The Costly Card-Check

The Employee Free Choice Act of 2009 has franchises lobbying politicians to block the legislation that could ‘dramatically increase labor costs.’

As of early May, there were reports in the national media that a compromise bill was being drafted by Democratic Speaker of the House Nancy Pelosi, who was said to be holding private meetings with a minority group of Democrats opposed to the legislation in its current form, including Sen. Arlen Specter (D-Pa.).

Andrew Weikert, director of government affairs for the Auntie Anne’s Inc. hot pretzel chain, is spending a lot of time in Washington these days battling a contentious labor issue his company fears could critically impair its franchise system at a time when economic recovery remains uncertain.

The Lancaster, Pennsylvania–based quick-serve operating nearly 1,000 units is just one of many restaurant companies taking a hard line against the Employee Free Choice Act of 2009 (EFCA), also known as “card check” legislation, which was introduced in identical bills in the U.S. Senate and House of Representatives on March 10.

The legislation calls for changes to a labor law that opponents say threaten to skew the organizing process unfairly toward unions, whose numbers have been steadily waning in recent years. Critics of the act also say it would bring near-certain increases in hourly wages at a time when many restaurants are struggling with slower sales and a range of economic pressures brought on by the recession.

“Costs are going up. When you combine that with an increase, perhaps a dramatic increase in labor costs, it could have the potential to put some of our franchises out of business,” says Weikert, who along with Auntie Anne’s CEO, Sam Beiler, joined the National Restaurant Association (NRA) in its recent lobbying efforts against the legislation.

Proponents of the bills argue that increased union representation as well as the higher wages and secure benefits it guarantees would give more power to the middle class, which has borne the brunt of the downturn. Workers’ increased buying power could help to jumpstart the economy at a time when consumer spending remains stagnant, they argue.

“Passing the Employee Free Choice Act would be tantamount to a mini-economic stimulus package—pumping $49 billion into the economy every year at a time when working families need it most,” says Christy Setzer, a spokeswoman for the Service Employees International Union (SEI). SEI is among the groups leading the charge for EFCA, which was introduced by Sen. Ted Kennedy of Massachusetts and Rep. George Miller of California, both Democrats.

The business community remains staunchly opposed to the changes, with groups such as the NRA, the U.S. Chamber of Commerce, the International Franchise Association (IFA), and others raising millions in attempts to thwart the bills.

“The economy is in a fairly challenging place,” says David French, IFA’s vice president of government relations. A recent IFA FranPulse poll indicated that 86 percent of Americans in franchising say EFCA includes provisions that would hamper their ability to compete.

“Even the most optimistic supporters of this bill recognize that it is going to cost jobs,” French says.

Read more at QSR Magazine

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