A Fast Food Executive Will Make A Perfect Labor Secretary

Andrew Puzder is the CEO of CKE Restaurants, the company that franchises Carl’s Jr. and Hardees restaurants and also owns and operates some of them. He is also Donald Trump’s nominee for Labor Secretary. This has Democrats quite upset as they seem to believe that the only acceptable position on any labor issue is the one favored by unions. Yet, if the qualifications for a labor secretary involve knowing how to create jobs and understanding what is important to workers then a fast food franchise executive should be perfect for the job.

As CEO of a large corporation, he is in charge of almost 900 company-owned stores that do over $1 billion in annual sales. That means he has responsibility for a complex supply chain and on the order of 30,000 employees, so the administrative task of running a large federal bureaucracy will not overwhelm him. It also means that he is familiar with the regulatory burdens that fall upon large firms. CKE is privately held at the moment, but it was a public company, so Mr. Puzder has experience with operating large corporations in both the publicly traded and private equity worlds. This should help him considerably in understanding the regulations that most impact the profitability, growth, employment, and success of large American corporations.

Yet at the same time, CKE also has almost 2,400 franchise stores operating under its brands. These are small businesses, with anywhere from thirty to a few hundred employees depending on how many restaurants a particular franchisee owns. Small businesses like these have very different regulatory burdens. For example, they may have under 50 employees and be able to escape Obamacare. Further, hiring, firing, pay, and all sorts of personnel issues are at the top of a franchise operator’s concerns. Because a franchising executive must keep his franchisees happy (and profitable) in order to keep the royalties and franchise fees rolling in, he must also understand the concerns and issues of most importance to small businesses.

Understanding small businesses is a crucial part of being Labor Secretary because small businesses create most of the new jobs , roughly two-thirds of all new jobs. Most of these jobs are not created by tiny startups, but by larger businesses that still meet the government’s official definition of “small,” which is less than 500 employees. That means that restaurant owners are exactly in the sweet spot for job creators. A person who opens a new restaurant likely creates over thirty jobs for the operation of the restaurant, not counting construction jobs created to get it up and running.

Small businesses, particularly those in the restaurant industry, are also among those most closely following and most affected by such current hot labor topics as the minimum wage, paid sick leave, scheduling issues, unionization, and health care reform.

Restaurant owners need to pay well enough to attract workers, but not so much that they cannot make money. The same goes for benefits that workers are offered, the owner faces a tradeoff between keeping workers happy and being too generous and going bankrupt. Thus, they are in the perfect position to explain to somebody the reality of how increasing the minimum wage and other employment costs kills jobs. Because Mr. Puzder has been in close contact with restaurant operators for years, he is already well acquainted with these issues and understands these tradeoffs. The trick to a successful economy is that everyone—both workers and employers—must win, but nobody can win too much.

Given the economic issues of the moment, a fast food executive may be exactly what we need as Labor Secretary. Andrew Puzder understands small business economics because his business is built on several thousand small businesses. He understands big business because his company has over $1 billion in annual revenue and thousands of employees. He understands high finance, having run a publicly traded company and one owned by a private equity firm. He understands how public policy runs smack into job creation numbers in the real world. If we want to create jobs at a faster pace, to help workers without being so generous that their jobs disappear, then he is the perfect nominee for Labor Secretary.