With the recent increase in New York state’s minimum wage, and the now Democratic-controlled U.S. House of Representatives quickly passing a federal minimum wage increase, the restaurant industry will be only one of many industries, along with retail and service, that may feel the impact. The increase still awaits approval by the Senate.
With any mandated wage increase, restaurants are asked to pay more to their minimum-wage workers, to their tipped workers, and, sometimes, to kitchen workers such as cooks who may already make more than the minimum.
Minimum wage increases often draw opposition from restaurant operators who say that the cost of covering those increases can negatively affect their bottom line. On the other hand, some economists and legislators argue that bumping up the minimum wage can raise the standard of living for low-wage workers and boost overall spending.
On Jan. 1, the minimum wage in New York rose from $6.75 to $7.15 an hour, the final jump in a process that incrementally raised the minimum over three years. For tipped workers, the minimum wage increased 25 cents to $4.60 an hour, provided that the wage combined with tips is at least equivalent to $7.15.
If passed, new federal legislation will bump the nation’s minimum wage up to $7.25 from $5.15 over the next two years.
The question, then, is how do minimum wage increases negatively affect the restaurant industry ` one of the nation’s largest employers of immigrants and young people.
According to Trudy Renwick, senior economist at the Latham office of the Fiscal Policy Institute, they don’t.
`There really doesn’t seem to be any evidence that the increase in the minimum wage has hurt the food service industry,` said Renwick.
According to Renwick, in the same year as the 2005 minimum wage increase, New York’s small businesses experienced 1.6 percent job growth. The food service industry did even better ` increasing jobs by 2.7 percent.
Another study released by the institute in March 2006 showed that small business and retail job growth was faster in states ` such as New York ` with a minimum wage above the federal level. Currently, 28 states have a minimum wage greater than that mandated by the federal government.
The report was in response to those who said the minimum wage would force businesses that largely employ low-wage workers to experience sharp cost increases resulting in reduced employment. The results of the report contradicted that argument.
But restaurant owners maintain that wage increases place a burden on their industry in a number of ways.
According to Rick Sampson, president and chief executive officer of the New York State Restaurant Association, when wage increases affect the restaurant industry’s bottom line, the only solution is to raise menu prices and, ultimately, cut the hours made available to staff.
Sampson expressed objection not just to minimum wage hikes, but the beneficiaries of the increases.
`The only thing that’s important to us is not only the minimum wage going up, but that the minimum wage is going to the wrong people in the industry,` said Sampson.
Sampson said that giving tipped-based earners ` servers and bartenders ` raises, doesn’t make a whole lot of sense.
`Tipped employees are making 15, 18 and 20 dollars an hour in tips, and we’re giving them a raise in their minimum wage?` said Sampson. `They’re not working for the paychecks, they’re working for the tips.`
A waitress or waiter who works 40 hours a week, at the new minimum wage, would earn an additional $184 a week in addition to their tips.
Additionally, in paying more to the waitstaff and raising the amount that their minimum-wage workers already make, restaurants face another problem from the wage increases.
Restaurant employees who already earn a wage greater than the minimum also feel they deserve an increase in pay rate when those they work with get one, said Sampson.
An October survey, in which 600 restaurant operators were polled, conducted by the National Restaurant Association, showed that consumers may end up paying higher prices in restaurants if minimum wages are raised, while employees could see their jobs eliminated or hours reduced.
The survey found that 41 percent of family dining and casual restaurant operators would cut jobs, and 40 percent of operators said they would postpone plans for hiring. Nearly nine out of 10 restaurants said they would raise menu prices.
`Restaurant budgets are similar to family budgets; they operate on a very slim margin,` said Hudson Riehle, senior vice president of Research and Information Services for the National Restaurant Association, when the survey was released. `When they are hit with increased costs, they have to make painful decisions. Unfortunately, in the case of a minimum wage hike, everyone pays.`
And, Sampson noted, when menu prices increase, so do the tips left behind, meaning that in addition to the hourly wage increase, waitstaff makes even more money and customers are left giving more, something that may have restaurantgoers think twice before heading out.
`The biggest competition we have is eating home,` said Sampson.
Sampson said there is a way to remedy the problem: `The solution we have always looked for is to exempt tipped employees from minimum wage increases.`
For example, Sampson said, for a restaurant with 30 servers on staff, each working 40 hours a week, and getting an increase of 25 cents per hour, that restaurant would be paying out $300 extra a week. That money, he said, could be better used going to the often low-paid table bussers and dishwashers.
According to Renwick with the Fiscal Policy Institute, those low-paid workers, like the dishwashers and bussers, even with wage increases, still don’t make enough ` especially if they’re supporting a family.
`The opposition likes to paint this picture that everyone making minimum wage is high school students or casual workers,` said Renwick.
Even with the raise to $7.15 an hour, those making minimum wage, and raising a family, work below the poverty line.
`We feel that this is a basic tenet ` if you work full time, you should be able to support your family,` said Renwick.
Sen. Hillary Clinton, D-N.Y., an original cosponsor of legislation introduced by Sen. Ted Kennedy, D-Mass., that would increase the federal minimum wage, said, `It is unacceptable that Americans working full time are living in poverty. Every day the minimum wage is not increased, it continues to lose value, and working families fall further behind.`
The last time a full-time minimum wage worker lived near or above the poverty line was around 1970, said Renwick, adding that to get back to that level, minimum wage would need to increase to at least $8.50 an hour over the next couple of years. One solution, said Renwick, is having legislation that would make the minimum wage increase automatically each year so `we don’t have this fight every three years.`
`We’d like to see a movement where we could at least get back to where we were around 1970,` said Renwick. `
SIDEBAR: Keep the change By JESSICA HARDING, Spotlight Staff
Working for minimum wage can seem thankless at times, but some food-service jobs have hourly salaries that clock in far under the state minimum. When minimum wage in New York was increased to $7.15 per hour at the beginning of the year, it was set at $4.60 per hour for food servers. The idea is that tips make up the difference.
Restaurant patrons use tipping to account for the level of service they feel they have received. Better service equals a larger tip; poor service equals a small tip or none at all. And some tips seem to have no relation to the service at all.
So why do some people choose to work as waiters and waitresses and gamble on the fickle nature of restaurantgoers to make up their paychecks? The answers are varied, but almost always include issues of flexibility.
Carole Dooley, 51, has been a waitress since she was 15. She now works at Gershson’s Deli and Caterers on Union Street in Schenectady. She makes a living working days there, usually from 9 a.m. to 3 p.m. six days a week.
Dooley started waitressing when she was in college and continued to work nights after she got married and had two children.
`It was the quickest money I could make while working at night,` she said. Dooley took care of her children during the day while her husband worked, then went to work at night.
`You can make a living working three to four nights a week, but there are no benefits,` Dooley said.
Dooley’s two children are now 28 and 26, and she is sill waitressing. She said money is a constant worry for her. She used to work a few night shifts on top of her day gig, but lifting heavy trays for so many years has damaged her arm so she can’t pull double shifts anymore.
In addition to the damage to her arm, Dooley had back surgery for a herniated disc about 10 years ago. In spite of the physical injuries, Dooley said it’s the mental strain of dealing with people that makes waitressing so tough.
`I get burnt out dealing with people all day. By Saturday evening I just can’t muster up another smile,` she said.
Dooley said many people stereotype waitresses as people without degrees or who can’t get other jobs, but it takes a special kind of person to handle the stress of serving.
`Many servers are going to law school or medical school. You have to be able to keep everything in order in your head,` she said.
Brittany Sendzicki, 21, has been working as a server at Ruby Tuesday’s in Niskayuna for nearly four years.
Like Dooley, she finds that waitressing allows her to work around her classes and still bring home a comfortable income.
She studies business full-time at Schenectady County Community College, and said she can’t beat the flexible schedule or the amount of money she makes in such a short time as a waitress.
`I can work half the hours and still bring home as much money as I would working at a desk all day,` she said.
Sendzicki still lives with her parents, but she has to pay for everything else with the money she makes at her job, including car payments and insurance, phone and credit card bills, food and gas.
`I arrange my school schedule so I can work two days and two nights — all day Friday and every day on the weekends,` she said.
The money Sendzicki makes is almost entirely based on tips.
`Last week I worked 23 hours and got a pay check for $24,` she said.
Because of this, Sendzicki said it’s hard to plan financially because she never knows how much she’ll bring home in a given week.
Sendzicki said she plans to keep her job until she finishes school.
`It’s the perfect job for a college student, but I would never make a career out of it because it’s too exhausting. You never have a minute for yourself,` she said.
Dooley advises younger servers to not make a career out of it.
`It’s nice for something on the side, but it’s not a career. It’s way too much work for not enough money,` she said.
Chris Lure, 27, who works full-time at the Ripe Tomato on Route 9 in Ballston Spa, said waiting tables is easy now that he’s young, but he won’t be able to keep at it once he’s older.
`Right now it’s fine, but when you’re 40 you can’t do this, and you don’t have a retirement plan,` he said.
Lure said he works construction during the summer and has had many other jobs, but has always worked in a restaurant because of the hours and the money.
`I’ve had several other jobs, but the easy money and flexible hours work great with the other activities that I do,` he said.
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