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Can restaurants afford a higher minimum wage?

3 min read


When the federal government froze minimum wage for tipped workers at $2.13 per hour in 1996, the wage amounted to half the federal minimum wage for non-tipped workers. Tips were supposed to make up the difference and, if they didn’t, the law required companies to do so. Since then, that $2.13 per hour has fallen to 29% of the minimum wage.

A bill proposed this session would unfreeze the tipped minimum, a move called for by President Barack Obama. Supporters say the change is necessary to give restaurant workers a wage they can count on and may actually save restaurants money in the long run because it will reduce turnover and keep highly productive workers on staff. Detractors say the measure will push down job creation, put workers out of a job and drive up meal prices for consumers.

The provision is part of a larger bill to raise the overall minimum wage to $10.10 in two years and provide for annual increases thereafter. The tipped wage would rise to $3 per hour in the first year and increase by 95 cents annually until it reaches 70% of the untipped wage, and would stay at 70% thereafter.

This is one of those issues with studies that shore up both sides of the argument, as Bloomberg reported, and no shortage of experts eager to argue their positions, which typically fall along party lines. Given the political divisions over the issue, it’s not likely the measure will pass in the Republican-controlled House this year — but that doesn’t mean the issue is going away. In fact, on some fronts it seems to be gaining steam.

There’s evidence that the effort to win a living wage for restaurant workers may be gathering momentum, from recent strikes by fast-food workers in New York City and Chicago to the announcement earlier this month of the launch of an alternative restaurant association spun off from Restaurant Opportunities Center United. The Restaurants Advancing Industry Standards in Employment or RAISE claims almost 100 business owners as members, all of whom are committed to winning higher wages, paid sick days and affordable health care, according to a news release from ROC United.

Many states have instituted higher minimum rates for tipped workers since the federal rate was frozen, but 13 states still use the federal minimum and 34 states and the District of Columbia have a minimum wage for tipped workers that’s less than 70% of minimum. That came as a surprise to former waitress Gina Deluca, who told Bloomberg her wages and sense of economic security fell significantly when she moved to New Mexico from California, which at the time had a minimum wage for tipped workers of $6.75. “The difference in San Francisco was that I felt valued,” she said.

Would a higher minimum wage for tipped workers work at your restaurant? Tell us about it in the comments.