To view a recent Fox Business show special on the subject and get my take, please click on the link:
http://video.foxbusiness.com/v/4437889480001/stossel-07172015-the-american-dream/?playlist_id=1794596212001#sp=show-clips As usual, you can scroll down for more details.
FreedomFest recently met in Las Vegas and I had the opportunity to go on the John Stossel show to discuss whether the American Dream is still achievable. The audience was large and extremely engaged which made the show very entertaining. The Fox Business show included other guests like Steve Wynn from Wynn resorts and I think you’ll enjoy watching it. My segment starts at the 9 minute mark and wraps up just before the 15 minute mark.
John Stossel kicks off the segment titled, The American Dream, by talking about our edgy marketing and showing the Most American Thickburger ad. That’s what I call a sizzling intro! After he introduces me as the CEO of Carl’s Jr. and Hardee’s, he talks about the success I’ve had in leading this company to where it is today. During the segment, I explained to John that I was able to turn the company’s fortunes around by relying on a management style summarized in two words: no excuses; and improving the quality of our food, restaurants and marketing. It’s amazing what will happen when you take time to find out what people want and you invest the time, energy and resources to consistently deliver an outstanding product.
No discussion about the American Dream, though, would have been complete without talking about upward mobility, the role of minimum wage jobs in helping people climb the ladder of success, and the obstacles people face in government. As I told John, we need to create jobs for anyone who wants to work and the only way to increase opportunity and reduce poverty is thru economic growth, not government growth. This is the best way for us to ensure that the American Dream won’t fade away!
Anybody watching the market selloff knows that it has been significant. During a segment with Charles titled, Government needs to back off, we discussed how gas prices and a strong dollar should benefit companies with a domestic base in the U.S.
We also talked about the number of people who are eating out and whether the trend will continue. I used Carl’s Jr. and Hardee’s as examples of how food quality has gone up and how attractive prices can help make the trend sustainable. However, things would be much better across our economy if government regulators would back off.
In discussing the impact of higher minimum wages and government overregulation on businesses, I cited a recent American Enterprise Institute (AEI) analysis that shows the Seattle hike has so far resulted in the loss of 1,300 jobs. I also told Charles about the National Labor Relations Board attack on franchising a business model that has lifted more people from the working class to the middle class than any other business model.
I wrapped up my interview by encouraging voters to support candidates who are going to help increase job opportunities and reduce poverty.
To quickly access some articles published following a recent congressional hearing during which one of our top executives testified on the impact of the Department of Labor’s proposed changes to federal overtime rules, please click links below. Read on if you’d like additional information.
- Cost of overtime: New rule limits ability for workers to advance like he did, restaurant exec tells Congress (The Business Journal)
- Overtime pay proposal bashed by businesses at first House hearing (Reuters)
- GOP lawmakers: Obama’s overtime rule will cost billions (The Hill)
Last week, Eric Williams who was recently-promoted to CKE Chief Operating Officer and is also one of our company’s newest franchise owners, testified before the House Education and the Workforce Subcommittee on Workforce Protections regarding the administration’s proposal to raise the salary threshold under which salaried employees would qualify for overtime pay from $23,660 a year to $50,440. Eric, who started his career at Hardee’s as a crew member in 1983 advancing through the ranks with various management positions at both company and franchise operations, criticized the proposal because it won’t help employees rise thru the ranks and will most likely result in reduced hours, reduced salaries or reduced bonuses.
As Eric put it during the hearing, “The very people this overtime proposal is intended to help will unfortunately be the biggest losers.” He goes on to tell committee members that individuals like him “may never reach their potential or realize their career dreams because of this change.” If you’d like to watch the hearing, please click here. Also, if you’d like to read what I had written on the topic last year, please click on this title: Obama’s Overtime-Pay Boomerang. Before taking a step that will reduce their future chances of success, the administration would be well-advised to consult with the salaried employees who they claim this proposal will help and see how they feel about the change. Chances are they’re more interested in earning their performance based bonuses and moving up rather than logging more hours.
To quickly access my recent Wall Street Journal op-ed, please click here: How the GOP Can Avoid Becoming the Pan Am Party. You can read on if you want some additional background…
In business, as in politics, we often come across people who refuse to adapt in the face of change which can result in setbacks both large and small. Today, as a nation, we seem incapable of moving forward and dealing with serious issues in a pragmatic and reasonable manner. This becomes even more apparent during campaign seasons as Americans become more divided on issues that impact us all equally.
The recent comments made by Donald Trump regarding immigrants serve as a perfect example of this disconnect and failure to map a new course of action. That’s why I took the opportunity to submit an op-ed to the Wall Street Journal published Wednesday under the headline, How the GOP Can Avoid Becoming the Pan Am Party. My point is simple: to win next year’s presidential election, Republicans cannot alienate the very voters they will need to win it, so they must consider a different approach. We can’t insult the very voters essential to victory and expect them to vote Republican. The bottom-line is that the demographics in our nation are changing and the party needs to figure out ways to make voters, who haven’t typically voted Republican, feel welcomed. We can adapt without compromising our principles but adapt we must.
As we head into next year’s presidential election, we know candidates will take positions on a wide number of issues ranging from what role the United States should play on the world stage to implementing policies that can help lift people out of poverty. Instead of seeing rival campaigns and their supporting factions try to spin the public and attack those with differing views, I hope we can have an honest debate about what policies are most effective because whoever wins will ultimately use them as a blueprint to govern.
That’s precisely why last month, 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 shared with readers that in order to reduce poverty, our nation must create opportunities for the economically disadvantaged. In it, I discussed 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. While my approach resonated with policymakers and other stakeholders, it also drew criticism from the Left in the form of nasty tweets and an article which misstated what I said about helping people.
Frankly, attacking my position on this issue does absolutely nothing to help people living in poverty. While I don’t typically respond to nonsense, I felt it was important set the record straight in an effort to reach those who are truly committed to ending poverty. On Friday, Real Clear Politics posted my response to the truth-twisting piece under the headline, EITC–The Way Out of Destructive Economic Carousel, and I encourage you to read it. Putting facts before voters that allow them to see that opportunity, not bigger government, can help them is the only way to impact the ongoing inequality debate leading up to next year’s presidential election.
As an aside, we should never let extremists on either side of the isle stifle debate on this or other issues. One of the things that makes our country truly unique is the fact that we can debate issues freely. We should exercise this right frequently and be respectful of differing views. After all, we’re all Americans and we need to work together to make our country work for everyone.
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.