MV TELEGRAPH

As small business owners cheer President Joe Biden’s plans to channel more aid onto a pandemic-ridden high street, they also discuss another of his pledges – raising the federal minimum wage to $ 15 an hour.

Workers’ rights groups are cheering the move, but proponents from America’s smallest companies warn that such a surge could prevent an already challenging economic recovery on the way back to stability after the health crisis.

Biden’s plans would more than double the current federal minimum wage of $ 7.25 an hour, which has not changed since 2009, despite repeated efforts by Democrats to raise wages for low-wage workers.

A 2019 report by the Congressional Budget Office predicted that gradually increasing the federal minimum wage to $ 15 an hour by 2025 would raise wages for 17 million workers, but could also cost 1.3 million workers their jobs. In addition, 1.3 million people would be lifted above the poverty line. While the federal minimum wage has stagnated for more than a decade, more than half of the state’s states have above-federal minimum wages, and the pressure of $ 15 becomes increasingly important in states and communities as local government takes action.

“We cannot and will not return to the status quo after the pandemic is over because the status quo is not working for us,” union member Rita Blalock said in a press release by advocacy group Fight for $ 15. The group went on strike earlier this month to seek higher wages in the fast food industry and continued its year-long efforts to expand workers’ protection and pay.

The economic recovery for small businesses will be an ongoing challenge, even if stimulus measures are implemented to increase consumer spending. Researchers at Opportunity Insights estimate that the number of small businesses in America fell by nearly 30% in the past year.

A number of industry groups have raised concerns. The National Restaurant Association said Biden’s move could “do more harm than good” for the entire industry. The International Franchise Association also warned the increase could be counterproductive at this point. Matt Haller, IFA’s senior vice president of government relations, said, “The request to more than double the wages of some workers will hurt companies in trouble and likely slow recovery.” “”

The advocacy group of the National Federation of Independent Business reiterated this assessment, saying that small businesses are being disproportionately harmed.

“We are concerned that elements of this plan could harm the companies that have carried the lion’s share of the pain from the pandemic,” Kevin Kuhlman, NFIB vice president of federal government relations, said in a statement. “Large corporations may be fine with dramatic increases in the minimum wage and federal paid vacation mandates since they were successful during the pandemic, but small businesses know that these guidelines will make it even harder for them to hold their own against their bigger competitors. “

An example of this is Target, which would spend $ 200 million on Monday to give its employees another round of rewards. The discounter accelerated plans to raise its starting wages to $ 15 an hour in July.

Small business owners like Patrick Guay are exploring what the hike could mean if it breaks legislative hurdles and becomes a reality. Guay owns four Mooyah restaurants in Massachusetts and Connecticut, where minimum wages are $ 13.50 and $ 12, respectively. It usually starts with younger workers at the minimum wage and pays a higher wage to older workers with more experience who may be supporting families. When the federal minimum hits $ 15, he’ll have to adjust pay across the board accordingly.

“Every year when the minimum wage increases, you also need to reevaluate your existing employees to differentiate their wages. It is a big problem that you have hourly employees who earn almost the same as your employed directors.” in the restaurants, “Guay said.” I’m not sure it’s fair to burden the small business owner with everything and then make a decision about how much of that we want to pass on to our customers. “

While small business owners may voice concerns about higher wages, the vast majority of Americans, about 72%, support the idea of ​​raising the minimum wage. This is the result of an Ipsos survey of 1,114 adults conducted on behalf of Public Agenda and USA Today in August. Some proponents say that increasing workers ‘wages will mean more money in workers’ pockets, which could benefit small businesses and the economy as a whole.

The small business owner Julia Knight pays a higher than the minimum wage at her company of the same name, Julia Knight Collection, in Minneapolis. She has three employees and more than a dozen contractors, and says she never pays less than $ 20 an hour because the expertise she needs requires higher wages. Your employees also have health insurance. This is true even if their business that sells high-end tableware has suffered a blow due to the pandemic and economic recession.

“I just don’t like it when the people who work for me worry about how they’re going to take care of themselves,” Knight said.

She added that those who say $ 15 an hour is too high would say, “Have you looked these people in the eyes and said, ‘You have to raise a family at $ 15 an hour’? I don’t see , how it works. “

– CNBC’s Betsy Spring contributed to this report.

As the adoption of Covid vaccines gains momentum across the country, restaurants are weighing options to encourage workers to get the vaccine.

Foodservice workers are recommended who should be vaccinated when supplies are limited in Phase 1 (c) of the Centers for Disease Control and Prevention List, and are right behind high-risk healthcare workers, the elderly and key workers at the forefront. The National Restaurant Association requested priority for those working in food service after first responders and the most at risk.

“Prioritizing testing and vaccine distribution will help secure the food supply chain for our communities and ensure that agricultural and restaurant workers can safely sell and serve healthy food,” said Sean Kennedy, an industry group spokesman, in a statement to CNBC. “The association continues to work with the administration to plan vaccine distribution, and the state restaurant associations are working to ensure that restaurant workers continue to be seen as essential to food security and prioritized in their state vaccine rollout plans.”

Starbucks offers logistical support

Starbucks announced a partnership with its home state of Washington last week to accelerate vaccine adoption. The coffee giant aims to help the state get 45,000 shots a day by employing 11 people who specialize in labor and use, operations, and research and development to work full-time on vaccine distribution, NBC News first reported.

In a recent interview with CNBC, Starbucks chief operating officer Roz Brewer said the company has not yet made a decision on vaccine mandates for partners or guests.

“We will do everything we can to influence and improve the distribution and implementation of the vaccination process. And that is it [what is] The most important thing is to get the entire community vaccinated, “Brewer said.” To make sure everyone understands how important this is. “

Large restaurant companies are considering the next steps when it comes to employees.

Both Chipotle and Yum! Brands told CNBC they won’t mandate vaccinations for workers. Chipotle says it will heavily promote vaccinations by providing resources and access to workers, and Yum! said it does not anticipate such a mandate at the time.

Companies like McDonald’s, Restaurant Brands International, Dunkin ‘Brands, and Papa John’s, all of which have a large franchisee footprint, have yet to take a public stance on employees or franchisees. Domino has told CNBC that there is a team working on the issue, but they also don’t have a public position yet. Once one is set up, it is said to be shared with the franchisees.

‘The Greater Good’

Franchisees and franchisors can generally require workers to be vaccinated with certain exceptions, according to Jim Paretti, a shareholder in Littler Mendelson’s Workplace Policy Institute, which focuses on labor law.

However, it is unlikely that a franchise will suggest anything more than suggesting that restaurant owners are following certain guidelines, as litigation continues over the joint employer rule, which is still being fought in court. The rule that an employee of one company can also be considered an employee of another company could change under the new administration.

McDonald’s had a huge hit in 2019 when the National Labor Relations Board ruled that the company was not responsible for actions taken at its franchise locations, meaning it is not a joint employer with its franchisees. The industry continues to observe this.

“That’s the thing that is likely to drive franchisors to act cautiously and do things related to guidance, recommendations, suggestions, and resources for franchisees rather than giving directions from on high,” Paretti said.

At Amel Morris’ pizzeria, Lefty’s Place in Morgantown, West Virginia, the focus is on getting the vaccine and moving forward. The small restaurant only has six employees, and Morris said he had no plans to require vaccinations but he was willing to make it easier for workers to access them.

“Everyone wants to get the vaccine. If they needed time off, we would get coverage so they can get it. Some of them don’t have a car, so we would drive them there,” said Morris. “It’s supposed to help the common good, get more people to get it and hopefully get everyone back to normal.”

“If it took $ 50 to get someone to do it, I’ll bring them some money if that’s the push that is needed in that direction.”

Adrienne Parker, who owns a consulting firm, has applied for a second round of PPP.

Source: Adrienne Parker

Adrienne Parker knows what it is like to struggle as a black small business owner during the pandemic.

Parker, the sole owner of Peace of Mind Consulting, an Atlanta management and accounting consultancy firm, saw much of her income run dry as clients faced their own financial hardships.

When the first round of Paycheck Protection Program loans became available, it went to a community development financial institution (CDFI) in Atlanta, ACE instead of a major bank.

“I’ve heard the horror stories and witnessed the horror stories firsthand, the experiences with the big banks,” said Parker, 37.

While she eventually got a $ 9,000 loan, one of her clients going through a major facility waited months to find out they had been declined.

“Before the pandemic, there were already differences in loan approvals for black entrepreneurs compared to white business owners,” said John Holdsclaw IV, chairman of the CDFI coalition.

“Despite the PPP program, the pandemic has only widened the gap.”

More from Invest in You:
Here is a 12 month roadmap to financial wellbeing
Black Hispanic Americans pay twice as much bank fees as whites: survey
Biden pledges to help resolve America’s childcare crisis. Here is his plan

CDFIs have long played a role in underserved communities. These are credit unions, banks, microcredit funds, or venture capitalists that provide low-income communities with access to financial services. Their communities may trust them more than large financial institutions.

CDFIs are also among those with early access to the latest round of PPP loans. When the program reopened on Jan. 11, community financial institutions working with underserved communities were at the fore. The following week it was opened to more lenders. More than 60,000 loans were approved in that first week.

Parker is among those who applied for another loan. Others are first-time applicants.

“This next round is huge for black and brown entrepreneurs and entrepreneurs,” said Holdsclaw.

This round is just a deposit for 2021 in my opinion.

John Holdsclaw IV

CDFI coalition

There is no precise data on the racist breakdown of PPP loans as all demographic information included in applications is purely voluntary. About 75% of all PPP loans had no information at the time of application, according to the SBA.

However, PPP data analyzed by The Associated Press showed that many minority owners did not get loans until the final weeks of the program, which ended Aug. 8.

The analysis found that six loans were approved for every 1,000 people living in 20% of the postcodes with the largest proportion of white residents. That was almost twice as much as for those who live in 20% of the postcodes with the lowest percentage of whites.

The relief is urgently needed. In a September survey by Goldman Sachs, 43% of black small business owners said they will run out of cash by the end of 2020.

David Reiling, CEO of Minneapolis-based CDFI Sunrise Banks, is encouraged by the response to this latest round of PPP loans. The extra lead time allowed his bank to do public relations and help underserved business owners steer the process.

Of the 2,500 applications received so far, 1,700 are complete. Of these, 800 are first-time PPP borrowers with an average loan volume of around $ 30,000. About 45% are from low- and middle-income communities, 25% are African American, 10% are Asian, and about 25% did not disclose their race.

However, more is needed to help these businesses survive.

“In some cases, a small grant may be a more efficient and effective way to support these small businesses,” said Reiling.

“You need a little bit of equity to get through Covid.”

Holdsclaw hopes the SBA will continue to go to CDFIs and other organizations to reach out to minority communities.

“This round is just a down payment for 2021 in my opinion,” he said.

SIGN IN: Money 101 is an 8-week financial freedom learning course delivered to your inbox weekly.

CHECK OUT: A year after starting my side business, it was making $ 10,000 a month: Here’s what I learned about Grow with acorns + CNBC.

Disclosure: NBCUniversal and Comcast Ventures are investors in Acorns.