Proposed pay hike for tipped workers stirs debate


A bill moving through Congress could raise operating costs for local restaurateurs who would be required to nearly double their base pay for waitresses, bartenders and other tipped workers by the end of the decade.

Senate Bill 1737 would raise the federal minimum wage for tipped workers from $2.13 an hour to $5.93 by 2015 and $7.10 by 2019. In Ohio, the tipped minimum is already higher than the federal rate at $3.98 an hour, but the proposed increase would still amount to a 75 percent wage hike over time.

Under the law, tipped workers can be paid less than the regular hourly minimum — $7.95 in Ohio and $7.25 federally — as long as their employer makes up the difference. But while the minimum wage is reflected in every paycheck, tips can vary dramatically and make it difficult for tipped workers to keep up with the rising costs of basic necessities.

“Tips are unreliable,” said Emily Mendenhall, who manges Lily’s Bistro in Dayton’s Oregon District and previously worked as a server and bartender in Chicago and New Orleans. “There would be days that I would make only $8 in tips in a whole shift, plus my $2.13 paycheck. Inevitably, that would be the day that rent was due.”

Mendenhall, who worked in mostly upscale restaurants, acknowledges that average hourly wages for wait staff and bartenders are typically significantly above minimum wage. In fact, the median hourly wage nationally for tipped employees is $16 to $22 an hour, according to the U.S. Bureau of Labor Statistics.

The problem is the sporadic and often seasonal nature of the restaurant business, which means paychecks don’t always keep up with the average, Mendenhall said: “A lot of people in the service industry really do live hand-to-mouth, and having unreliable tips hurts sometimes, that’s for sure.”

Women with backgrounds similar to Mendenhall’s are likely to suffer most, according to a recent report from the White House.

Women account for 72 percent of all workers in predominantly tipped occupations, and wages for those workers are nearly 40 percent lower than overall average hourly wages, according to the report. Meanwhile, tipped workers are twice as likely as other workers to experience poverty — and servers are almost three times as likely to be in poverty.

While Mendenhall remains a staunch supporter of an increase in the tipped minimum, her new management role has given her greater insight into the financial concerns of business operators who employ tipped workers.

“There’s a formula that goes into everything,” Mehdenhall said. “There’s a cost of goods, there’s a cost of labor, there’s paying your rent and utilities. And then there’s a slim little area there that’s profit. Increasing base pay over time would give some reliability and stability to a job that is frequently unreliable and unstable, but we would have to pass on some of the labor cost; that would be part of it.”

Restaurant owners in Ohio would face a smaller wage hike than restaurants in states adhering to the federal rate, which hasn’t changed in more than 20 years.

But even a small increase would make a big difference in operating costs, according to Dan Young, owner of Young’s Jersey Dairy in Yellow Springs.

“A busy restaurant will typically generate about 20,000 server hours a year,” Young said. “A $2 an hour increase would be $40,000. You have to try to squeeze those costs out somewhere.”

Young said the most likely recourse for most restaurant operators would be a combination of raising prices and cutting staff and hours. But tipped workers will continue to be the backbone of the restaurant industry, he said.

“I don’t want to come across as saying it’s all doom and gloom, and everybody is going to go out of business; that’s not what I’m saying,” Young said. “And I’m certainly not anti-server, for heaven’s sake. We exist because of our 320 employees who do a great job for us. But there are real consequences associated with any change like this.”

The Senate may vote on the bill, which includes President Obama’s proposal to increase the federal minimum wage from $7.25 to $10.10 an hour, as early as next week. But even if it passes the Senate, the proposal is likely to face stiff opposition in the Republican-controlled House.

The National Council of Chain Restaurants (NCCR) is among a number of restaurant associations leading the charge to kill the bill.

“We’re just trying to make sure that federal policy doesn’t create a disincentive for hiring and growth within the industry,” said NCCR Executive Director Robert Green. “At this key juncture in the country’s economic recovery, the last thing that the Senate should be considering is a scheme to raise labor costs.”


Reader Comments ...


Next Up in Business

Springfield shoppers out early for the best deals
Springfield shoppers out early for the best deals

The lure of cheap televisions, half-priced laptops and steeply discounted Apple watches had Springfield shoppers up early and bundled up in the cold outside local stores Thursday morning. MORE: Italian flair added to Thanksgiving meal at Springfield Soup Kitchen At a handful of stores, shoppers were out to get a jump-start...
Springfield firm pitches new social media app to save for retirement
Springfield firm pitches new social media app to save for retirement

A downtown Springfield financial firm recently announced the launch of a new social media platform the company says will also allow users to save money for retirement. Megga Inc., a subsidiary of HUTN Inc., recently announced it will launch a social media platform called Meggalife that awards points to users as they use its apps for tasks like searching...
Thanksgiving, Black Friday shopping: Best deals we found today
Thanksgiving, Black Friday shopping: Best deals we found today

Shoppers are already out finding the best deals at big box retailers like Meijer on Thanksgiving. While most malls and shopping centers won’t open until later this evening or on Black Friday, some stores already had crowds out purchasing items early in the morning. Meijer opened at 6 a.m., and Cabela’s opens at 8 a.m. JCPenney opens stores...
Ohio State’s Barrett seeks to make more history vs. Michigan
Ohio State’s Barrett seeks to make more history vs. Michigan

J.T. Barrett often speaks so softly during interviews with the throng of reporters who cover the Ohio State Buckeyes, it’s hard to hear him from two steps away. Barrett’s a low talker, as opposed to the teammate who snaps him the ball, center Billy Price, who follows a long line of Ohio State offensive linemen whose voices are as large...
4 Honda vehicles named most in demand
4 Honda vehicles named most in demand

Four Honda vehicles, two of which are manufactured in the automaker’s Ohio plants, were included in a list of most in-demand vehicles in the U.S., according to Edmunds, a car shopping and information website. The list was based on information that included sales, days-to-turn and shopper interest data on Edmunds’ website. Honda and Mercedes...
More Stories