A new minimum-wage model

Trying to hold the minimum wage at current levels is a crusade long on emotion but devoid of sense, as even sputtering-mad opponents of an increase will privately acknowledge. The real mission is tempering a hike to minimize the wallop to employers’ margins and hiring plans. That’s why the wage models put forth yesterday by Minneapolis and Maryland deserve restaurateurs’ attention.

Their real point of distinction is a tiering of the minimum wage.

Under a compromise measure that’s expected to become a Minneapolis law by week’s end, employers with annual sales below $500,000 could pay a considerably lower wage than would businesses falling above the threshold. At times, that gap would be 23 percent or $1.75 an hour, with larger businesses mandated to pay $9.50 while smaller operations like mom-and-pop restaurants pay $7.75.

The rates would climb to those levels in three increments. For big businesses, the wage would rise to $8 this summer, $8.50 next year and $9.50 in 2016. For operations with less than $500,000 in sales, the new minimums would be $6.50, $7.25 and $7.75, respectively.

A component that restaurateurs are sure to hate: After 2017, the minimum wage for both sizes of employers would automatically rise with inflation, up to a maximum of 2.5 percent. Still, that automatic adjustment would be delayed far longer than many states are willing to wait in their indexing proposals.

The Minnesota Restaurant Association has argued that raising their state’s pay floor would put the industry at a competitive disadvantage. All of the states bordering Minnesota currently use the federal minimum wage as their pay floor. Lower wages would theoretically enable restaurateurs there to keep their prices lower. Plus, some chains factor the minimum wage into their choice of places to open new restaurants.

Minnesota isn’t the only state that’s taking a multi-tiered approach. Maryland voted yesterday to exempt businesses with annual sales of less than $400,000 from increases that will gradually lift the minimum wage to $10.10 an hour on July 1, 2018. But the exemption could be merely symbolic if President Obama succeeds in his push for hiking the federal minimum to that level.

The new Maryland law includes a tip credit for servers of $3.63 an hour.


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