Bill Phelps, co-founder and chief executive officer of the California-based Wetzel’s Pretzels franchise, was a prominent advocate for the Golden State’s $15 a hour minimum wage for several years, but has recently changed his opinion, reports the Washington Examiner. He now says that the rate — which has only just reached $11 — is already squeezing his businesses and hurting workers, and he worries things will likely get worse as minimum wage rises to the $15 level.
The CEO in 2016 wrote a pretzel twisted advocacy of a higher minimum wage in an op-ed for Forbes where he said, get this, “I’ve paid very close attention to our business as California has raised the minimum wage over the past couple of years. And what I found was stunning. When California increased the state minimum wage from $8 to $9 an hour in July 2014, our same-store sales doubled in the next two weeks and stayed that way for six months. When the minimum increased again in January of this year to $10, the same thing happened; our same-store growth rate more than doubled.”
But now with the minimum wage at $11.00 he says, ” I see a change happening now. I think fast food in general is flat to declining and you’ve got wage increases and the operators are getting squeezed.”
“I was very bullish on the minimum wage increase. It was working really well for us. It was working okay for the fast food industry but there is no question you are going to have to see a reduction in the number of restaurants that are out there. You are going to see a reduction in service. And you are going to see more people going to technology to reduce labor costs,” Phelps said.
“I see it — and everyone else I talk to in the restaurant business sees it — as a huge challenge. It is a total squeeze on the franchisees and I think it is going to result in less jobs, less restaurants and less service. That’s how I see it today,” Phelps said in a phone interview with the Examiner.
“I see the next wave of increases as these cities and states go from $11 to $15 as being hugely problematic. And that’s where the issue is,” Phelps said. He said that states such as California would likely see a growing chorus from business to halt the increases. He said he was willing to do some lobbying himself, if necessary. “My concern is that by the time we react it’ll be too late.”
Phelps said that at Wetzel’s, and the entire fast food industry, automation of stores was one avenue that is being strongly looked at.
It is certainly a twist from 2016 when Phelps wrote:
Numbers don’t lie. Increasing the pay of millions of Californians has not increased unemployment.
I understand business owners being concerned about an increase in labor costs. But the new wage will be phased in over six years – reaching $15 in January 2022 – giving them time to adjust…
Workers in California and other states are looking forward to consistent pay increases in the future. And I’m looking forward to continued growth for our business.