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National Restaurant Association - Taxes, regulatory concerns cited as reasons for slow job growth

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Taxes, regulatory concerns cited as reasons for slow job growth

With unemployment in the United States stuck at 9.1 percent and millions of people still seeking work, restaurateurs across the country, including one who attended President Obama's job creation speech in Washington, D.C., say the biggest hiring obstacles they face are the uncertainty and lack of clarity surrounding current tax codes and numerous federal regulations.

"We've been around since the 1930s and this is the most challenging economic environment we've ever seen," said Lisa Ingram, chief operating officer of White Castle Management Co., parent of the 415-unit quick-service burger chain based in Columbus, Ohio. "We are always looking to spur job growth ..., but [ending the] uncertainty in Washington [would be] the best way to help us. We've been around for 90 years and want to be able to plan for the next 90, and in order to do that we have to have a better understanding of the regulatory environment and the tax codes."

Ingram was one of a handful of business operators invited by House Speaker John Boehner to attend the President's Sept. 8 speech on job creation. During the speech, President Obama implored Congress to pass a jobs bill that calls for some $447 billion in tax cuts and government spending.

The White Castle COO told the National Restaurant Association that being able to take advantage of tax credits tied to hiring has acted as a stimulus for hiring more employees into the chain's system.

"For us, as a company-owned [entity], we expand about 10 units a year and every time we do that we offer new jobs for team members," she said. "We tend to build in a lot of areas that our competitors may not. Last year we added 500 jobs and took advantage of the Work Opportunity Tax Credit. This was a great added benefit for us and we want to continue to have that. The more certainty we get around tax reform, the better it is for the restaurant industry. That will help us grow jobs."

Ingram also said one of the most critical issues affecting the future of hiring is the health benefits mandate for large employers that will take effect in 2014. She cited a lack of clarity surrounding the definition of full-time work as another reason employers are extremely careful about hiring.

"The health-care law is certainly something we want to have as much clarity on as possible," she said. "We are concerned that a 30-hour work week is considered full time. We want to know how the 30 hours came about; it's something we question and want to be clear about. If a full-time team member needs to work just 30 hours [to obtain health-care coverage], that will impact how many jobs and how many hours will be available. That's not good for them or for us."

Larry Schuler, owner-operator of Schuler's Restaurant & Pub in Marshall, Mich., agreed with Ingram's assessment. Schuler, who represented the restaurant industry during a House committee hearing on the impact of the health-care law, said the law would have a negative effect not only on business but on future hiring.

"One of the concerns our industry has regarding the challenges of mandating health care is that work hours will be affected," he said. "There is no question that the way the bill has been adopted into law - without a full understanding of what it is - will truly create challenges for entrepreneurs trying to expand their businesses."

Paul Baldasaro, chief operating officer of Buckhead Life Group, proprietor of several upscale independent restaurants in Atlanta, said two major factors causing businesses to remain cautious about hiring are increased commodities and labor costs.

"Obviously the collision of commodities increases and unrest in understanding what the labor impact [of offering mandatory health benefits] is going to be on business in combination with the inability to increase prices has made people very hesitant to grow," he said. "How health care will affect overall costs is still very volatile and is causing most operators to reconsider how they do things at this point in time."

Schuler said he thought hiring would come from those entrepreneurs who are willing to take a risk.

"I think we're all being very selective in the [hiring] decisions we make," he said. "Business leaders are looking at jobs and making cautious decisions. If they are going to take the risk [of hiring] it's going to be because they feel the risk is worth taking."

Dawn Sweeney, the NRA's president and chief executive, said in a statement that the restaurant industry, an employer of 13 million people nationwide, is one of the few industries continuing to grow and provide jobs, despite the sluggish economic recovery.

"With greater regulatory certainty, consumer confidence, and more stable commodity and energy prices, our restaurant operators will be able to create even more jobs and provide greater opportunities to more Americans," she said. "We look forward to working with both the President and Congress in eliminating regulatory burdens and advancing pro-growth, job-creating measures that will help our businesses and the American economy."

In a recent article on National Public Radio’s website, www.npr.org, Sally Smith, president and chief executive of Buffalo Wild Wings and current NRA chair, indicated the jobs picture would improve as consumer confidence grows.

"Again, it comes down to uncertainty," she told NPR. "The question is can government do anything to shore up consumer confidence so that [consumers] will start spending their discretionary dollars again?"

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