The Unavoidable Costs of Rising Minimum Wage and Unionization in Restaurants

by | Apr 13, 2023 | Labor Relations Ink, SEIU, UFCW, UNITE-HERE

Clearly, the rising minimum wage places an imposing burden upon businesses. We saw panic on the horizon last year In the labor laboratory of California, where the Fast Food Accountability and Standards (FAST) Recovery Act is on hold but could still boost base wages to $22 per hour, which would be shouldered by franchise owners. A 2024 ballot measure could also push the state’s overall minimum wage to $18 per hour.

The SEIU lobbied hard for those bills, as with the Fight For $15 initiative, which now pales in comparison to the union recently pushing for a $25 minimum wage in Chicago. What unions don’t acknowledge, however, is that a rising base wage negatively impacts workers with businesses making tough hiring choices in order to stay afloat.

No one can dispute the existence of this friction in the food service industry, which was previously considered impervious to organizing only a few years ago. The Starbucks wave changed everything, and as we’ve previously discussed, that contagion spread to other industries. Fellow coffee houses continue to feel the impact, too.

Case in point: Since January, the New York-based Blank Street Coffee chain’s workers voted to join the United Food and Commercial Workers at 26 out of 40 of its locations.

Independent restaurants are also beginning to feel the union pains. A Vietnamese eatery, Cong Tu Bot, recently became Maine’s first unionized independent restaurant in over four decades as workers signed on with UNITE HERE.

Additionally, food prep workers for the Chicago-based Portillo’s fast-casual chain will vote this week on whether to join the Iron Workers Union, and yes, this will be the first time that this particular union has stepped into the food service realm.

Stranger things have happened – the United Auto Workers moving in on graduate student workers at universities across the U.S., for instance.

More developments reflect the union influence upon the minimum wage:

New York: Infighting lawmakers could set up a domino effect in far-flung states. Gov. Kathy Hochul wants budgetary funds to help raise minimum wage with inflation, and she’s fielding criticism from both sides with Democrats striving past the $20.00 mark. NY AG Letitia James also threw her weight behind the Raise Up NY bill for a $21.25 base wage across the state over three years. Unions are here for it.

Maryland: Minimum wage could soon zoom up to $15.00 two years earlier than originally planned. The state’s employers would prefer a two-tiered approach to set different wages for first-time high-school workers versus adults with more experience.

Pennsylvania: The state’s current $7.25 per hour matches the federal minimum wage, but unions, including the SEIU, and lawmakers want to make the decision a local one, ideally to push metropolitan areas to the $15.00 mark.

Minnesota: A wrinkle in this state finds disabled workers’ families pushing against a bill to abolish the so-called “subminimum wage,” If this should happen, employers would likely be forced to cut loose these workers to hire candidates who can produce goods or services commensurate with a higher pay rate. It’s not the greatest lawmaker look.

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