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Subway CEO No Longer Thinks Minimum Wage Hike A 'Bad Idea'

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FRED DELUCA
US sandwich maker Subway co-founder and chairman for the world, the self-made billionaire Fred DeLuca, poses with a sandwich in a Parisian Subway restaurant on June 17, 2011 prior to attend a meeting with the press as part of the 10th anniversary of Subway France. (Photo credit should read ERIC PIERMONT/AFP/Getty Images) | AFP via Getty Images

The chief executive of the biggest fast-food chain in the world isn’t worried about a minimum wage hike anymore.

In an interview published Wednesday with CNBC, Subway CEO Fred Deluca said he is “not concerned” by the idea of federal minimum wage increase, since it would affect rivals companies just the same and not put anyone at a "particular disadvantage."

"Over the years, I've seen so many of these wage increases," he told CNBC. "I think it's normal. It won't have a negative impact hopefully, and that's what I tell my workers."

Deluca said that when he started in business, the federal minimum wage was $1.25, the rate at which it sat between 1963 and 1966.

Deluca even said he would support measures that would raise the minimum wage automatically. Unlike Social Security and many tax code provisions, the minimum wage is not adjusted each year to account for rising prices.

“If I were in charge of the government, I would index the minimum wage to inflation so that way everybody knows what they can count on,” he said. “The employees know they’re going to get increases on a regular basis. The management knows that they’re going to have to pay a little bit more.”

The comments are a departure from sentiments expressed in early 2013. Back then, Deluca described a minimum wage increase as a "bad idea."

Senate Republicans last week filibustered a bill that would have raised the minimum wage to $10.10 and indexed it to inflation. President Obama threw his support behind the bill last November.

Economists and policymakers have long been divided on whether to raise minimum wage. Some argue it pulls the working poor out of poverty without much effect on overall employment. Others fear it kills jobs at an alarming rate.

Subway, which with 41,000 restaurants in 106 countries is the world’s largest fast-food chain, has had some trouble paying its own employees in recent years. In fact, individual Subway franchisees accounted for more pay and hour rule violations between 2000 and 2013 than any other fast-food company, according to a CNN report published last week.

“We, as a company, realize that some of our owners have not done the right thing,” DeLuca admitted in the Q&A with CNBC. “I can’t tell you exactly why, but I think we have a lot of first-time business people that enter into business in Subway, and they might not be as sophisticated in what to do.”

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