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In a Nation’s Restaurant News special report on wage economics, restaurant operators maintained that hourly pay rates are already higher than the federal minimum. Data from different research groups supports their claims, finding that pay levels for hourly employees — both tipped and non-tipped — vary widely, depending on the state, the market, the employee’s experience and other factors.

“When we look at all hourly employees, 92 percent are paid above minimum wage,” according to Michael Harms, executive director of operations for People Report, a Dallas-based firm that tracks workforce trends in the foodservice industry. “As for those who are making the minimum or less, 25 percent have experience levels of 0.1 years tenure or less, 50 percent have half a year of experience or less, and 75 percent have 1.5 years of experience or less.”

Government data support Harms’ research. According to the Department of Labor’s Bureau of Labor Statistics, the mean hourly wage for a quick-service cook in 2012 was $9.03, with that rate ranging from $12.94 for the same position in New Haven, Conn., to $8.14 in rural Kansas.

Separately from the UC-Berkeley report, the National Employment Law Project examined quick-service restaurant companies and workers, finding seven of the largest publicly traded companies awarded their chief executives $53 million in compensation, while hourly workers struggled, according to Jack Temple, a policy analyst with NELP.

“Low-wage fast-food jobs are expensive for all of us,” Temple noted. “The low-wage, no-benefit, limited-hours business model in the fast-food industry is costing a substantial amount each year, even as these companies continue to earn strong profits.”

The NELP study indicated that low-wage jobs at McDonald’s cost taxpayers an estimated $1.2 billion a year. Yum! Brands, Subway, Burger King and Wendy’s rounded out the top five quick-service companies whose workers depend on public assistance to afford the basics for their families, according to the study.

According to analysis from Trinity Capital LLC, an investment banking firm, a typical quick-service restaurant company’s earnings would be negatively impacted with minimum hourly wages above $10.25. At that point, labor expenses, which are typically 33 percent of sales, would rise to 42 percent of sales and allow for a business to only break even, rather than book a profit. Find details of that analysis here >>

— Lisa Jennings contributed to this report  

Contact Ron Ruggless at ronald.ruggless@penton.com.
Follow him on Twitter: @RonRuggless