How restaurant workers help pay for lobbying to keep their wages low
nytimes.com
nytimes.com
1) There is a frame that wages are decided by the government. There is a lot of evidence that this isn't how wages work - that isn't how the price of most other things a business expenses is decided.
2) There is a frame that a "living wage" is some magic number. I remember "fight for $15" being a slogan somewhere. Which, given how long the fight takes, has probably become a Fight for $10 after inflation by now.
The best thing that cooks, waiters and bartenders could have happen is some political leadership that stops picking stupid battles and takes a bit of time to articulate what the actual problems are and put some effort towards fixing them.
Greater government control over wages and prices is not going to help low status workers people. There is a very real chance that the more of those battles they win, the worse the outcome will be. Market inefficiencies usually make life worse for people with no money.
That's an assertion, not an axiom. It seems to work in the favour of low-paid employees in other developed counties.
The de facto $0 wage that servers are paid is a crime. It should end.
I'm not sure what "de facto $0 wage" means.
And they don't pay tax on it, so its really more like $25/hr minimum.
Which is something a lot of servers act like they don't get.
Their work is more akin to contracting than it is to regular employment. You make hay while the sun is shining. The people who tip well make up for the people who don't tip well and for the times when you aren't tipped at all.
Just because you didn't physically get $7.25 this exact hour, doesn't mean your employer has to make up the difference for that hour. No, you take all the money you made from both your hourly wage and all the tips you collected, and you divide that by the number of hours you worked. If it comes out to $7.25 or over on average, everything is cool. If not, the employer has to make up the difference. That's the law.
And really, we should just absolutely do away with it. It pits the servers against the customers and creates an adversarial relationship. Servers don't want it to go away because a certain segment of servers know they cannot make as much as they do tipped. They are good at the hustle. They don't want to bring up their coworkers because it means they have to go down a bit.
So, fuck em. They could have a better system, but they choose this one. So I really couldn't give half a shit about most of their complaints. Especially when they put the blame on the customers rather than where it belongs, their employers.
The wait staff/bartenders I knew/know all do it because it was by far the highest paying job you could get. Especially with part time hours. There isn't much else you can do as a college student that will pay any better. And if you are very good, attractive, and get a bit lucky on where you work you are talking white collar pay levels per hour.
Waitstaff understand this and build it into their concept of what their true hourly wage is. Many people will scramble to get jobs at $200/plate places, even if you have to wait around for 5 hours during the day time doing almost nothing till dinner comes. On the contrast, hardly anyone wants to work at busy diners that charge very little per plate. You'll be busy yourself, working non-stop and you'll take home very little since that's all they charge.
Reality is somewhere in between those two examples, but its a known reality.
> And they don't pay tax on it, so its really more like $25/hr minimum.
First, I don't believe you know any servers and second fact that few servers have decent pay doesn't make the rest of them as well paid.
AFAICT, this $0 paycheck thing comes from a single reddit post described in this article: https://www.newsweek.com/waitress-who-comes-home-0-paycheck-...
TL;DR: the restaurant calculates a much higher number for cash tip income than actually received and withholds the meager wage income to cover the taxes.
The server kept the actual cash tips, which should be most of their income, although they might have an unexpected tax bill. The restaurant can't report the wrong amount for tips and has to report what the employee reports to them, so this is likely illegal.
It's not uncommon to have a low paycheck since taxes for tip and wage income are withheld only from wages. If you make $20/hour total and your tax rate is 20%, wages will generally cover your taxes if they are at least 20% of your income or $4/hour.
Usually this works the other way, where servers under-report cash tips and get a little tax-free income.
I think what you mean is that in some US states servers in restaurants are paid a very low hourly rate from their employer but are charged tax based on an expectation that they are being paid a significant amount in tips.
So if they are receiving no tips then the tax can reduce their tax-home amount to zero.
Almost all except one of the restaurants I worked at didn’t care if you claimed cash tips at the end of your shift.
Tipping needs to be an exception not the rule. Restaurant food costs will have to increase by 10-15%.
Low pay and awkward, inconsiderate scheduling are not mysterious things that need to be explained.
China has seen living standards double and double and double again because they worked hard and invested in capital. India too. Africa following the same path. I keep an eye on per-capita energy stats which suggest the average person living in China is locking in to a better living standard than the average person living in the UK.
Seems likely that restaurant workers will be worse payed by the time I'm old.
I fully acknowledge that it is easier to get a doubling in living standards in China than the US. But the strategies they are using are wildly different and most of the things China they are doing to achieve amazing outcomes have been made illegal in the US. Indeed, one of the strategies a lot of countries have used to get ahead is ... allow people to hire workers at low wages and keep local costs low enough that their people can save money. This has moved a lot of wealth from the West to other places. Indeed, stories of big lifestyle improvements from a minimum wage are practically non-existent. Big wins come from owning capital, saving hard, education and upskilling where success stories are common.
The framing in this article isn't pushing people to think in those terms, it is pushing them to pick a fight with their employer. That is a strategy for people who are about to lose at economics. For example if restaurant workers want sustainable improvements they should be lobbying for mechanisms to get part-ownership of the business or educational bonuses - both of which are easier fights to win and would lead to better long term outcomes than raw wage increases.
A strategy like higher wages or forcing better conditions for workers through legislation is basically the exact opposite. In 20, 30 years time people's material living standard is going to be determined by how much productive capacity was bought to bear and how much new capital was built. Minimum wages are a sideshow that don't move the levers that make people wealthy. If average wages halved and people were allowed to build out cheap energy stations like China has (be that whatever tech), we'd probably find living standards going up rather than down.
The key to me, I suppose, is if the goal here is for people to be better off, we have very serious examples of people becoming better off quickly. The superficial evidence to me is that it was investing in new capital, especially manufacturing capacity and energy. Which makes sense, because to live a comfortable life we need an overabundance of manufactured goods and energy. Minimum wages are a policy that pushes against that in a small way. If wages go up, if it does anything it will probably reduce manufacturing. If that happens that happens (China is so wealthy now that people aren't rushing across the globe to manufacture there for example), but government intervention to force wages up is a terrible idea. The goal should be for living standards to go up because there is so much stuff available it is hard for them not to.
If you look at the USs energy per capita stats, the raw total figure is dropping. It doesn't matter how much time people spend lobbying for higher wages, if the energy per capita stat is dropping then someone is going to have less energy available to them no matter how much kicking and screaming there is. Less energy means less stuff & less comfort. If they get wages up that won't change the physical reality, at best it'll mean some different group of people will get really stomped with shortages. That is not an environment where anyone is likely to thrive.
That's exactly what minimum wage IS. And the other symbol that companies that pay minimum wage are also saying is "If I could pay you less, I would"
> 2) There is a frame that a "living wage" is some magic number. I remember "fight for $15" being a slogan somewhere. Which, given how long the fight takes, has probably become a Fight for $10 after inflation by now.
"Fight for 15$" has been going on since 2008. It really now should be "Fight for $25" But back when FDR did it, the minimum wage WAS the living wage. But it definitely should be pegged to a random subset of a wide variety of goods, or accept that not everyone in the country needs to work... But that second assertion likely wont happen in my lifetime in the USA.
> The best thing that cooks, waiters and bartenders could have happen is some political leadership that stops picking stupid battles and takes a bit of time to articulate what the actual problems are and put some effort towards fixing them.
Like, say, Unions? Again, without real teeth in the union laws with NLRB, corporations will just do illegal activities and pay the token fines, and get their way. You may not be able to fire a unionizer, but you can shut the store down for 3 months, lay everyone off, and rehire, flushing the union out. And completely legal. And the fines are laughable, like "you must rehire".
> Greater government control over wages and prices is not going to help low status workers people. There is a very real chance that the more of those battles they win, the worse the outcome will be. Market inefficiencies usually make life worse for people with no money.
From a terrible libertarian take, that isn't indicative in most of the world (or even European sensibilities), this is laughably wrong. I've seen "trickle down". The only trickle I got was being peed on. And "market inefficiencies" don't care for things like, say, people, human suffering, climate change, or any of those externalities. Those are just inconvenient things to avoid to the "market".
Exactly. This is also what pisses me off regarding reporting on strikes and wage negotiations. If you're going to report on these accurately, any raise less than the rate of inflation should be called a pay cut. The fact that some workers have to strike to get even a 2% pay increase in an 8% inflation environment is nuts.
I made a point to say, "So, that's a 6% pay cut when comparing to inflation?" The call got real quiet, and then moved on to other topics.
Lest to say, with the pervasive "chilling" of the job market, I will stay put for a time... But I definitely did update my resume.
New hire budgets are always better monied than retention budgets.
There is actually an important insight there that is being missed. Companies 'think' this about all employees at all times. My employer would, if given the opportunity, choose to pay me less. And all my co-workers. None of us are paid anything near as low as the minimum wage.
The minimum wage doesn't force companies to pay more, it forces them to fire all the employees who are less productive, until the only ones left are those worth paying the wages they receive.
No need for tipping at every opportunity.
Naturally unions leverage on top of those laws.
Yeah it is sad that for all the progress on this country, it still lags behind on some safety nets in regards to poorer countries.
I never understood the need to tip toilet workers instead of providing them a proper salary.
That single examples at most shows that other factors also matter and in sufficient combination can dominate, not that minimum wage doesn’t really matter.
And it's true: a high minimum wage does not matter when it comes to worker welfare. A minimum wage does not increase a worker's leverage with their employer. A strong social safety net, which enables unionization, does increase a worker's leverage with their employer and thus improves the worker's standard of living.
Not really, because there could be some other common factor that explains the difference and more than offsets the effect of absence of a minimum wage.
(The small n problem combined with the fact that there tend to be lots of correlated confounders is why empirical assessment of policy tends to be very difficult, even before all the motivations people have to distort results.)
Ok, let's assume this is true. What is the argument that we should continue to focus on minimum wage rather than trying to pursue these "other common factors"?
Personally, I think the minimum wage approach has a number of problems. In addition to the evidence presented above, which shows that many countries have strong labor without a minimum wage, the minimum wage fails to pass even a basic logical test.
For instance, let's say we increase the minimum wage. In the best case, ignoring second order effects to demand, employment either stays the same or decreases due to the increased cost of labor. If unemployment decreases at all, labor overall is weaker, as higher unemployment favors the capital owning class. So the only way a higher minimum wage makes sense is if the second order effects of paying people more induce enough demand to lower unemployment. It just seems unlikely to me that we could magically induce demand in this way. The CBO seems to agree with this overall assessment. They estimate the impact of minimum wage increases on unemployment to be purely detrimental: https://www.cbo.gov/publication/55681
Since you seem to support a higher minimum wage, I'd be curious to hear your thoughts on the specific mechanisms is which a higher minimum wage would increase the leverage that labor has with the owners.
"Raising the minimum wage will produce stronger labor, like in Europe"
"Germany is an example of a strong-labor country in Europe that achieved strong labor without any minimum wage at all."
"I didn't say every European country."
"Here are five other countries without a minimum wage that have strong labor. Together, they make up the most desirable countries in Europe to work in"
That doesn't seem like moving goal posts to me.
> Not in US, in plenty of "communist" European countries it is.
Also English source: https://www.destatis.de/EN/Themes/Labour/Earnings/Minimum-Wa...
> National Restaurant Association
This is not an association in the business of lobbying for cooks, waiters and bartenders. It is in fact in the business of making sure labor stays cheap. It is obviously not an association that should somehow be entrusted with mandatory safety training regulation; that is just corrupt regulatory capture.
1. That is actually how "wages work". The state decides what is the minimal possible wage and then businesses will pay that amount to low status workers because businesses seek to maximize the surplus value out of their workers. Suggesting that businesses will opt into paying their workers a living wage without an external pressure is laughable and ahistoric.
2. Nobody serious is suggesting that $15 is some magical number but given political reality, it seems like an easier sell than proposing a minimum salary that dynamically adjusts based on local cost of living and inflation. It would also be a massive increase relative to the abysmal figure it is today.
"There is a very real chance that the more of those battles they win, the worse the outcome will be."
Such as the battle for minimum wage, the weekend, the 40 hour work week or the abolition of child labor?
I'm waiting for a credible example of a pro worker regulation having overall negative consequences for workers.
https://www.bls.gov/IAG/TGS/iag70.htm tells me that the average hospitality worker is working 25 hours a week. Did we have another huge fight to bring the 40 hour work week down to 25 hours? I suspect not, or people would talk about that instead of the 40 hour week. That victory looks a bit hollow - much like any successes in pitching a minimum wage of low single digit dollars per hour which has been rubbed out by inflation.
Even the child labour one is interesting - children are unemployable regardless of the law, they don't have the skill, stamina or strength to participate meaningfully in a modern economy. It makes a difference, but this is a ban on something that doesn't make much economic sense to start with. This isn't a meaningful political question these days, the economy has no use for children. Child labour went the way of slavery - any society attempting to utilise it will get steamrollered by capitalists using productive techniques to do an order of magnitude better.
Your point against child labor is however complete nonsense. The fact that most so called "modern economies" are propped up by overseas labor often performed by children in the developing world is not an unfortunate accident. It's the consequence of the obvious fact that there are many jobs where businesses will happily choose low cost and high volume of labor over individual "skill, stamina, or strength".
Meanwhile, the GOP in America are trying to overturn long standing child labor laws in an attempt to battle increasing demands for higher wages by service workers so don't try to sell me the idea that it was businesses that decided to end child labor instead of the reality that it was activists and strikers - often facing heavy violence from the state in response - that ended the practice.
I think if I even started to talk about the laughable notion that slavery ended because of (instead of being massively bolstered and spread by) capitalists, I would be here all day so I'll save that diatribe for another time.
There are literally exceptions built into minimum wage law for tipped workers like restaurant workers.
From when I was a waiter and had a weirdly slow week - it's not so much an exception as a change to how 'wage' is defined.
Your total hourly income needs to be the minimum wage. If your tips+floor_wage>= minimum_wage, exception is in effect. If your tips+floor_wage< minimum_wage, floor_wage is increased until they are equal.
It has done precisely that in every developed country except the one with the most poverty, and an entirely unique class of people called the working class poor.
Why doesn’t that class of people exist in any other developed country?
Because of government control of wages.
But as soon as you start applying that to sacred cows like minimum wage, people fall into immediate cognitive dissonance.
Restaurant-workers/servers/bartenders make $2.15/hr plus tips. If that amount < minimum wage, the employer has to make up the difference. If they don't, they're breaking the law and any server with two brain cells to rub together can and should report them.
Unless you're a really crappy server, you make more than minimum wage. Most bartenders make well more than minimum wage.
If you want to change the TIPPING industry, that's a horse of a different color.
> Unless you're a really crappy server, you make more than minimum wage. Most bartenders make well more than minimum wage.
Well, restaurant work is rife with tax fraud and misclassification of tips everywhere. So yeah, the servers get paid $2.15/hr and hope that tips covers it the rest of the way.
Then again, ive seen sleazy shit, like "averaging out over 2 weeks" to make $7.35/hr, rather than the fact the Monday, Tuesday, Wednesday they got a wage equal to $5.00/hr.
Or restaurant managers will also demand servers do cleaning and other duties... which would be under $7.35/hr . How do you account for this time if the company/manager is cheating in this way? (Ive never seen a restaurant job switch the person's labor classification to do this.)
That's right, you file a grievance with the Dept of Labor. I've been there, and done that. If you want a lawyer, you'll likely be denied since you make peanuts, so the case will be for peanuts. But when the DoL responds, like usually months later, it's likely a moot point. You MIGHT, at the end of a yearlong investigation, MIGHT get paid back for the time. Then again, maybe not. The company can afford lawyers. You cannot, getting paid $2.35/hr
It's supposed to be averaged over the pay period because the bookkeeping would be murder. And that includes the side work as well.
Servers are either really fucking stupid or like to think we are. I understand it's a hustle and we're all trying to get our piece of the pie. But if you really, really, really hate being "underpaid" for specific hours you didn't collect enough in tips. Advocate to remove the tipping system entirely. Push to work under the normal minimum wage laws with no tipping.
But no, that's a non-starter with servers. No, their solution is to keep increasing the "suggested minimum tip". It used to be 10%, now it's 20% and climbing. And fuck that noise, "If you can't tip, you can't afford to eat out". When you start asking someone to pay a quarter of the listed price in this weird hidden fee, maybe your entire industry needs an overhaul.
End of the day, you need customers just as much as you need employees and being combative with the customers is not going to end well for anyone.
All of these options are fine. It doesn't even have to be done on the federal level, state and local governments can increase the minimum wage.
The failure to pay employees isn't a failure from the customers.
As a former bartender with lots of friends and family still in the industry, I respectfully disagree. Tipping creates patronage. In the right bar/restaurant, you can create regulars who specifically tip you inordinate amounts based on your ability to provide them with reliable, high quality service.
My significant other recently visited their home country in Europe where tipping does not exist, and was (to put it a bit colorfully) disgusted with the poor quality of service from each and every bar/cafe/restaurant that they went to.
Tipping creates an incentive if done right.
> Studies have shown that tipping is not an effective incentive for performance in servers. It also creates an environment in which people of color, young people, old people, women, and foreigners tend to get worse service than white males. In a tip-based system, nonwhite servers make less than their white peers for equal work. Consider also the power imbalance between tippers, who are typically male, and servers, 70 percent of whom are female, and consider that the restaurant industry generates five times the average number of sexual harassment claims per worker. And that in many instances employers have allegedly misused tip credits, which let owners pay servers less than minimum wage if tipping makes up the difference.
I don't think that removing the expectation to tip removes people's generosity.
It sucks, but wage theft often goes unpunished. https://www.kqed.org/news/11780059/were-being-robbed-califor...
On a related note, it also sucks that often people need jobs to meet the work requirements for many government benefits. This gives way more power to the employer and makes it harder for the employee to quit bad situations like this and risk losing those benefits.
Put another way: Restaurant-workers/servers/bartenders make minimum wage + tips. However, the employer is allowed to steal the first (minimum wage - $2.15)/hr in tips.
If we keep raising the minimum non-tipped wage but not the minimum tipped wage, eventually restaurants will be fully-pocketing the tips.
“If I do well I’ll get lots of tips!”
No you won’t. Studies have shown that people tend to tip the same regardless of service. It’s a hidden fee, nothing more.
It’s not the variability and incentive that makes tippees like it, it’s just the extra money. It may be a hidden fee, but it results in them making more overall.
Part of the course includes time and temperature safety requirements which I don't think are obvious or intuitive to most people who are being employed as food handlers. Who should pay the $15 for the training is another issue.
From: https://www.servsafe.com/access/SS/Catalog/ProductDetail/SSE...
Covers five key areas:
Basic Food Safety
Personal Hygiene
Cross-Contamination & Allergens
Time and Temperature
Cleaning and Sanitation
In fact, the course teaches many things that are not common knowledge and which are important for food preparation - specifically the times and temperatures at which food must be kept in order to minimize the culture of dangerous bacteria.
Maybe the Times would prefer that food workers be taught this important information about food safety by some other organization but trivializing the actual information is a bad faith argument.
This how the national restaurant association tried to lobby against a reduction in restaurant profits in California 10 years ago. They really are a terrible organization.
For example, Darden restaurant group operates with a gross margin of ~20% (with labor being ~36% of cogs), and SG&A is 5% of sales, for a ~15% EBITDA margin.
So every 10% increase in wage costs decreases GM ~3.6% and reduces EBITDA by 25% (15% to 11.4%)
This means in order to raise wages restaurants need to either cut costs (automation, reducing # of jobs), reduce tip expectations (20% to 15%, negating wage increases), increase prices (and reduce demand, leading to a lower # of jobs and hurting shareholder value), or be good with a massive shareholder value destruction.
My point is that big picture, framing this in any other light than a this is either a transfer from shareholders to employees, or to pay less employees more at the expense of making some employees redundant is disingenuous.