Decline in Open Hospitality Businesses Due to COVID-19

The Biden Harris Administration has included in their $1.9 trillion COVID relief package tens of billions in small business restaurant relief and the Raise the Wage Act, a bill that already passed the US House of Representatives in 2019 and proposes to raise the minimum wage to $15 an hour and phase out the subminimum wage for tipped workers, currently $2.13 an hour at the federal level. The COVID relief package includes multiple sources of restaurant owner relief. Economists and advocates alike are noting that this large relief package for restaurant owners needs to be coupled with relief for restaurant workers to help these small business restaurants survive. The National Restaurant Association has claimed that small business restaurants cannot bear the burden of paying a full minimum wage for tipped workers during the pandemic, and that phasing out the subminimum wage for tipped workers would cause small business restaurants to close. However, new data outlined in this brief on the rates of decline in open small businesses do not corroborate NRA’s claims

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