Minimum wage for restaurant workers?

[Robin Garr]

When we get into our frequent discussions of the American tipping system and its basic inequity, folks often speculate about how and whether the system could or should be changed.

Here's one option: Press to change legislation that exempts restaurant workers from the federal minimum wage. If you like it, here's a petition from MoveOn.org where you can sign on:

Your waitress is underpaid
–Saru Jayaraman
The Welcome Table

You probably know that when you order a meal in restaurant, the person who brings you the food is generally paid less than minimum wage. Tips are supposed to make up the difference.

Here's the problem: Minimum wage for tipped employees is an appalling $2.13 an hour. And for millions of people who work in the restaurant industry, tips don't come close to providing a living wage.

This is not a small problem. Almost one-third of food workers don't have enough money to buy enough safe and nutritious food to meet their needs. The people who make and serve your food literally may be going hungry.

Next week, we'll be at a press conference in Washington, D.C. with key members of Congress, launching a big push to raise the minimum wage for food workers and restaurant employees.

To win this campaign, it's critical that we be able to walk on stage with momentum—that means tens of thousands of folks like you standing with us.

Sign the petition: Tell Congress to give food workers and restaurant employees a fair minimum wage.

We can do this, but not without grassroots support. That's why I created a petition on SignOn.org to Congress, which says:

Raising the minimum wage for the benefit of 29 million low-wage workers would increase food costs at most by 10 cents a day for consumers.

As a consumer, I am willing to pay an extra dime a day for my food so that close to eight million food system workers and 21 million additional low-wage workers can receive a much-deserved raise to help them meet their basic needs.

I ask that you support the Miller-Harkin Fair Minimum Wage Act, which would raise the federal minimum wage from $7.25 to $9.80/hour over the next 3 years and the tipped minimum wage from $2.13 to 70% of the regular minimum wage.

Click here to add your name to this petition, and then pass it along to your friends.

Thanks!

http://signon.org/sign/tell-congress-do ... by=6018410

The problem with that is that it doesnt fix the problem.

I would favor getting rid of the server minimum, but I would expect restaurant menu prices to increase about 18%, not 10 cents.

If it only goes up 10 cents, we havent fixed the tipping problem.

It almost seems like raising their wages to the minimum wage (where 70% of it) will create more problems that it will solve. Obviously, customers will believe that the tip percentages should go down, which is a valid assumption. The wait staff will be disappointed with their tips go down even if they are making the same amount of money! Unless we go to the European model where tipping is not customary, there doesn't seem to be a good solution.

If a law like this a happens, small locally owned restaurants will be even at a larger competitive disadvantage with respect to larger operations and chains.

Be careful what you wish for.

I'm sure the math is way beyond my ability to grasp. But back of the envelope figure 30% of cost base is labor. Of which maybe 1/3 is front of the house at $2.13 per hour (Obviously I'm just guessing).

So 2.13 -> 6.86 (9.80x.7) is a 222% increase on roughly 10% of cost base so 22.20% overall.
Article says this willl cause a $20 meal to cost $20.45 or a 2.25% increase in meal cost.

I've probably done something wrong but gut instinct says 22.20% incr in cost leading to only 2.25% increase in product cost doesn't add up (or I've put a decimal wrong somewhere).

Although I'm all for people making more money, the call for signatures is a bit deceptive. That 10 cents a day is likely based on infrequent trips to restaurants. Once every five days would make your math add up, assuming everything else stays the same..

Anyway, what's a living wage? Surely not minimum wage. Eliminating the tip system and paying servers minimum wage would surely result in a pay cut for those servers.

I think for most consumers there's not much transparency on what servers really make. So it's hard to engage in outrage. I was guestimating it a bit given the recent flare-up in the Applebee's receipt incident. In that case server makes $3.50 per hour. The mean ole preacher's table was worth $200 and was charged an 18% gratuity. What is a typical shift.... six hours? 6 x 3.50 = 21 plus 200 x .18 = 36. Take what? 20% out of the tip for tipouts? 21 + 28.80 = 49.80 divided by six is $8.30 an hour for waiting just one (albeit large) table.

Let's say in six hours you could wait eight other tables at $25 apiece. 8 x 25 x .15 = $30 less tipout is $24. I reckon that adds up to $12.30 an hour. If your tipout is 15% then it's 13.60 an hour. Not great, not horrible. There's light manufacturing jobs these days that don't pay much more than that.

I think the problem of those pushing for increases is that they will seriously **** things up for a certain percentage of servers who have decent gigs.

Edit to add... given tip inflation of the past several years, do you really want to risk tip percentages collapsing or, inviting a free-for-all in what the dining public thinks it's required to pay?

Wow. I expected a lot of support for this proposal here, but it's still early.

There are so many issues at play. What is a living wage? What does it include as essential? Does a living wage differ according to where you live? How many people make minimum wage? How many earn below a "living wage"?

In food service how does tip-sharing affect actual wages and the minimum wage issue? Would raising minimum wage for all food service workers end the practice of tip-sharing? Why should a great server have to suffer (lower wages, meaning tips) to subsidize someone else?

From research I conducted for a client I learned a few things and arrived at some personal conclusions. The current minimum wage creates an increased need for social program subsidies (read tax subsidies) to make up the difference. Theoretically, if earned income rises then it should be matched by a corresponding decrease in the need for social services. It artificially and dramatically affects the "real cost" of goods and services for those businesses that utilize minimum wage workers. A lot of "think tank" calculations place the mythical, one-size-fits-all minimum wage at between $10 and $11 bucks per hour. Approximately 5% of the work force earns total income at minimum wage. A large percentage of those are dependents. There is still a huge gap between those earning a minimum wage and a "living wage". The people in this category are statistically single with dependents and/or disabled. It seems to support observations that without family that can help you in time of crisis, and your health, you're behind the eight-ball. I know, I know. Who didn't know that.

I personally support a living wage for a full-time worker. This would certainly be different for Louisville or Arkansas and New York City. The chips fall where they may in regards to price increases for businesses that rely on low wages to support their business model. It might mean some business fail. It might mean others thrive. Everyone can then decide for themselves whether to pay the freight for what they want. That's really free-market.

How you get there is what they pay politicians for. Or maybe that's why we might never get there.

Well, if you support a "living wage" for everyone, including single 18 year olds living with their parents, there are going to be a lot less restaurants around.

I support the legislation.

That minimum wage for servers has not changed for many years, yet the minimum wage for everyone else has gone up. Why are we treating them as lesser folks even at that wage?

I would have thought that, if this were a really sticky issue there would be more servers here offering strong viewpoints. But it seems much more like *crickets*. So here are a few "Angry Old White Man" observations:

1) $2.13 an hour is meaningless. At issue is total remuneration
2) The Food away from home component of CPI has blown away core CPI for several years now
3) The grocery component of CPI is even higher than the food away from home component, meaning:
4) Lots more meals being eaten in restaurants which is also underscored by:
5) Share of restaurant meals in total US consumption has risen steadily for ten years
6) Tip inflation from 15% standard to now 20-25%

For someone not inside the industry all that adds up to many more diners = many more tables turned per hour worked at higher prices per meal plus tips which have increased in relative terms by 33-66%. That sort of indicates that restaurant servers may have had better total remuneration performance in the last 10 years than many, many other fields like light manufacturing, construction, or non-food retail.

Now if Joel suggests I'm trolling he might just be right in this case . I just think... as someone who very soon may be a US-based consumer, I'd like to know what the "real deal" is, esp given the industry experience on this forum. The inexpert view from the outside seems to show servers doing better in recent years. And despite the well-known disadvantages of the job, advantages are also apparent (short work week, easily portable job skills, potential for flexible hours to suit school needs, children, etc).

Normally I would refrain from posting in this thread, but I will try to keep my personal views out of this, and just clear up some misinformation being posted. The minimum wage for all tipped employees is the same as it is for all other employees. No matter what, no matter what you do, if you are a tipped employee, the minimum wage you make is the same as it is for any other minimum wage occupation. The difference for tipped employees is something called a tip credit, which has not yet been mentioned in this thread.

According to labor law, an employer is allowed to claim an hourly tip credit, against a tipped employees tips, and count it (but not actually take possession of it), to pay a portion of their wage. The employee is still responsible for paying the remainder of their wage, and the tipped employee keeps all tips above the maximum mandated tip credit. In Kentucky, both the maximum tip credit ($5.12) and federal minimum ($7.25) are used. Obviously the difference between these two numbers results in tipped employees being paid a "minimum" wage of $2.13 an hour. There are also rules regarding transparency should an employer decide to use a tip credit.

Not all states use a $5.12 tip credit (Washington $0.00, Kansas $1.06, New York $2.25, Illinois $3.20) (source: http://www.paywizard.org/main/minimum-w ... ed-workers), The less the maximum tip credit, the better for the employee. I know it seems I am arguing about semantics, but when speaking about labor law, the specific words matter. This thread is about increasing server minimum wage, but thats not what people are actually discussing. The issue is lowering the tip credit, which will then raise the wage line on a servers paystub.

Continued because I assume I hit some maximum word count.

In addition, I know of at least one establishment in Louisville, who has elected to pay their servers a normal wage ($11 /hr give or take) (and for the record I don't know if its legal, but it is better for the employee so I don't see why not). They still use tip credit of $5.12, but the servers pay on a 20 hour week (with sufficient tips). Would have them making the following.

Tip Credit (portion of tips) $5.12 x 20 hours = $102.40
Remaining Tips = Total tips - $102.40 (straight into servers pocket)
Hourly Wage = $11.00 - $5.12 = $5.88, $5.88 x 20 hours = $117.60.
Depending on how much above $102.40 in tips were brought in over the course of the week, that server could be doing quite nicely for themself on 20 hours of work.

If you truly care about server wages, then look into the details of how tip credit works in various states, as well as encourage restaurants to change how they pay their employees.

After reading Aaron's very informative post I found this:

http://www.dol.gov/whd/state/tipped.htm

It occurs to me that American consumers face literally zero transparency when it comes to minimum wage server jobs and how they should allocate tips. If this sad state of affairs existed in any other industry it would be universally viewed as a scam. This is more damned confusing than mortgage backed securities.

We all know servers mostly work hard, but so do other people. Given how often people are eating out there is a LOT of money at stake and it looks to me like consumers are the ones coming out on the short end of the stick when it comes to relevant, reliable information on appropriate tipping. They simply face a steady drumbeat of evangelism that they have to pay 20-25% cause the server only makes two bucks an hour and can't pay their rent. I'm still completely unconvinced that the plight of restaurant servers has gotten worse than the rest of middle class America (or what's left of it).