Biden Minimum Wage Hike Would Kill Family-Owned Restaurants, Business Owner Warns

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February 26, 2021

A group of small business owners railed against President Joe Biden's proposed $15 federal minimum wage increase, arguing that the policy would benefit large corporations while hurting mom-and-pop shops across the country.

Carlos Gazitua, president of Sergio's Restaurant in South Florida, derided Biden's proposal as a "one-size-fits-all policy." He noted that—unlike a minimum wage hike that passed in his home state in November—Biden's version would eliminate tip credits for waitstaff in the full-service restaurant industry, forcing employers to pay their servers at least $15 an hour on top of any tips they receive. According to Gazitua, the result would be devastating for family-run eateries like his, forcing them to rely on technology in an attempt to cut costs—a dynamic that is already on display due to the coronavirus pandemic.

"There's going to be slashes to job opportunities in our restaurants as technology replaces jobs," Gazitua said during a Wednesday call with reporters. "When you go to a restaurant now … you'll see that there are QR codes on every table. Sooner or later, you'll be ordering from your phone to the kitchen, direct only."

The pushback comes weeks after a Congressional Budget Report found that a $15 minimum wage would kill 1.4 million jobs and raise the federal deficit by tens of billions of dollars, with "young, less-educated people" bearing the brunt of the reduction in employment. Some Democrats have since objected to including the wage increase in Biden's $1.9 trillion coronavirus relief package. Sen. Kyrsten Sinema (D., Ariz.) argued that the provision is "not directly related to short-term COVID relief."

Corina Morga, who owns and operates C.R. Construction Services in Baltimore, echoed Gazitua's concerns. She highlighted Amazon's steadfast support for the wage increase—the online retail giant has recently flooded U.S. media outlets with ads lobbying for a $15 minimum wage. For Morga, the P.R. push exemplifies her worry that a federal wage hike would allow large corporations to price out smaller employers who can't afford the increased labor cost.

"That's competing with the job pool that I have. I can't compete in that market," Morga said. "Where do companies like mine go?"

The proposed wage increase has stalled in recent weeks as Democrats spar over the provision. In addition to Sinema, Sen. Joe Manchin (D., W.Va.) recently voiced his objection to a $15 minimum wage. He instead called for an $11-an-hour compromise, arguing that such a figure would be better for "rural America." Far-left members such as Rep. Alexandria Ocasio-Cortez (D., N.Y.), meanwhile, have threatened to drop support for the package should their party strip the $15 minimum wage provision from the final bill, a position that could tank Biden's ability to deliver on a key campaign promise.

It's unclear how Democrats will move forward with the proposal. Biden and Senate Majority Leader Chuck Schumer (D., N.Y.) for weeks plotted to pass the wage hike via reconciliation, a budgetary tool that would allow the policy to become law without Republican support. Provisions passed via reconciliation, however, are supposed to have a direct impact on the federal budget—a stipulation that does not apply to Biden's wage raise, Senate parliamentarian Elizabeth MacDonough determined Thursday night.

Vice President Kamala Harris could overrule the decision, a move that progressive lawmakers have pushed for in recent days. Rep. Ro Khanna (D., Calif.) called MacDonough's opinion "advisory" in a Wednesday tweet, insisting that Democrats "have the power to pass $15 wage." But White House chief of Staff Ron Klain said Wednesday that the Biden administration would "honor the rules of the Senate" and not attempt to overrule MacDonough if she concluded that the wage increase could not proceed through reconciliation.

Biden will likely now push for a stand-alone bill, with the president pledging a "separate negotiation" on the minimum wage in early February.