Where minimum wage momentum is growing and what operators can do. Sponsored by American Express.
Map Source: National Restaurant Association (Restaurant.org/advocacy)
MINIMUM WAGE MOMENTUM
As most restaurateurs are aware, bills have been introduced in the House and Senate to dramatically increase the federal minimum wage. The Fair Minimum Wage Act would increase the federal minimum wage nearly 40% over a period of slightly more than two years – from the current $7.25 to $10.10 – and it would automatically index the federal minimum wage to inflation each year thereafter, regardless of economic conditions. The legislation also calls for increasing the minimum cash wage for tipped employees until it reaches 70% of the federal minimum wage. It would triple, in stages, from $2.13 to $7.07.
While this federal minimum wage legislation is “unlikely” to pass this year, advises Scott DeFife, Executive VP, Policy & Government Affairs, National Restaurant Association, he warns operators that “the subject is going to be in the news continually for the next year, if not the next three years.” Partly, he acknowledges, because it’s a political issue, but also because wage and benefit issues have public support across party lines. “The public wants to solve what they think is a real and growing problem with lack of opportunities and the ability to advance. They want the situation to be better.” But Scott encourages restaurateurs – and legislators – to keep things in perspective in terms of public sentiment. “The majority of the population supports a minimum wage increase, yes, but that’s normal. Go back five to seven years, or 10 years, or three years, it doesn’t matter – there has always been support. It’s important to look at current public opinion – which we measured recently at about 60% in support of increases – relatively, compared to norms. It’s never below 50%. We aren’t working from a zero point scale.”
Nevertheless, it’s difficult to deny the legislative momentum, notably in states and municipalities. “We, as an association serving the restaurant industry, are always more effective if our members are engaged,” he continues. “In this case, to advocate for the industry, we need them to be more involved than usual. Operators need to be reaching out to public officials in their states and cities – not just senators and congresswomen/congressmen but mayors, governors, city councilmen, etc. Invite them into your restaurant and educate them about your business, about the industry. There’s rampant misinformation out there and they typically don’t understand a restaurant business model.” For example, Scott says, many policymakers try to apply full-time principles to the part-time employee model of the restaurant industry, so he urges restaurateurs to educate them about their part-time workforce – how old they are, why they work part time – and to talk about the low-skilled and entry-level workers they employ and the value of the training they provide. “Also, explain your thin pre-tax profit margins and how difficult it is for such a labor-intensive industry, which already devotes about a third of sales to wages and benefits, to absorb cost increases,” he continues. “Discuss the ripple effect that increases in entry-level wages will have on the entire organization. Let them know that the revenue per employee is much lower than other industries, and that sometimes the server serving them is making more from that transaction than you are. When you explain things to policymakers who spend the time to understand, they get it and realize that they need to look beyond the polls. Sometimes the numbers behind what’s being proposed just don’t add up.” For more information about minimum wage legislation and advocacy, visit restaurant.org/advocacy/All-Issues/Minimum-Wage/Overview
STATE MINIMUM WAGE LEGISLATION IN 2013
According to the National Council of State Legislatures, during the 2013 legislative session, 34 states, Washington, D.C., and Puerto Rico introduced legislation regarding minimum wage issues. (Measures included providing for increases to the state minimum wage, addressing base wages for tipped employees, and restricting the authority of local government to enact or enforce a local minimum wage, among other issues.) Of that legislation, 23 states and Washington, D.C. proposed minimum wage increases.
The legislatures in four states – CA, CT, NY, and RI – enacted bills that were signed into law providing for minimum wage increases starting in 2014. The legislatures in ME, NJ, and NM enacted increases but the measures were vetoed by each state’s governor. NJ voters subsequently approved a state constitutional amendment in November 2013 to raise the minimum wage in 2014 and tie future increases to the cost of living.
For a listing of current minimum wages by state as well as future scheduled increases, visit the website of the National Council of State Legislatures.
ONE OPERATOR’S PERSPECTIVE
“To deal with rising labor costs, we are constantly trying to make the business more efficient. We are on top of everything from portion sizes and waste to trimming labor costs by staggering arrival and departure times for front of the house employees and eliminating overtime. As it’s not always possible to trim hours, we are considering a policy of closing 30 minutes early on some nights. We cannot change prices too dramatically right now but expect to have a fairly significant increase if the minimum wage were to jump approximately 40% in San Francisco (from $10.75 to $15), which has been proposed.
The real challenge for small restaurants is that we don’t have much of a voice. We’re not very effective at getting our message across. We need to have people – politicians and the public – understand the challenges we face. Customers don’t need to be stressed out about our business model – they come to find a refuge and hang out with friends – but there has to be a way for them to understand the nature of our business.”
Anjan Mitra, Co-Owner, Dosa, San Francisco, CA
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