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Sunday, May 27, 2018
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Citing Obama policies, fast-food franchisees flee Navy bases

Because nothing happens in a vacuum, and because for every economic action there is an opposite and equal reaction, it seems only those inside the Obama administration will be surprised by this news, as reported by the Military Times:

Four restaurants, including three McDonald’s outlets, will close within the next three weeks on Navy installations, according to Navy Exchange Service Command officials.

And two other contractors — a name-brand sandwich eatery and a name-brand pizza parlor — have asked to be released from their Army and Air Force Exchange Service contracts to operate fast food restaurants at two other installations, according to AAFES officials.

A source with knowledge of military on-base resale operations said the issue likely has to do with two new government regulations — one implemented, one pending — that will affect wages for contract workers in such on-base concessions.

These closings “are the tip of the iceberg,” the source said. “I don’t think anybody has realized what the far-reaching effects of this will be.” ...

At issue are a pair of federal mandates, one requiring “health and welfare” fringe benefits at a rate of $3.81 per hour for fast food workers, and the other President Obama’s executive order requiring federal contractors to pay a minimum wage of $10.10 per hour. Both mandates apply to contractor-operated fast food restaurants on military bases.

The new rules “have to be part of any contract we negotiate,” said [NEXCOM spokeswoman Kathleen] Martin, adding that many vendor partners “have verbally indicated hesitation” to accept contract changes reflecting the revised wage rules. ...

“At the end of the day, there will be fewer jobs,” said the industry source. “And for [the contractors] who stick it out, there will be higher costs and the customers will pay more.”

The kicker: Most of the restaurants leaving the bases will offer jobs at nearby off-base shops to employees affected by the closures, so the inconvenience for President Obama’s magnanimous gesture (made with other people’s money) will fall squarely on those who work and live on base — the latest example not of unintended consequences, but consequences anyone who’s passed Economics 101 could have predicted.