Small businesses collateral damage in $15/hr ruling

Tuesday, May 3, 2016
 | 
Chris Woodward (OneNewsNow.com)

minimum wage illustrationThe Supreme Court's decision this week not to hear a challenge involving Seattle's minimum wage could impact a lot of people.

Seattle gave small businesses seven years to phase in a $15-an-hour minimum wage, whereas large employers must do so over three years. Small businesses are those employing fewer than 500 people.

According to five franchises and the International Franchise Association, Seattle's $15-an-hour minimum wage treats them like large businesses because they are part of "multi-state networks." However, franchise owners argue they are small businesses and should have more time to phase in the imposed minimum wage. That went away Monday when the Supreme Court turned away a legal challenge from the franchise owners and IFA, leaving in place a federal court ruling in favor of Seattle.

Working Washington says the big business lobby has thrown everything at Seattle workers – "but they keep on losing, and the economy continues to boom." Monday's ruling "is another win for workers and people of Seattle and another defeat for McDonald's & friends," says the organization.

Young, Ryan (CEI)"I think the Court should have reconsidered that," says Ryan Young, fellow at District of Columbia-based Competitive Enterprise Institute. "Even though McDonalds [for example] is a massive corporation, a lot of the restaurant owners are locally owned. They're small-scale businesses; they just buy the rights to use McDonalds' name and menu."

As a result, Young believes the Seattle franchise requirement is mis-targeted and they're not actually hitting the big businesses that supporters of the minimum wage intended.

"They're hitting, in addition, some small businesses," he continues. He also sees the possibility that this will have a "powerful disincentive" to opening up new businesses, at least on a franchise model.

Speaking of the franchise model, Young says franchisees in most places outside the Seattle area will not be paying a $15-an-hour minimum wage. That gives them "an instant competitive advantage."

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