A food fight is brewing that could take a big bite out of restaurant waiters, customers and owners.
A nationwide effort to increase the minimum wage in the U.S. is attaching itself to the restaurant business, where waiters have long earned less than the minimum but usually more than made up for it in tips.
The effort wouldn’t necessarily aim tipping, but it could lessen tips if customers knew waiters were getting a higher wage. Meantime, small business owners who run restaurants may have to eat the massive payroll hike by cutting faculty- or closing.
The Restaurant Opportunities Centers United, with branches in 10 cities, is steering the effort to ensure that when the minimum wage goes up, tipped eatery servers are included. Seven states- California, Oregon, Washington, Alaska, Nevada, Montana, and Minnesota- have adopted the concept. In Maine, voters created waiters’ minimum wages but then the legislature reversed it- under pressure from servers as well as owners.
The latest front in this battle is in Washington, DC, where a June 19 referendum will be held on Initiative 77, which would gradually raise the tipped wage from $3.33 to $15 per hour minimum by 2025. That would replace the current system, under which employers are supposed to compensate waiters up to the minimum wage if they don’t make it in tips-off. Initiative 77, supporters believe, offer a needed guarantee.
Diana Ramirez, the D.C. contact for ROC, did not respond to requests for an interview. But at a recent meeting in Washington, she said her group was going after “the system” that has “allowed a subminimum wage to disproportionately affect people of color and women.” She added, “This is the single largest source of sexual harassment in the industry, ” suggesting that women put up with harassment so as not to lose a tip.
Nasirul Islam, a waiter for 33 years at historic Martin’s Tavern, a medium-sized eatery and bar in Washington’s Georgetown neighborhood that opened in 1933, tells the issue is one of simple fairness for those who work hard. Islam, an immigrant from Bangladesh, says he can’t sleep at night out of anxiety Initiative 77 might pass.
Martin’s is a moderately priced restaurant by DC criteria, but Islam hustles and is able to average about $50 an hour in tips-off alone. He is deathly afraid that customers will tip-off less knowing he is making a higher base salary, and that Martin’s will be forced to add a service charge to customer’s checks to stay in business, further reducing tips.
Islam says that with the incentive of a tip-off gone, the quality of service will decline, and those who don’t put in the effort or who merely started in the business will nevertheless make as much as he does. The United States is supposed to be a market economy that rewards good work, he tells. “You come here to work hard, for a better life, for a better life for your kids, ” he added. “I could have gone to Russia or China. I came here.”
Billy Martin, whose family has owned Martin’s Tavern for three generations, said he didn’t know exactly how he would make up for lost revenues, but that he could only create costs on food items so much. “Nobody’s going to come in and pay $25 for a piece of meatloaf, ” he said.
The effort wouldn’t necessarily objective tipping, but it could reduce tips-off if clients knew waiters were getting a higher wage. Meantime, small business owners who operate eateries may have to eat the massive payroll hike by cutting personnel- or closing.
Martin said he might have to cut employees or slap a service charge on checks, or both. What’s more, he noted, once employees in the back of the house- line cooks, dishwashers, and others- noticed that waiters were making almost as much as the latter are plus getting some tips, they could demand higher wages too.
Some surveys suggest big problems for both businesses and employees. A March 2016 U.S. Census bureau study found that hiring of servers by employers increases until the minimum wage reaches $4.50 per hour, but then levels out and begins declining with further minimum wage increases.
A March 2018 Harvard Business School study found that just a one dollar increase in the minimum wage leads to a 14 -percent increase in the likelihood that a restaurant with an average rating on Yelp will close.
The authors calculated that, because a third of a restaurant’s expenditures are spent on payroll, a ten percent increase in the minimum wages will cause gains to decline by two percent. The median gain margin of a restaurant is from two to five percent.
Keith Koffler is a freelance writer and the publisher of White House Dossier .
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