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April 20, 2016

As a lobbyist for the past forty years whose diversified client base is largely service sector focused, I was pleased to read of President Obama’s recent positive recollections about the skills he learned from his first payroll job. What saddened me was the realization that, once again, rhetoric and policy have failed to align.

The American economy is dominated by the service sector. The dominance of an agrarian and industrial economy has given way to new vibrant forces of entrepreneurship that power today’s pursuit of the American Dream. The policy assumptions that helped drive the old economy have little applicability for the job creators and workers of the service sector. What is urgently needed is a bipartisan policy discussion aimed at fostering growth and vitality for the burgeoning service sector in all of its highly diverse mediums.

I am a lifelong Democrat who believes that wage stagnation and growing income disparity are serious problems that encumber our national economic potential.  Too much of the debate around these issues focuses on politically convenient scapegoats rather than root causes, the identification of which is required for effective solutions. To illustrate the point, let me go ahead and touch the third rail of workplace politics: the minimum wage.

The states of New York and California have now enacted laws that will raise their wage to $15 per hour, causing many Democratic leaning economists to wonder whether or not $15 will have a stifling affect upon economic growth.  In reality, the minimum wage has become the Goldilock’s porridge of partisan debates: will legislative bodies increase the wage by too much and thus stifle job creation, or not enough to truly help lower income workers? Respectfully, that’s not where our concerns should lie.

The minimum wage is an artifact of the New Deal. Created in 1938, it was meant to provide an income floor for a largely white, male, and non-portable workforce engaged in manufacturing or agriculture. Rather than bickering over this antiquated program, wouldn’t it be better to begin bipartisan discussions about a more efficient tool for providing income support that benefits 21st Century employees and their employers? The current minimum wage program provides political talking points for both Parties, but does little to empower the employees and employers who operate under it.

The minimum wage represents the most conspicuous but not the only example of the policy arteriosclerosis that ails the service sector. Protecting the rights of workers is a legitimate concern today just as it was during the labor battles of the early twentieth century. However, just as the needs of workers and the unions that represent some of them have changed, so too have other workplace dynamics. Let’s use restaurants as an example.

Place a restaurant under a microscope and you have the perfect test for adroit 21st century policymaking. Many of America’s most salient challenges lie within the nexus of their policy and commercial crossroads. From immigration reform;  compliance with the ACA; the International trade paradigm; tax reform; job training and workforce needs; to the advent and corollary challenges of new technologies and so much more; restaurants are at the center of these debates.

Today’s restaurant industry is vibrant, entrepreneurial, aspirational, and looks and feels like the face of the America that we live in. Here are a few simple truths: people seek careers in the restaurant industry; they view their jobs as a path to ownership; the great majority of the 14.4 million people who work for America’s second largest private sector employer do so with the belief that restaurant work can be their pathway towards realizing the American Dream. Restaurant jobs, like those in so many other service sector businesses, aren’t ones of last resort. If you doubt that, engage your next server in conversation and you’ll better understand just how aspirational service sector opportunities can be. Restaurateurs rarely flourish when their employees are unhappy, which is why one of the industry’s top priorities is workplace retention and education.

If you think that the service sector is limited to restaurants, think again. Travel is America’s number one export. Domestic and International visitors generated $2.1 trillion dollars of economic activity last year. The retail industry is comprised of almost 3.8 million establishments nationwide, and 98.6% of all retail businesses employ fewer than fifty people. Employment growth in the franchise sector continues to outpace the growth of employment in the private sector as a whole, just as it has in each of the past five years. Policymakers can’t help what they don’t understand, and the time for indifference towards this economic and societal juggernaut is long past.

Today’s service sector doesn’t receive the comprehensive, nurturing consideration that it deserves. What it does get is ad hoc, dysfunctional policy attention that far too often smacks of intellectual condescension and pejorative epithets (“low wage workers and minimum wage employers”).  From intellectually tortured academic theses about a fissured workplace; to muddled, incomprehensible Federal Agency musings about the meaning of a joint employer relationship; far too much policy churning has had a stultifying effect upon job creators, and especially amongst small business people.  Many Democrats fail to embrace service jobs for what they are: the national economic incubator for job creation, job training, innovation, and the dreaming of powerful personal dreams. Far too many have chosen to address ”income inequality” to the exclusion of motivating jobs creators.  No such choice was ever needed because, properly pursued, enhancing workers and their employers should be a mutually beneficial proposition.

America’s rapid transition to a digital economy and the inexorable job loss that comes with it, should give every elected official pause. The resulting imperative is clear: how to stimulate job creation while keeping a watchful eye on its’ twin encumbrances, income stagnation and new technologies’ impetus for job loss. The service sector provides thoughtful leaders with a unique opportunity to manage those dueling imperatives to get our economy to a better place. As with most important efforts in life, real success is best achieved by pursuing balance. The pursuit of “social justice” alone is the fool’s gold of contemporary politics.

President Obama was good to remind us of the life skills he learned from his first job, and the role that a service sector job played in his development. Scooping ice cream helped him find his way on the road to the White House. Not too shabby a testimonial to the power of humble beginnings and the belief that anything is possible in America. The service sector represents America’s future. Elected officials in both Parties need to better prioritize what positive, proactive policy engagement around its’ needs could do for our country. Intellectual bias against the service economy, especially amongst my fellow Democrats,  is unfounded, demeaning to its’ employees and employers, and a shameful waste of an opportunity to nurture one of our greatest national resources.

Chuck Merin

Chuck, Prime Policy Group's executive Vice President, possesses more than 45 years of Washington experience, beginning with service as a congressional staffer. He has established himself as the premier lobbyist for service and hospitality industry interests in Washington. He is an expert in building legislative coalitions and helping clients forge effective, long-term relationships on Capitol Hill. Chuck is perhaps best known for his close affiliation with the Blue Dog Coalition, an alliance of more than two dozen pro-business, conservative House Democrats whose votes are much coveted.
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