GO
Loading...

'Severe negative impact' if minimum wage rises: CEO

If the federal minimum wage increases, expect to see a "severe negative impact on job creation," said the president and CEO of one restaurant franchise association.

"Raising the minimum wage will only hurt those it was intended to help and will lead to higher prices for consumers, less sales for franchisees and ultimately lost jobs," Steve Caldeira, president and CEO of International Franchise Association, said in a phone interview Monday.

The organization says its members include franchise companies in over 300 different categories.

Full-time and part-time openings at a restaurant.
Michael Williamson | The Washington Post | Getty Images
Full-time and part-time openings at a restaurant.

Since July 2009, the nationwide minimum wage has remained $7.25 an hour. It's higher in 21 states and the District of Columbia.

In the face of these higher state requirements, franchisees have already resorted to price increases and are cutting back on hiring, Caldeira said.

On Capitol Hill, debate about a possible increase has intensified with President Barack Obama and many Democrats calling for a jump to $10.10 per hour. Former presidential candidate Mitt Romney also recently came out in favor of raising it, breaking with the GOP on the issue. Meanwhile, the CEO of Subway, the world's largest restaurant chain by locations, said he was not concerned about an increase and advocated indexing the wage to inflation.

Read MoreSubway CEO: How I'd solve the minimum wage debate

A recent forecast from the nonpartisan Congressional Budget Office suggested both positive and negative results from a hike to $10.10. Such a move could hit employment in the U.S., the report said, and result in a loss of half a million jobs by late 2016 but would bring 900,000 people above the poverty line.

Vote
Vote to see results
Total Votes:

Not a Scientific Survey. Results may not total 100% due to rounding.

Instead of a nationwide jump, Caldeira stressed the need to let the free market work and allow local business owners decide what a fair wage is for employees.

Read MoreSkip the tip, restaurant CEO says

He also pointed to what he sees as the law's original intent.

"The minimum wage was never meant to be a living wage," he said. "The minimum wage was never meant to sustain a permanent work force."

—By CNBC's Katie Little.