Friday, May 2, 2014

Obama Uses His Pen -- To Eliminate Jobs

Barack Obama wags his pen -- the dude is in charge!
When Congress wouldn't salute smartly and go along, Barack Obama used his pen to establish a new federal minimum wage for work on government and government sponsored or regulated contracts. He ratcheted minimum pay from $7.25 to $10.10 per hour. That is a 39 percent increase, which anyone who has even passing knowledge of basic economics or business finance knows, will make many operations that are dependent on low wage, unskilled labor unprofitable, put them out of business and inhibit new business growth altogether.

Sure enough, when Dear President's penmanship wrought and wrote down into military bases, their eateries, one after another, began to close down. In late March it was reported:
Six restaurants located on military installations, including three McDonald’s outlets and two name-brand eateries, have closed recently or are planning to shortly, with new minimum wage requirements for workers on federal contracts believed to have played a role in the decisions.
Last week McDonald’s restaurants closed at Naval Weapons Station Charleston, S.C., and at Naval Support Activity, Bethesda, Md.; a third McDonald’s will close next week at Naval Base Kitsap-Bremerton, Wash. A fourth restaurant, I Love Country, has notified Navy Exchange Service Command that it will close next week at Naval Station Pearl Harbor, Hawaii, reported Army Times.
Two other contractors, a sandwich eatery and a pizza parlor, have asked to terminate their Army and Air Force Exchange Service contracts to operate at two other installations.
These decisions most likely are related to Labor Department rules governing fast food workers on federal contracts, along with a recently signed executive order increasing the minimum wage for employees working on new federal contracts beginning Jan. 1, a source told the publication.
United States soldiers patronizing a McDonald's in Kuwait.
The Labor Department rules, issued last fall, require federal contractors operating under the Service Contract Act to pay fast food workers a higher minimum wage, as well as additional health and other benefits. It is not yet clear what the impact of President Obama’s executive order will be for contracts on military installations. It will increase the minimum wage for all federal contract workers from $7.25 to $10.10.
These closings “are the tip of the iceberg,” the source told Army Times. “I don’t think anybody has realized what the far-reaching effects of this will be.”
The shutdowns and job losses prompted a response and rebuke from the Navy:
More closures may come unless relief is granted. Navy and Marine Corps exchange officials estimate that up to 390 fast food concession operations would close on installations across the U.S. and its territories, which would result in the loss of jobs for nearly 5,750 employees, according to an April 8 letter to Labor Department officials signed by Russell Beland, deputy assistant secretary of the Navy for military manpower and personnel, asking for exemption from the wage regulations.
These contracts are negotiated for different bases at different times, so the effects will be seen incrementally. The Navy and Marine Corps exchange systems already have suspended 74 contracts for “new concepts,” according to the Navy letter.
Many family members and veterans are employed by the fast food restaurants.
Officials of the two exchange services estimate a combined loss of about $27 million a year in profits associated with food service sales alone. The companies that build and operate the restaurants on base make payments to the exchange systems.
This was a lose, lose, lose deal as is so normal when the federal government intervenes in business decisions and interferes with markets. I pray someday that we have a president again who worked real jobs, for real businesses, in the real world, for an actual living.

For now, at least, the Department of Labor has found a well of disappearing ink.
No need to bid adieu to that Big Mac. The U.S. Department of Labor is temporarily exempting fast food restaurants on Navy and Marine Corps installations from new minimum wage rules that led to the closure of McDonald's restaurants on several bases.
Time will tell if this is the last chapter or Obama will author more writs to show employees the door.

1 comment:

  1. Your core work is just terrific. I truly hope that you are building a constituency. It is well worth the read