For quite a few years now, my colleagues and I have tried to alert the companies we counsel to pay very close attention to what is happening politically at the local level. More and more issues that impact the P&Ls of operators, namely wage and benefit legislation, are playing out in city halls and county councils throughout the country. There are many reasons for this but chief among them is that the business community, in general, and the restaurant industry, in particular, have gotten significantly better in recent years at managing their issues at the state level of government.
In fact, with pro-business majorities in nearly two-thirds of state legislatures, operators and corporate leaders have gotten a well-deserved sense of confidence that their interests are being protected. Unfortunately, they may have gotten a little too confident. While employers are often busily focused elsewhere, the labor community has taken their ball to a different playing field — the local level of government. They are using that as a means to an end for their broader goals —action at the state and national levels.
Activity affecting core business model issues at the local level is often organic and can be the result of local entities trying to produce local outcomes they believe are important for their communities. However, just as often, the activity at the local level is intentionally pursued to ultimately force statewide action in places that once looked politically unlikely.
Recent activity in Iowa provides an excellent case study for how this plays out. Politically, Iowa is a battleground state but as a general rule, the state tends to lean a bit more conservative. Governor Terry Branstad is a Republican in his sixth term, the longest serving governor in American history. The state House has a strong Republican majority, but the state Senate is narrowly held by the Democrats and as of this writing, Donald Trump is enjoying a tiny but consistent lead in the polls.
Despite that, Iowa has been a hotbed of minimum-wage activity the past three months with four different counties passing an increase. Grassroots activists, many of whom were part of Bernie Sanders’ primary operation in Iowa and are still “feeling the Bern,” have been the driving force behind these issue campaigns.
Again, local activists and not the SEIU.
While these efforts are local, the "embers of the Bern" as one of my colleagues likes to say, are creating a brushfire that is about to jump to the state legislative level.
Just a few weeks ago, Governor Branstad — as pro–business as pro–business governors get — announced that a patchwork of different wages around the state is bad for business operators and Iowa should pursue a statewide increase in order to level the playing field. As history shows us, he will be joined not only by pro-business legislators from those affected counties that don't want their communities to be at a competitive disadvantage, but also by many larger employers who prefer a statewide standard rather that complying with a myriad of local laws.
Remember, the origin of this shift is the success of activists in a few communities. Their actions created a domino effect and ultimately culminated with a pro-business governor and legislature independently pursuing a minimum wage increase, seemingly as a way to "help" the business community. Now, all of the sudden, Democratic state legislators aren't going to have to lift a finger — their Republican friends will be doing all the heavy lifting for them.
This phenomenon of "Blue Cities" pushing the agendas of "Red States" is unfolding all across the country and business operators need to not only pay attention, they really need to understand what's going on. For employers to view these local events as unique and unrelated would be a major mistake. The labor community has a distinct state and national endgame in mind and each of these local successes gets them one step closer to that goal. They are playing a very smart game of chess and operators can't respond by playing checkers.
Shrugging off what’s happening in a given community in your state because you have no operations there is extremely short-sighted. The problem with smoldering embers is how easily a strong wind can stir a major fire. Proponents of minimum wage hikes discovered, sometimes accidently, there is enough fuel to spread their grassroots strategy far and wide.
At some point, restaurant operators will find themselves in the same place as elected Republicans—giving up some ground in order to stop increases from getting out of control. If not, then you might really feel the Bern.