Can’t Survive on $7.25

So far, Congress is listening to the lobbyists

 

The National Restaurant Association wrapped up its annual lobby days in Washington at the end of April. Called “the other NRA,” the corporate lobby’s top priority is to prevent an increase in the minimum wage.

Congress is expected to vote on a bill to raise the federal minimum wage from $7.25 to $10.10 some time this year. The bill would also raise the minimum wage for restaurant servers and other tipped workers, which has been frozen at $2.13 per hour for more than 20 years.

Marjorie_Elizabeth_Wood
Marjorie Elizabeth Wood

One of the most powerful corporate lobbies, the other NRA represents the interests of a $683-billion industry. Members include well-known corporate chains like Darden Restaurants (Red Lobster, Olive Garden, The Capital Grille), Yum! Brands (Taco Bell, KFC, Pizza Hut, WingStreet), McDonald’s, Starbucks, Chipotle, and hundreds more.

To date, this lobby has spent more money opposing a minimum-wage hike than any other single industry group on any other issue.

While the other NRA pushed its agenda, thousands of protestors shut down Pennsylvania Avenue, demanding an increase in the minimum wage and an end to corporate giveaways. The “Battle for the Capitol” march was organized by restaurant workers and their allies.

So far, Congress is listening to the lobbyists.

On the second day of the other NRA’s lobbying, Senate Republicans blocked a vote on the Fair Minimum Wage Act.

Not only are corporate lobbyists blocking an increase in the minimum wage; they are depending on taxpayer support for their low-wage model.

According to a new report that I coauthored with Sarah Anderson at the Institute for Policy Studies, taxpayers are subsidizing both the low wages of restaurant workers and the excessively high compensation of restaurant-industry CEOs.

Like most low-wage employers, the restaurant industry pays its workers so little that many of them rely on Medicaid and other taxpayer-funded anti-poverty programs.

The restaurant lobby has spent more money opposing a minimum-wage hike than any other single industry group on any other issue.

At the same time, taxpayers subsidize sky-high executive compensation through a trick known as the “performance pay” loophole. This tax break lets large corporations deduct unlimited amounts of money from their income taxes for the cost of stock options and other forms of “performance-based” executive pay.

Though Congress in 1993 capped at $1 million per executive the “salaries” corporations could deduct from their corporate income tax, this provision created an incentive for companies to pay their CEO’s extravagantly.

That’s because the more a company pays its CEO in “performance pay,” the less the company pays in taxes.

The result is that the largest corporate members of the other NRA are being subsidized by taxpayers at both the top—in the form of unlimited tax deductions for excessive pay—and at the bottom—in the form of public assistance for their low-wage workers.

It’s time Congress stopped doing the bidding of large corporate lobbies like the other NRA and started listening to ordinary Americans, like a protester on Pennsylvania Avenue whose message was simple: “Can’t survive on $7.25.”


Marjorie Elizabeth Wood is an economic policy associate at the Institute for Policy Studies.