A year ago, Pi Pizzeria raised the lowest wage for workers to $10.10 an hour, giving some 275 employees at eight locations increases in pay — without raising menu prices.
“We looked at what goes into turnover and productivity, and how much it costs to train and hire a line cook,” said Chris Sommers, CEO of St. Louis-based Pi parent Euclid Hospitality Group. “We realized that with lower turnover, it’s easy to pay for this. We have loyalty. And good people are not jumping ship to go down the street to make an extra quarter.”
Today, Sommers is lending his voice to a group of business owners who are supporting a renewed push to increase the minimum wage. On Thursday, a group of Democrats introduced the Raise the Wage Act, which proposes increasing the federal minimum wage to $12 an hour by 2020 in one-year increments.
Business groups have almost universally opposed increases in the minimum wage. The National Federation of Independent Businesses, the U.S. Chamber of Commerce and others have been highly critical of such proposals.
Even before the Raise the Wage Act was introduced, the Employment Policy Institute, whose directors include the CEO of a public relations and lobbying firm that has worked with the National Restaurant Association, took out a full-page ad in the Congressional publication Roll Call that was critical of the proposal.
The restaurant industry has been among the most vocal opponents of proposals to increase the minimum wage. Raising minimum wages pressures profits and forces employers to cut staff, raise prices or both, opponents say.
Angelo Amador, senior vice president of labor and workforce for the National Restaurant Association, cited a Congressional Budget Office estimate that a $10.10 minimum wage would reduce employment by 500,000 people.
“A starting wage to $12 would have even (more) dire consequences,” Amador said in an email statement. “As an industry of small business, with 90 percent of our nation’s restaurants independent or franchisee owned, restaurants are operating on razor-thin profit margins. Dramatic increases to the minimum wage and elimination of the tipped wage will hinder restaurant owners’ ability to continue to provide entry-level opportunities at a time when nearly one in five teens are unemployed, and stepping stones for those who need it most.”
Among these groups, however, are some business owners who have opted to get ahead of the issue by raising wages of their own choice. Some, like Sommers, are now actively advocating for a broad wage hike.
A few small-business groups have come out in favor of a minimum wage increase, including Business For a Fair Minimum Wage. The group helped organize business owners in the mid-2000s, before the last minimum wage increase in 2007, to $7.25 an hour.
“You often hear business opposition as to why the minimum wage should be raised,” said Holly Sklar, CEO of Business for a Fair Minimum Wage. “But there are some business owners who are for it, out there speaking on it.”
The bill was sponsored by U.S. Sen. Patty Murray (D-Wash.) and U.S. Rep. Bobby Scott (D-Va.). Democrats are firmly behind the bill, with 32 Senate co-sponsors and 160 House co-sponsors. The bill would start with a 75-cent increase in the minimum wage in the first year, and would raise the wage by $1 an hour each year until 2020, when it would reach $12.
The bill also allows for constant increases in the minimum wage to keep pace with rising wages overall.
The proposal seemingly has little chance of being passed, as Republicans control both the House and the Senate and have blocked efforts to raise the minimum wage in the past, including the proposal last year to increase the wage to $10.10. And $12, plus future increases, is an even greater hike.
“It’s not going to be easy,” Sklar acknowledged. “That’s one of the reasons it’s important to have a solid business case, publicly.”
Improving the economy
Sklar’s group argues that raising the minimum wage would increase the buying power of more employees, which would help their businesses, and also improve the economy.
“If more people are walking around with money in their pocket, there’s more money to buy pizza,” Sommers of Pi said.
Most of Pi’s restaurants are in the St. Louis area, but it also has units in Miami, Cincinnati and Washington, D.C.
Sommers said none of his workers were paid the minimum wage of $7.65 an hour in Missouri, but he had been thinking of increasing wages for some time.
“It was a concern to me that people were working so hard in our restaurants and were at best creeping by,” Sommers said. “They couldn’t afford a car repair. They couldn’t afford to put gas in the tank. People were showing up late or not showing up and getting penalized because they had no transportation.”
Sommers said the company could save so much on training and turnover costs that it didn’t need to raise prices. He could not say how much turnover has fallen, but he did say the restaurants are coming in at or below their labor budgets for the year. He also said that service has improved and the company has had a spike in the number of job applications, enabling it to hire better workers.
“I don’t necessarily expect every mom-and-pop can do quantitative research and analysis,” he said. “But we looked at a business like ours and we made an informed decision. But my team knows I would have done it, anyway.”
Contact Jonathan Maze at [email protected].
Follow him on Twitter: @jonathanmaze
