These days, there’s a concerted effort to increase the minimum wage in various cities and states across the nation to purportedly lift people out of poverty. While proponents would have you believe this is a panacea for millions of Americans living in poverty, it is not. To help people break the cycle of poverty, we must approach the issue differently. That’s why I took the opportunity as a member of the Job Creators Network (JCN) to write an op-ed that was published in The Hill under the headline, More work, less welfare, in which I share my belief that in order to reduce poverty, our nation must create opportunities for the economically disadvantaged. I specifically discuss how expanding the Earned Income Tax Credit (EITC) can do more for low-wage workers who want to break the cycle of poverty than existing welfare benefits like food stamps.
As I point out, some programs have the unintended consequence of discouraging work rather than encouraging independence, self-reliance and pride. I give an example of how some of our employees are now turning down promotions and reducing work hours to keep their government benefits. In doing so, they ultimately deprive themselves of the ability to achieve economic prosperity.
I discussed the topic further on Fox & Friends with co-host Steve Doocy who kicked off the segment by talking about our edgy marketing and the All-Natural Burger commercial. After we talked about the success of our ads, we discussed the large number of people on food stamps which has nearly doubled since 2008, to almost 75 million, and how the EITC has already lifted millions out of poverty, making expansion a logical next step. As Americans, we must not give up on those who are stuck in an economic hellhole; we must help them dig their way out in a real and lasting manner.
On Monday of this week, I had the opportunity to talk to Fox Business News personality Neil Cavuto during his Coast to Coast segment about how one of our competitors can create value for itself at a time when it is struggling with sales. In essence, by closing underperforming and going to a higher franchise model, our competitor can reduce its exposure to cost pressures like increased minimum wages and higher food commodity costs. Additionally, by increasing the number of franchise stores, the franchisor guarantees a stable and consistent revenue from franchisee top sales which shareholders and the market alike values.
Neil and I also spoke about our iconic burger ads and ability to target young hungry guys and gals. As I’ve said before in earlier entries, we know who we are and we know who are audience is. We don’t give an inch when it comes to giving our customers what they want and that has made us very successful. I wish we could apply some of the same logic to running our nation’s economy. If the economy is not improving, don’t do the same thing you’ve been doing. To get extraordinary results, you must be willing to try extraordinary things. Just look at our extraordinary burgers.
Speaking of results, I hope the upcoming presidential election gives Americans the opportunity to vote for individuals with a record of getting things done. To ensure our country and its people are positioned to compete in tomorrow’s global economy, we need leaders who will undertake meaningful tax, regulatory and immigration reforms, to name a few problem areas. We need leaders who will govern based on what’s right, not the latest polls. And, we need people like you to help elect them.
Business leaders know that ignoring problems comes at a cost, so we learn to deal with them quickly. If we ignore problems, they can result in bad service, loss of customers, inferior products and, ultimately, in the loss of a business. We need our elected officials to take a similar approach when dealing with entrenched and seemingly unsolvable problems—our nation’s social and economic well-being depends on it. Americans want politicians who will level with them, not spin them on the issues. That’s leadership.
For example, let’s talk about minimum wage hikes. While it may sound good to say that low-wage workers should make $15 an hour, do government officials fully appreciate how businesses have to mitigate labor cost increases? Some businesses will reduce employee hours, others will increase prices, some will lay off employees and increase automation. In worse case scenarios, some will close their doors.
With gas prices down and retail sales up, some companies are moving forward and increasing wages without any government compulsion which is the right way to go about it. Case in point, Walmart recently announced that it would increase wages for more than 100,000 of its department managers. In a segment titled, Wal-Mart to raise starting wages for more than 100K department managers, I told Neil that it’s good the company is raising wages on its own, not because the government said so. Businesses don’t need a one-size-fits-all approach to lifting people out of poverty, we need leaders who understand that the best way to help employees thrive is not to kill but rather to create jobs. This is something I discussed with Trish Regan on The Intelligence Report in a segment titled, Carl’s Jr. CEO says higher wages kill jobs.
Higher labor costs aren’t the only concern. In California, legislators are on the verge of creating and then solving a nonexistent problem. California Assembly Bill (AB) 525, misleadingly called the “Franchise Bill of Rights,” is making its way thru the Legislature. I wrote an op-ed that was published in this weekend’s Orange County Register titled, ‘Franchise Bill of Rights’ a cure for nonexistent problem, in which I discuss how the bill would have a chilling effect on franchising growth. I hope our California elected officials show leadership on this issue by sending this flawed bill to the circular bin.
Speaking of leadership, none is more needed than when we approach the topic of immigration reform. As Republicans continue to jump into the 2016 presidential race, one of the most divisive issues remains immigration reform. Republicans use this issue like a cudgel to beat each other up in the primaries. The winner is the Democratic nominee in the general election. The Wall Street Journal published an op-ed I wrote on this subject and in which I sought to clarify and defuse the issue by outlining some basic principles that I believe all candidates should be able to support. You can read the op-ed here: Ending the Republican Drama About Immigration.
With enthusiasm abounding about the economy adding 280,000 jobs in May, and 3.1 million jobs over the past 12 months (according to the President’s Council of Economic Advisors), pundits are wondering why so many America’s still feel economically insecure. A May 30th Washington Post article noted that “[i]f there was any time for American consumers to feel good, it would be this moment. Job growth is brisk . . . . But six years after the end of the Great Recession, Americans are startlingly anxious about their economic prospects.” Gallup’s Economic Confidence Index slid to -7 in May, better than during the deep recession but down 10 points from as recently as January (when is it was bolstered by low gas prices).
Clearly, Americans are still experiencing economic insecurity with many working class Americans feeling that the recovery simply left them behind. A closer look at what kind of jobs the economy has created post recession and the reasons why the unemployment rate has declined give some insight into why.
For example, while the employable population has increased by 17.5 million people since the recession began, as the Wall Street Journal reported Friday morning, “the economy still has around 550,000 fewer full-time workers than it did before the recession started at the end of 2007.” In other words, all of the increase in employment since the Recession began is a result of an increase in part time jobs. With a population increase of 17.5 million people but 550,000 fewer people holding full time jobs, a little economic insecurity is fairly easy to understand.
Meanwhile, the number of people working part time is up over the same period of time by around 2.8 million. And we needed those part time jobs. Over 7 million people are working two jobs to make ends meet, about 3.8 are working a part time and a full time job. Another 1.9 million are working two part time jobs. According to a recent Federal Reserve Board Report on the Economic Well Being of American Households, “[f]orty-nine percent of part-time workers . . . would prefer to work more hours at their current wage if they were able to do so.” The problem is that they’re unable to do so.
Perhaps as telling, all of the improvement in the unemployment rate from 7.6% when President Obama took office to 5.5% in May has come about because of a serious decline in the labor participation rate (the percentage of people who are either employed or have looked for work in the past month).
When President Obama took office in January of 2009, the labor participation rate was 65.7% and the unemployment rate was 7.6%. A low unemployment rate is far more meaningful if accompanied by high participation in the labor force. By definition, people who drop out of the labor force are unemployed, lowering the percentage of unemployed people remaining in the workforce. May’s participation rate was 62.9%, a full 2.8 percentage points lower than January of 2009.
Had the labor participation rate been 65.7% in May, the unemployment rate would have been 9.6% as opposed to 5.5%. In other words, if labor participation had at least been stable since President Obama took office, unemployment would be 4.1 percentage points higher than it is and 2 percentage points higher than when he took office. As Federal Reserve Chair Janet Yellen stated in a speech last week, “the unemployment rate today probably does not fully capture the extent of slack in the labor market.” The good news: Chairman Yellen gets it.
So where are the workers who are no longer in the labor force? Certainly, some have retired. But, others have just given up the search for a full time job. As Chairman Yellen further stated last week, “a significant number” of people “are not seeking work because they still perceive a lack of good job opportunities.” The BLS reported that in May over 6 million people were “Not in the Labor Force” who “Want a Job Now”. Understanding their economic insecurity is fairly easy as well.
Nor is this decline in labor participation a temporary situation that’s improving. The labor participation rate has now been below 63% (ranging from 62.7% to 62.9%) for 14 consecutive months and 19 of the last 20 months. Prior to the Obama Administration, it was last below 63% 37 years ago in April of 1978 during the Carter Administration.
May’s labor participation rate benefitted from about 100,000 new entrants to the labor force who were unemployed and had never previously worked (mostly students who recently graduated). Let’s hope this new group of students can find some of the economic security that comes with good paying full time jobs.
As I mentioned in my last post, we recently launched a new burger and I went to NYC to promote it. Our burger is bold, unapologetic and stands out far above the rest just the way America the Beautiful does.
When it comes to capturing our audience, we are really in a league of our own. Recently, I talked to CNN Money’s Cristina Alesci’s CNN about CKE’s unique approach to selling burgers and our latest creation. The network wrote a post titled, Model in a hot tub on a truck showcases Carl’s Jr. new 1,000-calorie burger, which lets you link directly to the interview.
Cristina starts off the segment by saying that, “Carl’s Jr. and Hardee’s could quite possibly be the bro-iest brands in America.” This is a great compliment. As I told Cristina during the interview, we have the “most beautiful burgers in the world” and we make ads with the “most beautiful women in the world” in order to reach our Young Hungry Guys (or guys like me who still aspire to be young). Our marketing approach works because we know exactly who we are, who are customers are and what they want to eat. Our number one priority is to give them a better burger, a better experience than the one they had before and this helps us to stand out against our competitors.
Perhaps this is why Cristina admits that our approach seems to be working since last year we hit the $3 billion sales mark “while competitors limped along.” As hard as it may be for some of you to believe, I completely agreed with CNN. I hope it won’t be the last time.
For businesses to thrive, they must deliver what customers want with passion and frequency. For our company, that means frequently coming up with new burgers people will want to eat. This is a challenge but it’s one that we relish because we’re not afraid to be bold. Such is the case with our newest product, the “Most American Thickburger,” which is now being served at a Carl’s Jr. or Hardee’s near you. As part of the new burger launch, I did a number of interviews to talk about the burger and other issues related to the industry.
I kicked off the week-long media tour thru NYC by going on “Squawk Box” to discuss our new burger. During the segment, I spoke about the All-Natural Burger, low-carb options and the importance of giving customers what they want. You can view that clip by clicking on this link: Millennial menu changes at Carl’s Jr.
Running a business, of course, also involves dealing with other challenges such as over-regulation, over-taxation, wage increases, etc. Some states do what they can to create environments where businesses can thrive and one of them is Wisconsin. In a separate segment titled, Market should drive wages up, I discussed a recent Wall Street Journal op-ed in which I set the record straight about Gov. Walker’s job creation record after the Bureau of Labor Statistics (BLS) issued a report that ranked Wisconsin 40th in the nation for job growth for the one year period from September of 2013 to September of 2014. Instead of looking at the narrow window, I looked at a four year time-frame to show that Wisconsin actually has a good record to stand on. In case you’re interested, you can access the op-ed by clicking here.
On a lighter note, the Jimmy Kimmel Live show did a comedy skit in which they talked about our “Most American Thickburger.” If you want a good laugh, check out the “Burger, Burger” spoof ad where all the ingredients, from the bread to the pickles, are made up of meat. Click here to see the video or here to read his post. If you’re on Twitter, check out his tweet: https://twitter.com/JimmyKimmelLive/status/600750586582016000
If you read my blog often, you know I feel strongly about the role job creators play in moving the economy forward and putting people to work. For decades, American business men and women from different backgrounds have contributed immensely not only to our nation’s economic growth and prosperity but also to strengthening our economic bonds with other nations, thereby benefitting the global economy. Unfortunately, starting up new businesses or running existing ones has become increasingly challenging because of the heavy-handed regulatory approach our nation’s leaders and other public officials have adopted. This ultimately limits our ability to invest money and create jobs. Recently, Neil Cavuto and I discussed this very challenge during a segment titled, Taxes, red tape piling on American business.
During the segment, Neil asked me if there’s a way for businesses to feel like they can trust Washington and I told him the way to do it is by electing individuals who support economic growth rather than big government. This was the case in 2010, when Republicans took over the House, and in 2014, when they took over the Senate. Following these elections, the business community breathed easier because it knew that nothing disastrous like Obamacare or Dodd-Frank would come down the pike. These wins, however, didn’t permanently eliminate the threat—a lot of danger lurks for job creators of all sizes from continuing attempts by regulatory agencies to further regulate businesses.
As a study commissioned by the National Association of Manufacturers last year shows, the big government agenda translates into a $2 trillion price tag annually in compliance costs for businesses. Until we elect people who want to reverse that trend, the economy will continue to limp along while Americans suffer.
A recent Bureau of Labor Statistics (BLS) report that ranked Wisconsin 40th in the nation for job growth for the one year period from September of 2013 to September of 2014 might lead you to believe that Wisconsin is headed down the wrong economic track. Governor Walker’s detractors have used the ranking against him to inaccurately argue that the Governor’s conservative economic and anti-union policies are not working for the state. This is simply untrue.
Using the BLS data for the full four years Scott Walker has been Governor, I wrote an op-ed published by the Wall Street Journal yesterday titled, A Closer Look at Scott Walker’s Record on Jobs. Here’s the takeaway: After four years with Scott Walker as Governor, more Wisconsinites are employed and at a higher percentage of the population than when he took office. In fact, Wisconsin has outperformed the national averages with respect to its employment-population ratio, its unemployment rate, and its labor participation rate. Its standing among the states has also improved with respect to each of these key metrics. Imagine what the national numbers would look like if the Obama Administration could boast the same metrics?
As CEO of a company with roots in California and a growing global footprint, I can tell you that our success is largely due to the people who work in our restaurants and our franchisees. As with most jobs, being successful in the food industry takes hard work as well as determination, perseverance, and self-reliance. That’s why I’m always particularly proud when our employees become franchisees. Nothing gives me more satisfaction than seeing them fulfill their dreams. Their success bodes well for their families, employees and the communities where they do business.
Amir Siddiqi, an immigrant from Pakistan who went from washing dishes at a Carl’s Jr. to owning 38 of our restaurants and employing 900 people, is one such employee. He knows that, in our country, if you’re willing to work hard and take risks, your potential is limitless—unless government gets in the way. In a recent Wall Street Journal op-ed Amir wrote titled Up From Dish Washer to Franchise Owner—and Regulation Target, he shares his success story and talks about the threat a government bureaucrat represents to his dream—and those of countless other franchisees.
So long as government doesn’t handicap entrepreneurs like Amir, the American Dream will remain within anyone’s reach and we’ll continue to see many more success stories like his. Job creators, not government, will continue to create real and sustainable economic growth under the right regulatory environment.
A few days ago, Fox Business News personality Neil Cavuto and I talked about why President Obama’s latest promise to offer free community college is an indication that he doesn’t know what people want and why his marketing is all wrong. Neil compared that approach against our successful approach to marketing and selling burgers we know people want to eat.
Neil kicks off the segment by saying that if you have something good to sell, people will buy your product. He then tells viewers this is why I spend time making sure our burgers look and taste good and why we use models to sell them. And, he is right. I’m not going to sell something people don’t want to buy.
After wrapping up our burger talk, we discussed the merits of offering “freebies” and why this approach won’t work. In essence, people won’t buy into the idea of having others get freebies at their expense which means the product won’t sell. Instead of focusing on freebies, politicians should focus on creating opportunities. This can be done by using the only thing that’s been known to work with the word “free” in it: the free enterprise system.