Why the Restaurant industry is Starving. By Heather Gwaltney

Please open website to see all pictures and graphs.
http://fixingpickles.com/2014/07/31/why-the-restaurant-industry-is-starv...

Why the Restaurant Industry is Starving

Header

“Although I could be reprimanded for eating on the clock, I dislike the idea of asking permission”, says Christin, a former server at the restaurant, Busboys and Poets. Christin, a recent college graduate took a server position with this DC metro area local chain as a way to support herself in school. –And while asking for permission to eat was frustrating for her, she also indicates that “working for such a low hourly rate prevents me from ever feeling assured that my finances are in order. My income is almost entirely based on the generosity of others who are often times ill informed about server wages.” She goes on to say “what my guest might feel is a ‘generous’ tip is in fact insufficient and can, at times, cause me to pay out of pocket.” Fortunately, Christin has found more stable employment, but for the rest of restaurant employees, the situation is dire.PullQuote1

WHEN YOU THOUGHT THE MINIMUM WAGE COULD NOT BE MORE MINIMUM. Restaurant-industry employees represent 10% of the workforce, however, it’s been more than 20 years since the Federal Government raised the minimum wage for tipped employees. Since 1991, “about half of all states allow restaurants to pay servers $2.13 an hour”, as cited by the U.S. Department of Labor.

In Maryland, the minimum wage for tipped employees is $3.63/hour; in District of Columbia, it’s $2.77; and in Minnesota, it ranges from $5.25-$6.15 depending on the restaurant’s annual sales volume. Progressive states like California and Washington pay their state’s regular minimum wage of $8 and $9.32/hour respectively.

THE TIPS MYTH. A common myth is that servers, and other tipped employees do quite well on tips alone, but if you look at state averages (see Graph 1 below), you can see that this is likely true for only a select few working at high end restaurants. In this way, gratuities are not gratuities at all, but rather take the place of a server’s salary. In this case, the patron is paying for the food they’re eating and the salary of the servers.

Few patrons also realize that most server staff is required to share their tips based on the food they sell. This is referred to as “tipping out” and can be upwards of 5% of their food sales or 30% of their tips. So when a customer decides to leave a 10% tip, the server is required to give up half of this amount. In the unfortunate circumstance that a customer leaves no tip, the server is still required to tip on the food that was sold. This means the server literally pays for the customer to patronize the restaurant. –And in the very unfortunate circumstance that the customer leaves without paying the bill all together, restaurants are allowed to hold the server responsible for the food that was not paid for.

PullQuote2

Using Busboys and Poets as an example, it represents itself as a hybrid social advocacy organization and community eatery, yet only pays its servers the minimum hourly rate required by state law, and does not have a designated mealtime or break-time for any of its staff – unless they work double shifts. Andy Shallal, owner of Busboys and Poets and former DC Mayoral Candidate, currently requires servers to pay for credit card fees, and recently had a policy (before it was prohibited by law) of charging the server for a customer’s meal if s/he walked out without paying the bill. The server, at that point, had the choice of paying for the food himself/herself or being written up for the incident. Another former server there worked three to four days a week and brought home $200-$250 in tips alone. This was “just enough to pay for gas and groceries”, she says, “but if I had to depend on them (the company) as my sole source of income, I wouldn’t make it.” At the $2.62-$3.63 per hour base salaries there, full time server paychecks range from $0 to a high of $260 a month.

A recent Applebee’s server said that one of the reasons he left the restaurant was because “management had to approve any tip over 20%”. An Olive Garden waitress reports that while there, she “was required to tip out up to 25% of her tips”.

As shown in Graph 1 below, tipped employees earn approximately half of the rest of the country. Bureau of Labor Statistics and the US department of Justice offer the following data, which applies to one earner paid annually.

Graph 1: Comparison of average salaries and average tipped employee salaries.

Graph1

When compared to minimum wage workers, tipped employees have hourly wages that are less than half. In DC, tipped employees earn 66% less an hour than a regular minimum wage worker. In Maryland, it’s 50% less (see Graph 2 below). The National Conference of State Legislators and the U.S. Department of Labor provide the following hourly wage numbers by state from 2013.

Graph 2: Comparison of state minimum wages and tipped employee minimum wages.

Graph2

COST OF LIVING INCREASES DON’T EXIST FOR RESTAURANT WORKERS. When you compare the rate of pay to the cost of living, the situation appears even more dismal. If you take an average Maryland server salary of $20,290/year or $1,690/month (refer to Graph 1 above), and compare it to rent and the median price of homes, it’s shocking. The “Average Apartment Rent per state for a one bedroom in Maryland is $1400-$1700/mo or $16,800 to $20,400/year”, according to FindTheData.org. If a Maryland resident applies for a rental, the common expectation is that the renter earns three times the amount of monthly rent. In this case, the renter is earning somewhere in between the full cost of rent. -And as of Oct 2013, the median sales price of a Maryland home was $275,000. It’s difficult to imagine how someone making even $20,400, on the high end, could afford to rent or own a home. Even the Washington Post is talking about how much income is required to purchase a home in the DC area. Journalist, Kathy Orton writes in her article, “How much salary you need to buy a home in the D.C. area”, that “you need to make more than $63,000 a year to afford to buy a median-price home in the D.C. metro region.” That is more than three times the salary of an average restaurant worker.

In contrast, even though the cost of living in “Minneapolis-St. Paul, Minnesota is 31.5% lower than in the DC area, employers in Minneapolis typically pay 0.4% more than employers in Baltimore, Maryland,” as sited by Salary.com.

Although projected restaurant-industry sales for 2013 was $660.5 billion, according to the National Restaurant Association, they have not come together consistently to provide a living wage for their tipped employees.

YOU’D THINK MEALTIME WAS A BASIC HUMAN RIGHT, BUT NOT IN RESTAURANTS. It’s not just the server salary that makes it difficult for tipped employees to make it; there is also no Federal law requiring restaurants to provide a designated meal or break period. This means that restaurant staff can be on their feet for six to 10 hours without a designated time to sit down, use the restroom, or eat. Christin, the former server, adds, “I regularly break the rules regarding meal time…” because “my energy level, mood, and motivation are directly connected to the schedule I have for consuming food.”chicken

While there are Meal Break Obligations in states such as California, Washington State and Minnesota, states like the District of Columbia, Maryland and Virginia have “no laws or regulations on rest and meal breaks for adults employed in the private sector.” as sited by the I organization, Work Place Fairness. Restaurants, such as the Olive Garden and Applebee’s also do not have a designated break or mealtimes.

Another former server of Busboys and Poets explains that in lieu of a rest break, she would take her “own self-entitlement break” by “sneaking off to grab a seat or go into the bathroom to take a few breaths and calm down.”

California and Washington are two examples of states that have made mealtime and rest period’s work in the industry. Under California law, “employees must be provided with a thirty-minute meal period when the work period is more than five hours…” California employers are also required to “authorize a 10-minute paid rest periods for every four hours worked”. In fact, if an employer fails to permit a rest period, they are required to pay the employee “one hour of pay for each workday that the rest period is not provided”. California even provides paid and unpaid breastfeeding time depending on if it’s taken with other break time or not.

In Washington State, mealtime is paid for if the employee is on duty or is required to be at a site for the employer’s benefit. Employees are also “entitled to a paid ten-minute rest break for each four-hour work period… The employee cannot be required to work more than three hours without a rest break.”

THE HIT LIST: WHICH STATES ARE BEHAVING AND WHICH ONES AREN’T? Who are the “offenders”? Among the lowest paying states are Virginia, District of Columbia and Maryland at $2.62-$3.63/hour. Who are the most well behaved states? Among the highest paying states are Washington, California, Oregon, Illinois, Connecticut and Minnesota at $5.25-$9.32/hour. Essentially, the Federal Government leaves these laws up to the states and for those states, like Virginia, Maryland and the District of Columbia; they allow restaurant owners to create their own policies.

NoodlesNChopsticks

SO, WHAT NOW? This situation does not have to be entirely “doom and gloom”. There are a number of solutions.

The most systemic solution is for the Federal Government to increase the minimum wage for tipped employees and pass legislation that requires mealtime and rest breaks for the restaurant industry.
The easiest solution is for restaurant owners to model their meal, rest time and wage practices after those who have had success to date.
A newly more common practice is to roll tips up in the hourly wage. Some restaurants are eliminating tips and increasing the cost of their food, so that they can have the tip included in the bill. This creates a situation where the tipped staff can count on a stable income, but the customer then is still paying staff salary — in addition to the food they’re eating.
In the end, until the Federal Government increases the minimum wage for tipped employees and passes legislation that requires mealtime and rest breaks, it’s up to restaurant owners to consistently pay their employees a living salary and provide them with the basic human treatment of mealtime and rest breaks. After 20 years, it’s time to make this happen.

If you are in a communications “pickle” and would like advice, click here to email me with a question about the issue you’re having.

Click to share on Twitter (Opens in new window)Share on Facebook (Opens in new window)Click to print (Opens in new window)Click to email this to a friend (Opens in new window)
Posted in On Another Note
Tagged activism, advocacy, Andy Shallal, Bus Boys & Poets, Busboys & Poets, Christin Probst, DC Mayor, Food, labor laws, restaurant industry statistics, Restaurant Opportunity Centers, ROC

Post navigation← Looking good on a low budget