The Deal: Minimum Wage Rhetoric Has 'Diet' Taste
NEW YORK (The Deal) -- The term "minimum wage" has come to carry with it the same kind of visceral reaction (or, standing ovation, depending on which side of the aisle you stand on) that the Affordable Care Act has in Washington right now.
But those private equity managers whose firms invest in sectors where most employees are affected by a minimum wage can watch Congress' fight over the budget and debt ceiling if they want to handicap how soon they will have to factor wage increases into profit and loss statements to investors.
Inside-the-Beltway sources said the entire public debate in all likelihood will prove to be much ado about nothing. Virtually no one is anticipating the House GOP will sign off on legislation paying a higher minimum wage.
"I see little risk in Democrats pushing for it, especially in an election year," one source close to the Washington wage debate said. "It would fit in with the narrative that the GOP is a far-right intransigent party."
However, that would come as welcome news to restaurant chains' private equity backers.
Businesses are doing what they can to get out from Affordable Care Act obligations they perceive as being too onerous -- like cramming employees down into 30-hour work weeks to turn them into part-timers ineligible for health benefits. But the minimum wage hike, if enacted, isn't something they can take out on the staffers. They will have to charge customers more, instead.
While its assessment of cost fallout to shareholders resulting from the Affordable Care Act's implementation is less than sanguine, the company said customers of the growing sandwich chain may feel the brunt of a minimum wage price hike. "As significant numbers of our associates are paid at rates related to the applicable minimum wage, further increases in the minimum wage or other changes in these laws could increase our labor costs," Potbelly stated in its initial public offering filing, also noting that "