Minimum Wage on the Rise: Restaurant’s Reaction

The latest news reports that New York will be awarding fast food workers throughout the state a minimum wage of $15/hr. The raise in wage would signify an increase of over 70% for workers earning the state’s current minimum wage of $8.75/hr. While the increases aren’t expected to be fully implemented until 2020, New York’s decision comes on the heels of other major US cities making similar minimum wage adjustments. Seattle, San Francisco, and Los Angeles have increased to $15/hr, Kansas City and Chicago have increased to $13/hr and many other cities have bumped their minimum wage up as well. As one of the largest employers of minimum wage workers, the restaurant industry has begun to feel the impact in these areas where minimum wage increases are causing them to make drastic changes to how they operate their business and cater to customers.

No More Tips?

Restaurants up and down the West Coast have been adapting to the new wage requirements for nearly a year now, and have experimented with many different ways to offset the higher labor costs while not pushing away customers with higher prices. A successful method that restaurants in Oakland have moved towards is no longer requesting tips from customers, but rather, adding a service charge to menu items. This additional service charge is what has helped restaurants offer a living wage to all employees, whether they are a front or back end employee. Oakland restaurants have increased menu prices roughly 20% to account for the service charges. While the method may take away the occasional big money nights for servers and bartenders, it also makes up for times during the slow season where tips can be scarce.  Other Oakland establishments have found that adding the service charge to the bill at the end of service is more effective, since menu prices can remain the same and a 20% service charge in lieu of a tip is usually perceived as the same as leaving a tip on the bill.

Breaking the Front vs Back Inequality

Traditionally speaking, front of the house jobs like hosts, bartenders, and servers have been seen as a stepping stone for individuals striving for something greater, whether it be a job during college, or a way to make extra money for bills. The restaurant environment allows these front of the house positions to make cash quick, with little limit on how much one could make. The back of the house workers endure a much different plight. With a median hourly wage of $10, these restaurant workers are earning $8 less an hour than the national average, and in many areas, the gap is even larger. Researchers at the Food Labor Research Center at Cal-Berkley have found that one in six restaurant workers lives below the poverty line.

As the nation continues to push towards increases in wages across all industries, the restaurant industry continues to be a leader in showing how an industry can thrive while paying valuable employees a living wage and providing financial stability. A Seattle restaurant who has eliminated the tip line from checks says that customers are very receptive to the change, and even will leave a small cash tip if they are especially happy with the service. In a time where wage stagnation and temporary employment is becoming all too common, the move in investing in your workers can pay off in the long term, both by reducing costly turnover, as well as instilling an environment where people can treat their job like a career.