President-elect Donald Trump has tapped a fast-food executive who’s spoken out against both overtime and minimum wage regulations to be the country’s next Labor secretary, the cabinet post charged with enforcing overtime and minimum wage regulations.
No other government agency plays such a strong role in protecting the rights of restaurant workers; this is the department whose regular investigations reveal that food and drink establishments withhold millions in wages from their staffers every year. And now that agency will be run by Andrew Puzder, the 66-year-old CEO who runs both the Carl’s Jr. and Hardee’s chains. He has no government experience.
This should erase any doubt about how Trump — a Republican, businessman, and media personality who leaned into populist, pro-worker language on the campaign trail — plans to actually deal with the working class, which is to say, by selecting a man who openly muses about replacing workers with robots and who helped turn around his own burger chain with models in bikinis eating burgers. Perhaps you’ve seen the one of Paris Hilton erotically washing a Bentley while chowing down on a patty?
It’s common, though not uncontroversial, for a Treasury Secretary to come out of the business world — both Robert Rubin (who served under Bill Clinton) and Hank Paulson (who served under George W. Bush) were higher-ups at Goldman Sachs. But having a restaurant industry executive tapped as Secretary of Labor appears to be unprecedented. There’s a good reason for this. Federal data suggests that the restaurant industry is the country’s largest employer of workers earning less than the minimum wage, with up to 16 percent of workers earning less the lowest legal wage of $7.25/hour, according to census data.
What follows is everything you need to know about Puzder and the job he’ll occupy. The TL;DR for low-wage restaurant workers is that you should not expect a continuation of Obama-era protections — in fact, some of those policies could be rolled back.
A Restaurant Executive Will Control the Restaurant Industry’s Most Powerful Regulator
Some fun statistics: The Department of Labor launched 4,787 wage enforcement cases into the restaurant industry last year and helped nearly 38,000 employees retrieve more than $38 million in back wages. That’s more than double the amount for any other low-wage industry. Over the past half decade, the Department of Labor has garnered over $167 million in back wages for restaurant workers.
And now, the man tasked with enforcing wage laws will be one who owes his wealth to the industry that, according to the above statistics, surely makes it the single largest U.S. violator of those laws. “Puzder as Labor secretary is like putting Bernie Madoff in charge of the Treasury,” an organizing director for the Fight for 15 movement told The American Prospect.
The Lingerie Catalog Hamburger Videos Actually Are a Big Deal
Here’s Puzder, on his chain’s racy marketing plan: "I like our ads. I like beautiful women eating burgers in bikinis. I think it's very American," he told Entrepreneur Magazine, adding that "I used to hear, brands take on the personality of the CEO. And I rarely thought that was true, but I think this one, in this case, it kind of did take on my personality.”
This matters because the Secretary of Labor oversees the bureau’s women’s division, which is responsible for eliminating barriers to employment ranging from sex discrimination to unequal pay. Women head chefs, for example, earn only 75 percent of what their male counterparts make. And yet Puzder’s most prominent comments about women are, for a lack of a better term, Trump-ian. Also worth noting: Lisa Henning, Puzder’s first wife, accused him of abuse, twice, in the late 1980s, according to the Riverfront Times, though she retracted those claims in an email last month.
How Do Carl’s Jr. and Hardee’s Fare in Labor Practices Under Puzder?
Nearly 60 percent of investigations into Carl’s Jr. and Hardee’s since 2009 revealed one or more violations of the Fair Labor Standards Act, the law that governs how American workers are paid, according to a Bloomberg Law study.
Now maybe that seems like a pretty scary rate for wage violations, because, well, it is, but here’s the thing: That’s actually better than the records for Taco Bell, McDonald’s, Arby’s, and quite frankly most other quick-serve outfits.
So, is it fair to say that Carl’s Jr. and Hardee’s have a better labor record that most of their competitors? Absolutely: And perhaps that makes for a halfway decent fast-food CEO. But nominating as Secretary of Labor an executive from a company whose stores fail to comply with some of the country’s most basic labor laws seems, well, maybe not a great idea?
Puzder Probably Does Not Want to Raise the Minimum Wage Above $9
In 2014, Puzder wrote an op-ed in the Wall Street Journal claiming that Obama’s plan to raise the minimum wage to $10.10 would reduce jobs, and that it would be impossible to offset the higher labor costs by raising consumer prices. He called California Governor Jerry Brown’s decision to sign a $15 minimum wage bill “horrific” during a radio interview (with a host who mentioned that he paid his interns $10/hour even though “they’re not worth” that much). He told CNBC earlier this year that he’s “fine” with raising the minimum wage to the point that it “doesn’t destroy jobs,” and said that he believes the federal minimum could be raised to $9 with “minimal impact.”
For a worker putting in a 40-hour week, $15 minimum wage would translate to $31,200 over the course of a standard, 2,080 hour work year. The $9 minimum wage equals about $19,000. This is a big difference. (The average U.S. cook makes about $11.70/hour, while the average waiter makes about $11.09.) And while raising the minimum wage is ultimately the purview of the Republican-controlled Congress, having a Labor secretary that publicly opposes a significant hike will give legislators strong political cover in keeping raises to a minimum.
So how does Puzder want to improve the plight of the working class, who’ve been unable to share in the financial spoils of the recovery or negotiate raises during this period of low unemployment? “The better policy would be to encourage the private sector to create more middle-income jobs,” he wrote.
But Does the $15 Minimum Wage Really Hurt Restaurant Workers?
San Francisco, which has been gradually increasing its minimum wage toward $15/hour, which it will hit in the middle of 2018, now has 31,000 more food service and drinking jobs than it did in 2007 when the minimum wage was just $9.08/hour — higher than Puzder wants it raised to, according to data from the St. Louis Fed.
Of course, everywhere isn’t San Francisco, so I took a look at other cities whose wages are actively rising toward $13 and beyond, including Chicago, Portland, Seattle, New York, Oakland, and Washington, D.C. They’re all experiencing positive growth in the food service industry on both an absolute and percentage basis, even while food prices away from home are rising about 2.5 percent nationwide.
Restaurants in states with rising minimum wages are gaining jobs, not losing them.
Can Puzder Undo Obama’s Regulations Raising the Minimum Wage to $10.10 for Federal Contractors?
Yes, he can, though it would be politically difficult for him and Trump to do so, and the same goes for rolling back regulations regarding federal contractors’ mandatory sick leave. (Getting re-elected might be tough after reducing the benefits and wages of an entire class of workers.) Many of those federal contractors, incidentally, are food-service workers.
Will Puzder Support Raising the Tipped Minimum Wage?
How Does Puzder Feel About Paid Sick Leave and the Affordable Care Act?
In another Wall Street Journal op-ed, Puzder dismisses those regulations, designed to make life better for the ailing and overworked, as “government mandates” that could make full-service restaurants a “thing of the past” if consumers balk from the expected cost increases (which, so far, they haven’t). He also told Business Insider earlier this year that rising minimum wages have sparked his interest in opening a fully-automated, employee-free restaurant.
Puzder Hates Obama’s Plan to Extend Overtime to Underpaid Restaurant Managers
Obama’s single most sweeping effort to combat wage stagnation and raise middle-class wages was to extend overtime eligibility to millions of Americans. Salaried workers, many of them restaurant managers, often don’t make a single extra cent for putting in extra hours because they make more than the current overtime cap, which has been set at $23,660 since 2004. Obama tried to fix that problem by having the Department of Labor double that overtime cap to $47,500. Anyone earning less than that would now be compensated with time and a half pay.
Trump has said publicly that he would be in favor of creating delays and small business exceptions to the overtime rule. Puzder would rather have Americans do extra work for nothing. His words, from a Forbes op-ed: “Most salaried employees recognize that in exchange for the opportunity, prestige, and financial benefits that come with a salaried position and a performance-based bonus, they’re expected to have an increased sense of ownership and stay until the job gets done, to run the business like they own it.” Except they don’t actually own it, of course. He went on to say the regulations would backfire by causing more employers to reclassify salaried workers as hourly.
As Eater reported, a federal judge has temporarily blocked Obama’s overtime rule, and with Puzder in place, it’s unlikely the Department of Labor would lose sleep over that fact. If the law survives being overturned by either the courts or an arcane process of Congressional disapproval, the Department of Labor could change the regulations, albeit via a slow rule-making process.