Subway Founder Says He Could Not Grow a Successful Business in Today's Environment
When people who want more government regulations argue in favor of a new mandate on employers, one of the most used arguments the new rule won’t break the bank. Taken in isolation, that is often true. However, as Washington Policy Center has pointed out to lawmakers, these seemingly harmless regulations have a cumulative effect that eventually become so burdensome they cripple employers and prevent entrepreneurs from creating the jobs everyone agrees are needed to fix our weak economy. There is always a straw that will break the camel’s back.
Washington Policy Center has warned the layers of local, state and federal regulations in place today are already so onerous they are stifling the entrepreneurs who drive job creation.
The founder and CEO of the successful “Subway” sandwich franchise, Fred DeLuca, is saying the same thing: “If I started Subway today, Subway would not exist." DeLuca said the environment for entrepreneurs in the U.S. has "continuously gotten worse because there are more and more regulations. It's tough for people to get into business, especially a small business."
DeLuca knows a thing or two about starting a small business. In 1965, at age 17, he opened his first sandwich shop with just his entrepreneurial spirit and a $1,000 loan. Today there are 38,900 franchised Subway stores in 100 countries that generate $9 billion in annual sales and employ close to half a million workers.
Given his success, the fact DeLuca says he could not replicate that success in today’s business environment, because of the “continuous increase in regulations,” should give pause to anyone who believes job creation is the key to recovering our economy. DeLuca used the examples of payroll taxes, minimum wage and Obamacare as some of the obstacles facing today’s budding entrepreneurs.
Some lawmakers in Washington State want to throw up even more obstacles to our state’s entrepreneurs with more regulations. Bills mandating employers pay workers for up to 9 sick days per year (HB 1313) and provide up to 24 weeks of paid family and medical leave (HB 1457) both passed committees in the House. The paid sick leave bill would be funded entirely by employers—when a worker calls in sick they must pay that worker, as well as pay the worker who fills in for the sick worker. The paid family/medical leave bill would charge a new payroll tax on employers and workers to pay for the program. Both bills would create more administrative and record keeping work for employers.
Predictably, supporters of paid sick leave and paid family/medical leave argue the new regulations wouldn’t cost employers that much. But as Fred DeLuca says, the problem is not the cost of any one regulation; the problem is the accumulation of “more and more regulations.”
Fortunately for employers, neither bill passed the House by last week's cut-off deadline. Of course, while the bills appear to be dead, a dead bill can be resurrected later in the session. Let's hope not.
The compounded cost of all government regulations is already taking a toll on employers. State officials have increased workers’ compensation taxes 66% over the last decade. We have the nation’s 5th highest unemployment insurance taxes and the highest minimum wage, all of which adds to the impact of a new regulation.
Too many entrepreneurs are already unable to bring their business dream to fruition, and existing businesses are at their breaking point because of the continuous increase in regulations. Washington lawmakers should not continue to pile on even “more and more regulations."