February 16, 2021
Dear Speaker Pelosi and Leaders Schumer, McCarthy, and McConnell:
We write to offer to our strong concerns with including the Raise the Wage Act in the pending stimulus bill. At a time when over 110,000 restaurants have closed and 2.5 million servers and employees have lost their jobs, increasing labor costs will push more employees off payrolls, raise menu prices, and force more restaurants to close. Eliminating the tip credit will hurt millions of servers who rely on the current system where they earn between $19-$25 an hour with tips.
The National Restaurant Association has just completed a nationwide survey of our membership – ranging from quick-service restaurants to full-service restaurants, both chains and independents. We asked what impact the initial 2021 increase in the federal minimum wage and tip credit would have on their ability to recover from the coronavirus pandemic. Eighty-two percent of restaurant owners responded it would have a negative impact on their ability to recover this year. Only two percent of operators said the wage hikes would have a positive impact.
We also surveyed on the specific steps restaurants would seek to stay open if the Raise the Wage Act was implemented this year. The response was clear – passage of this bill this year would lead to job losses and higher use of labor-reducing equipment and technology. Nearly all restaurant operators (98%) say they will increase menu prices. But what is clear is that raising prices for consumers will not be enough for restaurants to absorb higher labor costs. Eighty-four percent of owners responded they will likely have no choice but to cut jobs and employee hours from normal levels, while seventy-five percent say they will have no choice but to cut employee benefits from normal levels. Finally, sixty-five percent of operators say they will likely add labor-reducing equipment or technology.
The survey results make it crystal clear that the restaurant industry and our workforce will suffer from a fast-tracked wage increase and elimination of the tip credit. Restaurant jobs will be critical to every local community recovering from the pandemic, but the Raise the Wage Act will negate the stimulative impact of a worthy plan. We share your view that a national discussion on wage issues for working Americans is needed – but the Raise the Wage Act is the wrong bill at the wrong time for our nation’s restaurants.
We thank you for your continued focus and leadership on strengthening local communities during these uncertain times.
Executive Vice President, Public Affairs
National Restaurant Association