Higher wages: Biden draws ire of restaurant industry over comments

Another day, another business industry upset with the Biden administration. 

In the wake of President Biden’s comments to restaurant owner John Lanni that he will "be in a bind for a little while," unless Lanni – and other restaurateurs – improve wages, some in the industry are speaking out. 

"Hiking wages will only bring the entire industry [to] its knee. In New York already, we had a minimum wage hike over 50% in the last few years," said Rosario Procino, owner of Ribalta in Manhattan. 

Indeed, New York City has recently seen a period of historic wage raises during the Bill de Blasio administration, with the wage floor gradually raising to $15 an hour by the end of 2020. 

"The margins [have] already shrunk in the last few years [because of] the minimum wage raise increase. Now with the higher price of raw material, with the [increased] rent, it will bring the restaurant margin bottom line to 6-7%, which is very difficult to operate in this market," said Procino, who hails from Naples, Italy. 

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Also making matters worse when running a restaurant in 2021 is an ongoing labor shortage. Procino believes enhanced benefits coming to an end in September in New York will help solve that issue.

"At the same time, the government is helping [people] stay home by giving them extra money for staying home. It’s something that is really stopping the economy [from] coming back," he remarked.

The numbers agree with Procino, as the number of job openings in the U.S. have hit record highs in recent months. The Labor Department’s Jobs Openings and Labor Turnover Survey (JOLTS) totaled nearly 9.3 million openings in April and May – some of the highest numbers ever recorded. 

The issue has not gone unnoticed to the National Restaurant Association, which stressed the toll the pandemic has taken on the industry when asked about Biden’s comments.

"Mr. Lanni expressed the same fear and frustration being felt by operators across the country. Restaurants aren’t like other small businesses; they run on very tight margins, so any change in operating costs jeopardizes their stability," said Sean Kennedy, executive vice president of public affairs, National Restaurant Association. 

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"In most communities the demand for workers is pushing wages significantly higher, and restaurant operators are doing their best to offer competitive wages in this new environment, but they’re also balancing skyrocketing food costs and debt from operating in the red for the last year," Kennedy continued. 

When asked about the notion of a significant raise in wages – as Biden suggested – Kennedy demurred. 

"Higher wages alone won’t solve the problem when there aren’t enough people in the labor pool to fill the millions of open jobs," he added. 

According to statistics from the National Restaurant Association provided to FOX Business, restaurant and food service sales are down almost $300 billion from expected levels since the start of the pandemic. 

In addition, 90,000 restaurants are closed permanently or long-term, and restaurants have still not recovered 1.3 million jobs (or 10%) of its pre-COVID level. 

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Kennedy is hopeful the Biden administration will continue to assist the restaurant industry, especially now with mandates and COVID restrictions reappearing. 

"President Biden acknowledged last night the great opportunities the restaurant industry offers. We appreciate all that he and the previous administration have done to help as many restaurants as possible survive, and we hope that Congress and the administration will continue to work with us to find solutions that will help the industry weather this storm," he concluded.