From taxes to immigration, the result of the 2020 presidential election will have a profound impact on the restaurant industry.
After a contentious battle in 2016, the 2020 presidential election was already set to be a tense affair. But in the midst of COVID-19, the stakes are even higher in the race between President Donald Trump and former Vice President Joe Biden. Embittered by a fraught pandemic response, systemic racism, Great Depression–level unemployment, and a volatile economy, Americans will choose not only which candidate they want to sit in the Oval Office, but also which candidate they think will be able to steer the ship through the current crisis. Here’s how the presidential candidates’ platforms stack up on three key issues facing restaurant leaders.
Perhaps nothing is so pivotal to a restaurant’s success as its employees, so it’s fitting that presidential candidates’ labor policies are a top-of-mind concern.
Biden has emerged as a pro-employee candidate and has won the support of key labor unions in the 2020 election. Not only did he pledge to encourage unionization, but he also plans to extend benefits for workers displaced by the pandemic and require employers to provide up to seven days’ leave for family, safety, and illness, including for COVID-19.
However, Biden’s support for raising the national minimum wage to $15 per hour for all workers and eliminating the tipped minimum hourly wage of $2.13 is perhaps the most impactful change his platform would have on the restaurant industry. Proponents of the policy, such as One Fair Wage, a nonprofit group that lobbies for equal pay for tipped workers, have lauded Biden’s plan, while critics—including the National Restaurant Association, which has argued against such an increase for several years—posit that it would be too burdensome for restaurants already operating on thin margins.
Biden has also given support to “fair and flexible” scheduling, which would require restaurants to give employees more predictable shifts. He has called for a return to the Obama-era Department of Labor rule, which increased access to overtime payments.
Trump, however, has been seen as a pro-business candidate and has spent much of his term rolling back protections put in place during the Obama administration, including scaling down the overtime rule and canceling restrictions on how employers could distribute tips.
Surprisingly, in 2019, Trump said that he was considering the call for a $15 minimum wage, but so far in this election cycle, it hasn’t surfaced as a major issue for the president. While he did note that many low-income workers’ wages were rising in his 2020 State of the Union address, a study by the National Employment Law Project found that most of these increases were driven by state minimum wage increases rather than a federal policy.
During the 2016 election, one of Trump’s key platform issues was cutting taxes for businesses—something he accomplished with his 2018 tax reform. Under the plan, the biggest companies, including large restaurant chains, benefitted from sharp reductions in tax rates, with the top rates falling from 35 percent to 21 percent. Many of those restaurant chains that benefited from the tax breaks reinvested the money in their businesses. For some, like Starbucks, this freed up cash to increase pay for employees and issue company stock.
Meanwhile, smaller companies also saw modest rate reductions, and “pass-through” entities, which the nonprofit Tax Foundation says make up 90 percent of U.S. businesses, received a 20 percent deduction on qualified business expenses. Though Trump had promised tax cuts would help individuals, too, Investopedia reports that many individuals actually saw higher tax rates or smaller refunds, particularly among lower- and middle-income individuals.
Biden’s plan, on the other hand, would increase the tax burden for corporations and high-income earners to generate an additional $3.3–$3.7 trillion in federal tax revenue over the next decade if it were implemented in 2021, according to investment advisory The Motley Fool.
This would largely be accomplished by instituting a minimum tax of 15 percent on companies with $100 million or more in annual net income that typically pay little federal income tax. This would close the loopholes from Trump’s 2018 tax reform plan, which allowed massive corporations like Amazon to pay $0 in taxes. Additionally, the top marginal tax bracket would rise from 37 percent back to its pre-Trump 39.6 percent, and a payroll tax would be reinstituted on the top 1 percent of earners. While most of these moves impact the biggest restaurant chains and their leaders, Biden’s tax plan would also phase out small business deductions greater than $400,000.
Immigration is the topic where the two parties’ policies diverge the most. If re-elected, Trump is likely to continue using a national emergency declaration to grant wider powers for border control and the construction of a wall along the border with Mexico.
Additionally, in June, Trump suspended new H-1B and other temporary work visas that big companies frequently use to attract skilled workers from other countries through December, and he also extended a freeze on green cards for new immigrants—both moves made in response to COVID-19.
However, the next phase of his immigration plan is likely to be the rollout of a merit-based system. In July, Trump announced an immigration act would be forthcoming, and though the details had not been released as of August, the move is expected to remove 4 million people from immigration waiting lists.
While Trump has defended his stance, critics argue that tough immigration stances could hurt the restaurant industry. In 2017, the Chicago Council on Global Affairs estimated that while immigrants make up only 13.5 percent of the population of the U.S., 37 percent of all restaurant owners and 22 percent of restaurant workers are immigrants. Celebrity chefs such as José Andrés and Rick Bayless have been outspoken in their criticism of Trump’s immigration policies, even closing the doors of their restaurants for the national Day Without Immigrants protest in 2017.
Taking a near-opposite stance, Biden promised to rescind Trump-era policies limiting immigration within his first 100 days in office. He has also pledged support for the Deferred Action for Childhood Arrivals, Deferred Action for Parents of Americans, and Central American Minors programs and promised to build a White House task force to support immigrants. Biden also plans to end Trump’s national emergency declaration and workplace immigration raids. Instead, the former vice president will focus enforcement efforts on safety and security threats. He also plans to work with Congress to create a path to citizenship for immigrants.