Restaurant Employees are in Political Hot Water: The Debate on Minimum Wage

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minimum wageI’m an open-minded person when it comes to politics and I tend to see beyond the issues directly at hand, but the theory that wage increases in the restaurant industry would hurt the economy blows my food-loving mind. In my career I’ve witnessed servers saying that their tips didn’t even cover the gas they spent getting to work, cooks that have turned down marginal pay increases because the food stamps they qualified for were worth more, and employees turning down health insurance because they couldn’t afford it.

This leads me to believe that the wages for food industry workers needs to be raised, but there are many economists that disagree and offer lengthy detailed reports defending low pay. Once I get past the initial insult of restaurant employees being referred to as the low-skilled workforce (I’d like to see the average economist poach an egg), I see a lot of error in the ways in which these projectionists back up the idea that paying restaurant workers a livable wage will be detrimental to the economy.

First, they pit cooks and servers against each other by saying that raising server pay will result in kitchen employees getting wage cuts. Why is taking wages away from other employees the only way to pay servers? There’s no mention of reducing supplier profits or restaurants simply eating the cost itself, which is what other industries do to pay their employees.

Most states have a separate minimum wage of around 2.13/hr for “tipped employees” because tips presumably will bring them up to the federal limit of 7.25/hr. Most servers don’t realize that if their tips don’t meet the federal wage mandate, their employer is required to pay them the difference. Many times though, servers are able to at least reach minimum wage through tips, but if this is the case, should we really be calling it gratuity? Gratuity is defined as a favor or gift, but we can hardly call giving an employee a wage they are federally entitled to a tip, can we? Many servers don’t mind getting paid beneath minimum wage because many of them secretly don’t pay taxes on a good portion of their tips, but if they did, they probably wouldn’t make much of a living. Is allowing every waiter in our country to survive on tax fraud and the kindness of strangers really in the best interest of the economy?

Many people get antsy about the idea of paying wait staff more than the federally required 2.13/hr, but several states are already doing it. Two of the highest server-paying states are Vermont (4.10/hr) and Connecticut (5.69/hr). In Europe, servers don’t even get tips and are paid a regular wage like any other employee.

Economists say that restaurant prices will soar if anyone in the industry gets pay increases. But in many cases, the price of giving restaurant employees a wage bump would only increase menu items by cents, especially in fast food and chain restaurants that makes thousands of dollars a day. Some chain restaurants can pull in $30,000 on a great weekend.

Allowing service and labor industry jobs to pay wages that don’t adequately cover living expenses is bad for the economy considering how much of the workforce is comprised of them. Food industry jobs account for nearly 10% of the entire American workforce, according to the National Restaurant Association, and generate roughly $1.7 billion a day. The statistics indicate that the food industry is a major component of our economy and workforce. Defending low-pay in the food industry is defending 13 million extra people not being able to pay their bills and that does not sound good for any economy.

Last modified: March 23, 2013
Sasha Smith

This story is part of our Small Business Corner, a peek into the life and trials of small business owners.

Category: Insider's perspective, MPR Authored, Restaurants, Small Business, Small Business Corner, small business owners, Tips

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