Restaurant industry pushes tip penalty; unions and tipped workers push back

April 25, 2018 by

You might not have noticed the sky falling in Minnesota’s restaurant industry – unless, that is, you’ve been hanging out in meetings of the House Committee on Job Growth and Energy Affordability Policy and Finance.

The Republican-controlled committee has tucked a measure into its Omnibus Jobs and Energy Bill that would allow restaurants to pay servers and bartenders less than minimum wage. In hearings last month, industry lobbyists claimed the concession is necessary to shield establishments from annual, inflationary increases to the state’s minimum wage.

Minnesota is one of just seven states where employers may not pay a lower, sub-minimum wage to workers on the basis that their income includes tips. Lawmakers removed the “tipped tier” from Minnesota’s minimum-wage rules three decades ago.

But time hasn’t exactly softened the restaurant industry’s opposition.

The state’s minimum wage has increased from $7.25 to $9.65 for large employers over the last four years, and restaurant owners – and some workers – claim the increased labor costs have upended their industry, forcing layoffs, increasing automation and threatening the vibrancy of the local dining scene.

“The goal of this is to keep jobs intact and to keep our businesses open,” Minneapolis bartender Adam Borgen told committee members April 16.

But employment data collected by the state doesn’t back up the industry’s claims. An analysis by the JOBS NOW Coalition found that job openings in Minnesota’s restaurant industry have increased by 200 percent since 2014, when the minimum wage began to climb.

“Restaurants literally can’t get anyone to fill these jobs in the first place,” JOBS NOW’s Kevin Ristau said. “But they say that by raising the minimum wage, you’re going to hurt the very people you’re trying to help, that those opportunities for workers will no longer exist. Well, we raised the minimum wage, and there are more ‘opportunities’ than ever.”

Minnesota’s restaurant scene, meanwhile, remains hot. Ten local chefs and two restaurants were named semifinalists for the prestigious James Beard Foundation awards earlier this year.

So if a political push to make it legal for restaurants to pay workers less than minimum wage sounds like a solution in search of a problem, that’s because it is, UNITE HERE Local 17 Political Director Wade Luneberg said.

“My industry’s obsession with removing income from employees’ pockets has always stumped me,” Luneberg, a former server and longtime officer in the Twin Cities hospitality union, told committee members.

“This is not an industry in crisis,” he added. “Instead, it keeps expanding and diversifying to find more ways of doing business.”

Although most people who testified for or against the measure last month were from the Twin Cities, the bill’s chief author, Rep. Joe McDonald (R-Delano), stressed it was not his intention to preempt local minimum-wage rules.

Minneapolis did not carve out a sub-minimum wage for tipped workers in its $15 ordinance last year, meaning even if McDonald’s bill were to become law, Minneapolis restaurants would have to raise servers’ wages annually in accordance with the ordinance.

Still, St. Paul Regional Labor Federation President Bobby Kasper warned the tip penalty is just one piece of a broader corporate agenda Republicans are pushing at the Capitol. Another piece of the agenda: preempting local control.

“We’re going to fight any effort to put a tip penalty into St. Paul’s minimum wage ordinance because workers in the hospitality industry deserve one fair wage,” Kasper said. “But we can’t ignore what’s happening at the Capitol. These politicians are only listening to their corporate donors, and they could wipe out everything we’ve been working for.”

That’s exactly the feeling Desiree King had when she heard tip penalty legislation was alive in the House. A longtime server who now waits tables in St. Paul, King testified in favor of scrapping the lower minimum wage for tipped workers 30 years ago, and she never imagined she’d have to come back, King told lawmakers last month.

“To say that we, as a group of people because we earn tips, are not valuable enough to make the minimum wage is insulting,” King said. “We are worth more than that.”

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John Clay: $9.50 minimum wage lifts up women, children, people of color

September 30, 2013 by
John Clay is an economist for the JOBS NOW Coalition.

John Clay is an economist policy director for the JOBS NOW Coalition.

The Minnesota Legislature is expected to take up the $9.50 an hour minimum wage bill in the first weeks of the 2014 legislative session. Raising Minnesota’s minimum wage to $9.50 an hour would mean a raise for 360,000 working Minnesotans and significant gains in purchasing power for women and people of color, according to a soon-to-be-released Jobs Now Coalition report. The analysis looks at the number of Minnesota workers whose wages are below $9.50, as well as those above this mark who would likely see a raise due to what economists call the “spillover effect,” as employers adjust pay scales upward.

Although about 150,000 fewer women are employed in Minnesota than men, a greater number of women are working low-wage jobs. As a result, the majority of the 360,000 workers who would benefit from a $9.50 an hour Minnesota minimum wage – 202,133 workers – are women. A stronger minimum wage policy would boost purchasing power among Minnesota women by nearly $256 million annually. Empowering women is a key tool in eradicating poverty and closing the equity gap that hampers educational opportunities for Minnesota children. At last count, more than half of the state’s working mothers were their families’ primary bread winners, according to the Center on Women and Public Policy at the U of M’s Humphrey School. Its February 2012 report further found that “68 percent of female-headed households in rental housing … are paying costs that exceed 30 percent of their income.”

This has a profound impact on Minnesota children. As of 2011, nearly 260,000 children were living with parents who considered working poor, according to the Annie E. Casey Foundation’s Kids Count data center. About 137,000 Minnesota children would benefit if the state raised the minimum wage to $9.50 an hour. Children from families with sufficient financial resources are far more likely than children from economically disadvantaged families to start kindergarten ready to succeed in school and later in life, according to research cited by Children’s Defense Fund of Minnesota. An additional $1,000 of average annual family income throughout early childhood can result in higher reading and math scores for children in low-income families.

A minimum wage bump to $9.50 also would begin helping Minnesota address the growing disparity in wealth among white Minnesotans and people of color. While the statewide poverty rate is 12 percent, it’s 28 percent for people of color, and 37 percent for African Americans, according to data compiled by St. Paul-based Wilder Research. More than 83,000 workers of color would see a raise. That includes 22 percent of black workers, 29 percent of Hispanic workers and 17 percent of Asian workers. A $9.50 minimum wage offers an important tool, with other anti-poverty efforts, to begin building wealth.

Our upcoming report shows that workers across the demographic spectrum would benefit from a $9.50 an hour minimum wage, and that annual consumer spending power in Minnesota would increase by $470 million, giving a much-needed boost to sales at local businesses.

– John Clay, policy director for JOBS NOW Coalition, originally authored this report for Minnesota 2020’s blog.

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Going against the grain, some small business owners back wage hike

April 30, 2013 by
Barb Johnson, owner of Lyle's Cafe in Winthrop, supports raising the minimum wage.

Barbara Johnson, owner of Lyle’s Cafe in Winthrop, supports raising the minimum wage.

Think the minimum-wage hike progressing through the Legislature is bad news for Minnesota’s small businesses? Think again.

A survey released last week indicates strong support among small business owners nationwide for raising the federal minimum wage and adjusting it annually to account for inflation.

Small business owners gathered at the Minnesota Capitol yesterday explained the surprising survey results. Barbara Johnson, owner of Lyle’s Cafe in Winthrop, said when low-wage workers see more money in their paychecks, they are more likely to spend it at local businesses like her café.

“It’s just common sense in the restaurant business that if people have more money in their pockets, they’re more likely to go out for lunch on their break or maybe take their family out for dinner once and a while,” Johnson said.

She and other business owners spoke at a press conference staged by a coalition of unions, non-profit organizations and faith groups backing a House bill that would increase the state’s minimum wage to $9.50 over three years, and tie it to inflation. The bill’s author, Rep. Ryan Winkler (DFL-Golden Valley), said 400,000 Minnesota workers would see a raise if the measure becomes law.

By participating in the event, Johnson and other small business owners would appear to flout the company line toed by powerful trade groups and business lobbyists fighting hard against Winkler’s bill. These groups claim a minimum-wage increase would disproportionately affect small businesses by forcing them to reduce their payrolls in order to absorb the added labor costs.

There’s just one problem with that argument: It’s not backed by economic research.

In a study released last summer, the National Employment Law Project found that two-thirds of low-wage workers are employed not by small businesses, but by large corporations that are highly profitable – and entirely capable of absorbing increased labor costs.

Indeed, each of the nation’s three largest low-wage employers – Wal-Mart, Yum! Brands (parent of Pizza Hut, Kentucky Fried Chicken and Taco Bell) and McDonalds – is turning profits “substantially higher” than its pre-recession levels, according to the NELP. And while they may argue it would be impossible to absorb the cost of higher wages for their lowest-paid employees, CEO pay at the three corporations remains healthier than ever.

The report, entitled “Big Business, Corporate Profits and the Minimum Wage,” concludes: “Contrary to what critics sometimes suggest, the majority of the impact of any increase in the minimum wage will … be felt by large companies and corporations rather than small mom-and-pop establishments.”

What’s more, when large employers like Wal-Mart and McDonalds raise their workers’ wages, it boosts the buying power of a group of consumers least likely – or able – to save their wages for a rainy day. The Minnesota-based JOBS NOW Coalition reports that every $1 increase in the minimum wage boosts consumer spending in the average low-wage worker’s household by $2,800 over the following year.

That’s a ripple effect felt by businesses like Lyle’s Café. “If more people are spending more money, that’s great news for my bottom line,” Johnson said.

So why all the fuss from trade groups and chambers of commerce in advance of a minimum-wage hike?

“Employers complain a lot during these debates,” John Schmitt, a senior economist with the Center for Economic and Policy Research, said during a forum on minimum wage hosted earlier this year by JOBS NOW and the University of Minnesota’s Labor Education Service.

“They say one thing beforehand, and what they do after (a minimum wage increase) is they learn to live with it,” Schmitt said. “We don’t see any decrease in employment.”

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For minimum-wage earners in Minnesota, ‘a constant juggling act’

April 11, 2013 by
Rep. Jason Metsa hears from minimum-wage earners (L to R) Robert Schiff, Janiece Watts and Avita Samuels.

Rep. Jason Metsa hears from minimum-wage earners (L to R) Robert Schiff, Janiece Watts and Avita Samuels.

The state legislator spending a week on minimum wage met today with three Minnesotans for whom the minimum-wage challenge is an everyday reality.

Four days into his five-day walk in the shoes of the state’s lowest-paid workers, Rep. Jason Metsa listened as three minimum-wage earners related the experiences Metsa wouldn’t have during his five-day experiment.

Things like health care, housing costs and the unpredictable nature of most low-wage jobs – those are the challenges Avita Samuels, Janiece Watts and Robert Schiff shared with Metsa, the DFLer from Virginia, Minn., who accepted Working America’s challenge to live a week on Minnesota’s minimum wage of $7.25.

A bill in the Minnesota House would boost that minimum wage to $9.95 per hour. Seeing it become law, Samuels said, would mean more than a bigger paycheck; it would mean respect for the work she does.

“I take pride in my job. I want to do the best I can,” the 23-year-old retail worker told Metsa. “I don’t want to have to ask for a higher minimum wage, but I have to.”

40-hour week no guarantee

Metsa’s minimum-wage budget of $290 assumes a 40-hour workweek, but that’s rarely a reality for retail workers like Samuels and Watts.

Samuels, a student at the University of Minnesota, juggles work with school. Watts, who works in a grocery store, found herself in a similar situation until she graduated last year.

Now she juggles work with trying to find another job. “Every so often I pick up some extra hours, but most of the time I work 24 hours per week,” the 24-year-old said.

Schiff, a 31-year-old security worker, supports four children, ranging in age from 8 months to 12 years old, with his minimum-wage job. Metsa asked how he juggles fixed costs like rent and food with unexpected expenses like medical care.

“Most of the time those medical expenses go on the back burner,” Schiff acknowledged. “When you’ve got four kids, you’ve got to pick and choose. There are times when your kids have to go without because you’ve got to pay rent.”

The rental squeeze

Metsa and Working America organizer Chase Brandau search online for rental housing that would be affordable for a minimum-wage earner.

Metsa and Working America organizer Chase Brandau search online for rental housing within a minimum-wage earner’s budget.

Trying to find rental housing is a steep challenge for minimum-wage workers – something Metsa learned firsthand a day earlier, when he tried finding apartments available for $359 per month. That’s the amount Metsa, using the JOBS NOW Coalition’s Family Budget Calculator, allowed himself for housing.

Using a search engine that collects data from several online apartment postings, Metsa found eight options in his initial search of the Twin Cities. Most were senior-living facilities or vacation units that rent by the week.

He tried calling the property manager of an apartment complex in Woodbury, but the number listed was no good. The only remaining choice was to sublet a room in a four-bedroom house for $325 per month.

Still, there was a catch. To inquire about the sublet, Metsa needed to pay a finder’s fee to the website.

“I’m finding a lot of these intermediaries,” Metsa said. “I think I’d rule out an apartment search online pretty quickly. It would be easier to network with friends and family to cut a deal, maybe stay on someone’s couch.”

That’s a fairly common strategy, according to Bree Halverson, statewide director of Working America. As the AFL-CIO‘s community affiliate, Working America represents 300,000 non-union Minnesotans, including many who work minimum-wage jobs.

“We know members who are living with family or friends while they try to find something else,” Halverson said, adding that Internet access, security deposits, utility costs and credit checks present more barriers to affordable housing for low-wage workers.

‘Swallow your pride’

“The bottom line is if you’re on this budget, you have to get help from somewhere, whether it’s family or friends or public assistance,” Chase Brandau, a Working America organizer based in Minnesota, said.

Schiff, Samuels and Watts, of course, know that better than most. Schiff said he’s gone to his mother for help with groceries. Samuels talked about pleading with supervisors for the flexibility to take another job. Watts admitted she’s “lucky” to be on her parents’ health insurance.

“You end up having to swallow your pride,” Schiff said.

Metsa pledged to pass along the workers’ stories to his colleagues – and do his part to “raise the amount in each of these columns,” he said, pointing to a chart with his $290-per-week budget broken down into basic needs.

“This budget would be a constant juggling act,” Metsa said. “What do I give up today to get what I gave up yesterday?”

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Five days on minimum wage: Rep. Metsa goes grocery shopping

April 9, 2013 by
Rep. Jason Metsa compares prices of peanut butter at the Midway Cub Foods.

Rep. Jason Metsa compares prices of peanut butter at the Midway Cub Foods.

Peanut butter or jelly? Juice or coffee? Dry spaghetti or ravioli in a can?

Those aren’t decisions Rep. Jason Metsa usually wrestles with in the grocery store, but the Iron Range DFLer is tightening his belt this week after signing a pledge to live on Minnesota’s minimum wage of $7.25 per hour for five days.

Working America, the community affiliate of the AFL-CIO, issued the minimum-wage challenge to state lawmakers in the hopes of drumming up support for a House bill that would raise Minnesota’s minimum wage to $9.95 per hour.

Metsa accepted the challenge, he said, “to better understand an economic situation many of us have never been exposed to.” In events later this week, Metsa will look for affordable housing, consider his transportation options and participate in a forum with actual minimum-wage workers, who earn $290 for working a 40-hour week.

Metsa and Working America's Bree Halverson track how much of his $28 budget the representative has spent.

Metsa and Working America’s Bree Halverson track how much of his $28 budget the representative has spent.

But first, the 32-year-old representative needed food.

Using the JOBS NOW Coalition’s Family Budget Calculator as a guide, Metsa allowed himself $35 for food and drink. After spending $7 on Monday, he arrived at the Cub Foods in St. Paul’s Midway neighborhood this morning with $28 to spend and, after skipping breakfast, an empty stomach to fill.

“I’m already hungry,” he said, flipping through a stack of coupons he had clipped from the Cub circular.

His game plan, Metsa said, would be to stock up on the staples – bread, milk, eggs and pasta. Any leftover money might provide for a “splurge” item, and Metsa pocketed a coupon for Chef Boyardee ravioli just in case.

Store managers, media members and Working America staff trailed Metsa as he pushed his cart through the aisles, comparing prices and inspecting the in-store specials. It was more thought, Metsa admitted, than he had ever put into grocery shopping before.

“When I shop for groceries at home, I think more about what I’m hungry for or what’s good for me,” he said. “Today it was about how I can get full for $28 this week.”

Desserts and soda – items, Metsa acknowledged, that would usually end up in his shopping cart – were out. So too, Metsa discovered, were meats and other protein items, which proved “too expensive, even with a coupon.”

When he finally reached the checkout aisle, Metsa got more bad news: He’d gone over his budget. A loaf of bread, a container of frozen juice and, yes, a can of ravioli would have to go back on the shelves.

metsa-receipt-web

Click to view Rep. Jason Metsa’s grocery receipt.

What ended up in Metsa’s cart?

• Produce: One head of iceberg lettuce ($1.48), five bananas ($1.04) and three pounds of russet potatoes ($1.05).

• Meat and Dairy: One pack of salami ($1.99), one gallon of milk ($2.99), a dozen large eggs ($1.98) and a wedge of cheese ($2.99).

• Dry, Canned and Frozen Goods: One loaf of bread ($1.19), one jar of peanut butter ($4.35), one frozen container of juice ($1.59), one package of spaghetti (88 cents), one can of spaghetti sauce (88 cents), a case of instant-noodle cups ($2.49) and coffee ($3.74).

As he bagged his groceries, Metsa said he was confident the food he’d purchased would be enough to sustain him until this weekend. Bree Halverson, statewide director of Working America, asked how that might change if Metsa had a dependent child at home. According to the JOBS NOW Coalition, 35 percent of workers affected by raising the minimum wage to $10 per hour are married or are parents.

He’s single, but Metsa had no trouble putting himself in those shoes. “I think I’d drop my car insurance and make sure my kids could eat,” he said. “Otherwise, it would be impossible. You couldn’t do it without being on public assistance.”

For regular updates on Metsa’s minimum-wage challenge, follow on Twitter via #mnwage, or @workingamerica or @jasonmetsa. Updates also will be posted on Working America’s Main Street Blog and Working America’s Facebook page.

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