The National Labor Relations Board’s long-awaited trial involving McDonald’s will begin this week on March 10. The case puts the franchise model in the crosshairs of the NLRB’s new joint-employer standard, which makes one employer liable for unfair labor practices of another employer they do not directly control. By threatening franchises, this new NLRB standard endangers a successful business model that has made it possible for thousands of people to achieve their dreams of opening and running their own independent businesses, not to mention providing jobs for local workers.
By overturning the decades-old joint-employment standard, the NLRB is exposing thousands of businesses to increased costs and liability they cannot afford—many of which are small businesses that are the main source of American jobs. The NLRB’s new standard erects barriers to entrepreneurship, reduces job creation, increases employment insurance costs, disrupts thriving business models, and could lead to a surge in lawsuits.
Even while the Obama administration is reworking the law in a way that could upend the entire franchise industry, President Obama continues to praise his first work experience at Baskin-Robbins, a franchise, in a recent LinkedIn post.
In the column, the president touts the importance of working as an adolescent and is requesting $6 billion from Congress to start a summer youth employment program to help one million kids get their first job.
Instead of spending billions in taxpayer funds, President Obama should call off those in his administration who are advocating for the joint-employer rule, because the president is right about one thing: youth unemployment is a problem. As he said, “[L]anding that first job is already difficult, but even harder for the 1 in 7 Americans between the ages of 16 and 24 who aren’t in school or are unemployed.”
A Bureau of Labor Statistics reports shows, “unemployment among youth rose by 654,000 from April to July 2015.” This wasn’t always the case. In July of 1989, the summer youth labor participation rate reached its highest point at 77.5 percent, but has dropped to 60 percent in July 2015.
Unfortunately, the NLRB’s new joint-employer standard will make it difficult, if not impossible, for many to get jobs, particularly young people and minorities. This new standard will ensure that young people will not have the same opportunity to land that first Baskin-Robbins job like President Obama.
The Obama administration must consider the unintended consequences of this case and allow the franchise model operate according to the rules that had been in place for decades. In 2015, franchises added 376,000 jobs to the economy with 48,000 in December alone. Considering the U.S. economy only created 2.65 million jobs last year, government may want to stay out of the way of franchises.
Furthermore, the two main industries where young people are employed are in sectors that are heavily populated by franchises. For example, in July 2015, “27 percent of employed youth worked in the leisure and hospitality industry (which includes food services), 20 percent worked in the retail trade industry.”
These industries include fast-food restaurants, hotel chains and retail stores where many young people get their first work experience. As President Obama said, “I’ll never forget that job, or the people who gave me that opportunity, and how they helped me get to where I am today,”
Whether it’s the next commander-in-chief or the kid next door, the Obama administration should allow them to have the same opportunity to work at a franchise. But unless President Obama directs the NLRB to stop pushing their new joint-employer standard, he will be taking job opportunities away from countless Americans, especially those jobs that gave many of us our first crucial work experience.