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Inflation, Wages, and Restaurants: What You Need to Know

May 24, 2022

Inflation has become a problem in 2022. It is at a 40-year high. It started with COVID –19 and related supply chain complications and has adversely affected significant businesses, including the restaurant industry. America has been anticipating a concerted effort from the government to relieve supply chain issues. Instead, the problem is getting worse. In a recent CBS/YouGov survey, 65% of Americans said President Biden wasn’t focusing enough on supply chain issues and subsequent inflation. His level of popularity has been plummeting. While Russia has attacked Ukraine, a major player in the world supply chain, the effects of inflation on restaurants have received minimal attention.

What Are the Solutions?

Raise the Wage Act of 2021 (HR 603) is one approach to provide a solution. This act increases the federal minimum wage to bring relief to American families. Five annual steps would raise the minimum wage from $7.25 to $15 by 2025. This would increase pay for nearly 32 million workers, about 21 percent of the U.S. workforce. The problem is that a federal standard does not comply with the standard of living in each state. The cost of living in San Francisco, California, is vastly different than in Miami, Florida. A $15 minimum wage floor is insufficient for providing real support for every location in the country.

Assembly Bill 1003 addresses wage theft according to the California penal code. In the past, employers have been sued or fined for withholding wages. Now employers can be held liable for grand theft if they intentionally withhold more than $950 from any employee, or $2,350 from two or more employees in any consecutive 12-month period. Withholding wages, gratuities, benefits, or other compensation, not paying minimum wage, offering overtime, or meal or rest breaks is a felony instead of a misdemeanor for an employer in 2022.

Relief for Restaurants and other Hard Hit Small Businesses Act of 2022 (H.R. 3807), addresses financial support for restaurants, arts and entertainment venues, and small businesses adversely affected by the COVID-19 pandemic. It passed in the House on 4/07/22 and will extend to 3/11/23, maybe longer. Made up of an additional $42 billion for the existing Restaurant Revitalization Fund, previous applicants who have not received a grant have priority. The Hard Hit Industries Award Program determines award recipients within the bill, with a maximum amount of $1 million being granted for each organization. Through this process, the Small Business Act (SBA) prioritizes organizations that have experienced significant pandemic-related revenue loss, prioritizing those that experienced a loss of at least 80%. The second priority is to those that experienced at least a 60% loss and last, a 40% loss. Funds may be used for operating expenses such as mortgage, rent, utility payments, and payroll.

 

restaurant relief act

 

In addition, the temporary practice of outdoor dining will continue. Many areas have noted the profitable impact outdoor dining had on the restaurant industry during the pandemic and are seeking legislation to allow it to continue. In Connecticut, Governor Ned Lamont announced House Bill 5271, allowing the rules on outdoor dining at restaurants established during the COVID-19 pandemic to continue for at least another 13 months. Approved in the House and Senate, these relaxed outdoor dining rules will continue to allow restaurants to impact the economy positively.