Movie theater owners fearful of minimum wage increase

Last Updated on August 5, 2021

Congress is in the midst of pushing a new COVID-19 stimulus package and part of that package includes a federal minimum wage increase. The minimum wage has remained at $7.25 since 2009, depending on your state, and movie theater owners are warning that a federal minimum wage increase would be "disastrous" for their business in the wake of the pandemic.

The movie theater business was demolished in 2020 as movie theaters began to shutter in March of last year due to the pandemic. In the subsequent months, some locations in certain states have reopened but at limited capacity while major markets such as Los Angeles and New York City, remain closed. In fact, as of this writing, 60% of movie theaters in North America are still offline but there is light at the end of the tunnel due to the vaccines. Analysts believe that the majority of movie theaters will reopen by this summer or fall but exhibitors are growing more fearful of a federal minimum wage increase. As it stands, the federal minimum wage sits at $7.25, and Democrats are pushing for it to increase to $15.00 by 2025. As Byron Berkley of Foothills Entertainment in Texas put it, "That would kill us." He goes on to say "We couldn't justify raising our admission prices and concession prices to compensate for that kind of increase and still expect people to patronize the business. It would be disastrous."

Part-time workers are an essential part of the movie theater business because they are typically younger and usually working there as they focus on things such as school and other future endeavors. The thinking behind the federal minimum wage being where it's at now is that $7.25 is just enough for someone working part-time since they're not 100% using the job to fund their entire life. Exhibitors rely on workers making this amount because it keeps their overhead low and it maximizes their profits. Some states have been raising local minimum wage over the years (for instance, here in California, it's $12.00) and it's believed by theater owners that these local increases would also be affected by the federal increase. Russell Allen, President of Allen Theatres in Las Cruces, New Mexico said, "I think it's a real disservice to the young, unskilled employee when we start pricing them out of the market. We've hired 16-year old kids that don't know what a broom is, much less how to use it."

While the National Association of Theatre Owners (NATO) has not made an official stance on the potential 2021 federal minimum wage increase, they have been opposed to the increases in the past, according to "Variety." Back in 2014, they said, "While cinema owners and operators laud efforts to improve the standard of living for all Americans, NATO believes that applying a universal wage increase to economically disparate regions would stifle both the nation's economic growth and employment prospects for first-time workers."

In a much better position to deal with the increase are larger chains like AMC Theatres, Cinemark, and Regal Cinemas. That being said, they haven't had the best year due to the pandemic and I have a feeling they would also be apprehensive about a minimum wage increase due to this. The bigger chains do have more resources to save on minimum wage, particularly implementing automated ticket selling as a way to save money on labor. No matter what the case, if the minimum wage is increased, movie theaters will be forced to hike up their prices in order to make up for the increase and labor. The fear that they're facing at the end of the day is by raising their prices to keep their businesses afloat, moviegoers may decide to stay at home and save money by streaming.

Do YOU think movie theater owners should be worried about the federal minimum wage increase?