All About the Minimum Wage
Relying on tips has been the nature of working in the restaurant industry for years. As anyone familiar with the financial model knows, this can force staff to rely almost solely on the generosity of their guests to make money during a shift. There are also claims that this reliance on customers increases harassment in the workplace, with waiters and waitresses going to extremes for that extra buck. And as consumers, we’re not obligated to leave a tip if we don’t want.
Are you familiar with the federal tipped wage? According to Wikipedia, “The United States of America federal government requires a wage of at least $2.13 per hour be paid to employees who receive at least $30 per month in tips. If wages and tips do not equal the federal minimum wage of $7.25 per hour during any week, the employer is required to increase cash wages to compensate.” Some states opt for a higher tipped minimum wage than that which the government requires, but because it’s not mandated, things can change at the ballot box. Also interesting to note is that despite the increase in the cost of living, that $2.13 an hour we just told you about has been the same since 1991. There are arguments for and against a different wage for tipped versus non-tipped workers. Proponents say that increases in the minimum wage would lead to higher costs for the employer, which then get passed off to the consumer and eventually affect available job opportunities.
We’ve presented this history to you because today, we are talking about One Fair Wage. If you’re in the restaurant industry you’ve likely heard of this movement already, which was a key piece of legislation on the November 2018 General Election ballot in Michigan, Washington D.C., and New York. One Fair Wage argues that “Every person who works in America should be paid at least a full, fair minimum wage from their employer.” You can check out a chart of minimum wages for tipped employees based on state at the One Fair Wage website.
In July of 2019, the House of Representatives voted to increase the federal minimum wage to $15 an hour by 2025 by passing the Raise the Wage Act. With this, below-minimum wages for tipped, youth, and disabled workers would disappear in favor of $15 an hour. This is significant seeing that $2.13/hour has been in place for 28 years. According to the National Employment Law Project, “The Congressional Budget Office (CBO) found the bill would lift pay for 27 million workers earning at or near the minimum wage and it will reduce the number of people living in poverty by 1.3 million.” All of this sounds great for employee rights, but the Raise the Wage Act still needs to make it through the Senate—and hopes aren’t high. The popularity of the Raise the Wage Age is why we’ll see a number of states in 2020 increasing their minimum wages.
We’ve shown there are schools of thought on both sides of the aisle when it comes to restaurant workers’ pay. With that we ask, how do you feel about One Fair Wage, the Raise the Wage Act, and a federal tipped minimum wage? Has your business been affected, and where do you see wages going in the future? Is One Fair Wage soon to be a common theme across the industry, or is it dead in the water?