Colorado Politics

Politicians, business owners debate: Is Initiative 101 friend or foe of franchise model?

Robert Cresanti, president and CEO of the International Franchise Association, calls the nationwide push for mandated minimum wages such as Colorado’s Initiative 101 an existential threat to the uniquely American and highly successful business model of franchising.

“There’s the extremely corrosive, challenging and destructive business environment stuff, which falls into the $15 minimum wage [movement], and particularly if they’re discriminatory $15 minimum wage initiatives, which we’ve seen in different parts of the country …,” Cresanti told The Colorado Statesman during a recent IFA tour of the state.

While Initiative 101 only seeks to increase the state’s minimum wage to $12 an hour by 2020, Cresanti argues that entry level jobs at current wage levels (Colorado is $8.31 an hour compared to the federal minimum of $7.25) provide on-the-job training and allow workers to move up into higher paying management jobs and even franchise ownership.

“You find the stories over and over and over again anecdotally of folks who have started at the very bottom of these businesses at age 13 not speaking a word of English, and you see them owning their own store, and what other industry in the United States can you say that about?” Cresanti said.

But Bill Phelps, CEO of Wetzel’s Pretzels and an IFA member, counters that mandated minimum wage increases in California, where his company is based, have actually boosted business by giving employees more disposable income.

“I was concerned as many franchisors were concerned when we had the minimum increases in California, first from $8 to $9 and then from $9 to $10, and what has happened is it’s been great for our business and it’s been great for the franchisee’s businesses,” said Phelps, whose company has four locations in Colorado.

Phelps also doesn’t buy the on-the-job training argument.

“They need a living wage. They need to pay their rent. They need to pay for food and other necessities, and they can’t do it at $7.25 an hour,” Phelps said of the federal minimum, which has remained unchanged since 2009. “The fact is it’s a wage that is given to a lot of people, and a lot of older people are living on the minimum wage.”

State Sen. Ray Scott is a Republican from Grand Junction, where there happens to be a Wetzel’s Pretzels, and he was recently named Western Colorado field coordinator for the Donald Trump presidential campaign. Scott is a small business owner in both construction and software development.

“We better leave the free markets alone,” Scott told The Statesman. “We’ve always figured it out. Yes, you’re always going to have a high and you’re going to have a low, but the low end was designed for a specific purpose and that’s high school kids, that’s your first job type of thing, and it’s always worked in the past.”

Scott says minimum wage was never meant for long-term employment and that $12 or even $15 an hour isn’t nearly enough as a living wage.

“So the government steps in and says, ‘No you have to pay this particular wage,’ and then I always find it kind of comical that people will say $12 or $15 is a living wage,” Scott said. “Well, the data’s very clear: in Denver, Colorado, you better make about 35 bucks an hour to have any chance of having somewhat of a normal lifestyle because of rent, the cost of living, all those things.”

U.S. Sen. Michael Bennet, a Democrat facing reelection in November, issued a statement of support for 101 via a spokesman: “”It’s time to raise the minimum wage and help lift hardworking Coloradans out of poverty.”

A spokeswoman for Bennet’s Republican challenger, El Paso County Commissioner Darryl Glenn, declined to comment on Initiative 101, while Green Party Senate candidate Arn Menconi told The Statesman he supports the initiative but would like to see an immediate jump to $15.

“I’m for the $12 referendum but wish it was $15,” Menconi said. “We need to start where we can help people as fast as possible. I’m not for $15 for small businesses under 50 employees.”

Initiative 101, which was certified for the ballot on Aug. 11, would amend the state constitution to increase the current $8.31 minimum wage to $9.30 an hour next year and then raise it in increments of 90 cents an hour each year until it hits $12 an hour in 2020.

A spokeswoman for Colorado Families for a Fair Wage, the group spearheading Initiative 101, told The Statesman the $12 minimum was attainable as a first step.

“We’re excited to win this campaign for $12 by 2020 because it will be a major step forward for nearly half a million workers struggling to make ends meet, and it’s a victory we can win this year,” Patty Kupfer said. “We see it as a first step to ensuring hard-working families in Colorado have the stability they need to thrive.”

The Colorado Attorney General’s Office is reportedly investigating whether some of the signatures on the petitions that landed Initiative 101 on the Nov. 8 ballot may have been forged. In the meantime, political battle lines are being drawn in every corner of the state over the minimum wage push.

“I support the Colorado Families for a Fair Wage ballot initiative, to gradually increase Colorado’s minimum wage to $12 per hour by 2020,” former state Sen. Gail Schwartz said via a spokesman. “I am traveling to every corner of the 3rd Congressional District, meeting with hardworking Coloradans about the challenges facing them, their families, and their businesses. A gradual increase is key to ensure we protect small businesses and jobs.”

Schwartz is a Democrat running to unseat incumbent Republican Scott Tipton in as massive district that includes most of the Western Slope, where low-paying service sector jobs abound in resort communities and other tourism-reliant towns. Staffers for Tipton declined multiple requests to take a position on Initiative 101.

 

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