles and Seattle have implemented even higher wage levels. Seattle’s is now $13, with an increase to $14 & $15 in the next two years, and an even higher rate by 2020. LA is close behind, with 2017’s $12 per hour standard going to $15 by 2020.
Restaurateurs should not feel immune to increases should they reside in a “red” state. Higher minimum wages have received widespread support from the public in both “blue” and “red” states alike. And traditionally conservative states like Arizona supported an increase with a 58% margin in the 2016 Ballot Initiative, higher even than the proportion of voters who voted for Trump. Arizona’s increase of $1.95 to $12 is one of the largest increases ever and was received by 12% of the state’s workforce.
Republican Administrations have historically been friendly to business, but broad public support, among a large majority of voters, including Trump Supporters, introduces challenges to the new President. Trump largely avoided the issue on the campaign trail. In July he indicated that he could support an increase to $10. This was a change from earlier statements during the primary season when he said wages were “too high”.
Restaurant industry executive Andy Puzder, CEO of CKE Restaurant Holdings, Inc. has been picked by Trump as his new Labor Secretary. Puzder has been critical of minimum wage increases and has opposed a Federal Level higher than $9, below the levels already adopted in a quarter of the states, the District of Columbia, and many major cities.
Having taken many positions in opposition to historic Republican Positions, the Trump Administration may support an increase in the Federal Minimum Wage. At the same time given the selection of Puzder as Labor Secretary, any increase that may occur could be below levels already adopted in a number of states. Given widespread popular support among the general public for higher minimum wages, the Trump Administration may surprise America with a larger increase.
With a majority of states having already taken the lead, widespread support by the public, and annual increases common, the restaurant industry should likely brace itself for continued minimum wage increases, whatever actions Washington may take.