The morning of Nov. 5 could be a glum one for restaurateurs, regardless of what party wins the prior day’s elections. The outcome of critical concern to operators in many parts of the country is how the public votes on cutting restaurants’ margins. And it’s not looking good.
How could it? Voters essentially will be asked, “Would you and your fellow citizens like a pay raise?”
When that question was put to New Orleans residents 12 years ago, a referendum on raising the minimum wage was novel enough to merit headlines from coast to coast. This year, more than half a dozen jurisdictions could ramrod higher pay into law via popular vote. Others are holding nonbinding votes, meaning lawmakers could rubber stamp an increase without political risk, since they’re only abiding by the will of constituents.
There would have been a referendum to lower Seattle’s $15 minimum before it goes into effect in 2017, but residents wouldn’t buy the industry’s argument that a moonshot increase would backfire on the people it’s intended to help. Those whose financial struggles would have improved appreciably with a $12.50 minimum might have to settle for nothing per hour, because their job is eliminated. Citizens of Starbucks’ backyard wouldn’t hear it—even from a hometown brand that’s changed the labor market with its progressive benefits policies—and refused to put their name on the petition for a referendum.
That’s because the issue is more emotional than a stadium of soccer fans. Shifting the wage-hike process from voters means less rational debate about the merits of an increase. Never mind how an increase could affect wonky matters such as consumer confidence, job creation and economic growth. Who are you going to support, a hardworking Joe who’s struggling to earn enough for food and rent, or some greedy Mercedes driver who’d like to redo the weekend place?
Indeed, an urban myth has taken hold that today’s wage earner is a head of household who’s working two or three minimum-pay jobs and still falling short on the necessities. As long as that view prevails, the industry is going to be ignored in its efforts to moderate increases in labor costs.
That’s why every restaurateur should strive to counter the knee-jerk assessment with facts, which tell a much different story. Consider:
- About 34 percent of hourly wage earners live in households generating at least three times what Uncle Sam defines as a poverty income, according to David Neumark, director of the Center for Economics and Public Policy at the University of California.
- If the minimum wage were raised to $10.10 an hour, fewer than one of every five additional dollars (18 percent) would flow to poor families, Neumark wrote in a recent Wall Street Journal op-ed. The research supports the industry’s assertions that many of its minimum-wage employees are young members of middle- or upper-class families who want to earn fun money.
- Only 1.1 percent of minimum-wage earners are over age 25, according to the U.S. Bureau of Labor Statistics.
- Forty-one percent of employees, across all pay levels and industries, don’t have enough money to pay their bills, according to the Society for Human Resources Management. The restaurant industry is routinely blasted as a field where you can’t make a living. It’s a dubious indistinction, but the business appears no worse than other trades.
The picture changes when facts supplant emotion. It still may call for a wage increase. But there’s too much distortion when the public decides.