Taylor McCallister works at at Hick's barbeque restaurant in Belleville, Ill.
Jabin Botsford/New York Times/Redux

Big business gets creative in minimum wage fight

Updated

The minimum wage movement is following the classic American playbook for how you raise labor standards across the country: Constant grassroots pressure, resulting in one local achievement after another, with all of those small gains eventually coalescing into a national wave. But having the momentum on your side doesn’t necessarily mean winning every battle.

Powerful business interests and their conservative allies in government remain fiercely opposed to a wage hike. In some theaters—such as Congress, where a proposal to raise the federal minimum wage to $10.10 has stagnated for over a year—those forces are powerful enough to win on their own terms and oppose a wage hike outright. On other battlegrounds, particularly those located in the more liberal parts of the country, wage hike opponents have found that unconditional victory is not an option. So instead, they’ve had to get creative.

Even in cities and states where a minimum wage increase looks inevitable, business interests have managed to find ways of blunting its impact. None of those interests have been more successful than the restaurant lobby, according to National Employment Law Project policy analyst Jack Temple.

“The main countervailing force is not Republicans; it’s industry. And the restaurant industry is the most organized about this across the board, and the most aggressive,” he said.

The key tool in the restaurant industry’s arsenal is the minimum wage for tipped workers. Under federal law, the minimum wage for all workers is $7.25 per hour, but tips for service employees can count towards a significant chunk of that minimum. Provided a server or other tipped worker makes enough in customer gratuity, his or her employer can legally pay as little as $2.13 per hour in direct wages.

All but seven states differentiate between the overall minimum wage and the tipped minimum wage. Even when the state minimum wage goes up, restaurant industry lobbyists have often persuaded legislators to freeze the minimum, pre-tip amount which employers must pay their tipped employees. The most recent industry victory took place earlier this month in Maryland, when Democratic Gov. Maryland O’Malley signed a law raising the state’s minimum wage to $10.10 but freezing the tipped minimum wage at $3.63 per hour.

In Seattle, a coalition of industry groups including the Seattle Chamber of Commerce and the Washington Restaurant Association is going one step further. They want the city’s proposed minimum wage hike to make allowances for “total compensation,” meaning that employers could deduct tips, health care, transportation stipends, and even job training from the minimum hourly wages they’d be required to pay.

The Washington Restaurant Association is a local branch of the National Restaurant Association (NRA), which has lobbied against minimum wage hikes on the federal level. Scott DeFife, NRA’s Executive Vice President of Policy and Government Affairs, said the national organization had not gotten involved in minimum wage fights in Maryland or Seattle. But he also defended the principle of a tipped minimum wage, arguing that it did not amount to an exception for the restaurant industry.

“If you get tips, you are still guaranteed whatever the minimum is of the jurisdiction where you’re working, and tipped workers are usually among the most highly compensated people in the restaurant,” he said. “There has been a long recognized differential wage between a what tipped worker can get in the front of the house and [earnings for workers in] the back of the house.”

In fact, the median hourly wage for waiters and waitresses is $8.92, or about half the national median wage across all industries, according to the Bureau of Labor Statistics. A recent White House report found that tipped workers are 72% women and twice as likely as other workers to enter poverty. In part because minimum wage laws can be harder to enforce when managers can factor in tips, the report also found that tipped workers are “at greater risk of not earning the full minimum wage.”

“These are some of the poorest women in America, working at Denny’s or IHOP,” said Saru Jayaraman, co-director of the worker advocacy group Restaurant Opportunities Centers United (ROC United). She argued that female tipped employees are also at much greater risk of being sexually harassed by other workers, because they so often rely on customers for a substantial share of their income and therefore stand to lose wages if they resist unwanted sexual advances.

DeFife laughed that charge off, saying “this whole wage theft angle that has been coming out recently is overblown.” Jayaraman, he said, “is not in the business of telling the truth of the minimum wage.”

“If there are real instances of noncompliance with the law, then those should be dealt with through the regulatory authorities that are set up,” he said. “That is not an argument to increase the wage rate. […] The compliance numbers are up, and we work with the IRS to promote and ensure compliance.”

Whereas ROC United used to lobby for an increase in the tipped minimum wage, it has recently decided that nothing less than entirely eliminating the lower tipped wage would be satisfactory. Even then, other disadvantaged workers would be left out of standard minimum wage law, to the benefit of employers. The 1938 Fair Labor Standards Act excludes disabled workers from minimum wage laws; so did an early draft of President Obama’s executive order lifting wages for federally contracted workers, until public outcry compelled the White House to make revisions. Until recently, home health care workers were also exempt from federal minimum wage law.

Under federal law, employees under the age of 20 may also be paid as little as $4.25 per hour for the first 90 days of their employment. The foremost proposal for raising the federal minimum wage would leave that and other exemptions untouched. Similarly, Michael Saltsman—the research director of the Employment Policies Institute, a right-leaning industry lobbying organization—has raised the idea of offering a sub-minimum “training wage” for teenagers entering the workforce. NELP’s Jack Temple said he has seen similar proposals raised “in almost every campaign” for a higher minimum wage.

“I think they’re realizing that just coming out and demanding a lower wage isn’t working,” said Jayaraman.

UPDATE: After the original publication of this article, the National Restaurant Association sent the following statement to msnbc clarifying its position on sexual harrassment:

The National Restaurant Association takes real charges of sexual harassment very seriously. The assertion from ROC that the tipped wage somehow increases sexual harassment by customers is another effort to confuse the reality of the tipped wage and use of minimum wage in the industry.

Connecticut, Maryland, Minimum Wage and Washington

Big business gets creative in minimum wage fight

Updated