Minimum Wage in the U.S.

[MikeVic]

As a result of the Tipping (http://www.operationsports.com/fofc/showpost.php?p=2143197&postcount=114) thread, I was informed that some places in the U.S. are only required to pay employees a minimum of $2.13/hr, and the rest of the income to meet minimum wage standards is anticipated to be made up with tips. If tips don't make up the difference, only then does the employer pay more to the employee.

So my question is, who knows about this, and how do you feel about it? It's an anonymous poll. I'm guessing most Americans know about it, but maybe others don't... but I'm curious.

[molson]

It's not fair for a employer to have to pay minimum wage if the employee makes more than that off of the job you give them.

I really don't understand the other side of that argument. Even if you resent tipping - your tip isn't required for the person to make minimum wage.

[stevew]

I only make 6 dollars an hour, but I'm guaranteed to make minimum wage if I don't sell enough.

[RomaGoth]

Agree with Molson.

[molson]

I only make 6 dollars an hour, but I'm guaranteed to make minimum wage if I don't sell enough.

Just like a waiter is guaranteed to make minimum wage if they don't get tipped enough.

If the tipping culture ended tomorrow, restaraunts would have to pay the difference (and surely, the laws would change and require them to pay minimum wage anyway).

[Sun Tzu]

I think in commission based jobs you shouldn't be forced to pay much of anything. A very high percentage of my income is based solely on commission, but my employer is nice enough to provide a decent base of 40k on top of it. I know of some jobs where you don't make any base at all.

[CleBrownsfan]

As a part-time bartender I'm fine with the $2.13 min wage. Depending on the night I work I easily make $14+ a hour in tips. My wife use to work at the same restaurant and she use to pull in $15-$20 a hour serving. So you add in $7 a hour on top of that and hell - most people would quit there day jobs to become a server/bartender.

And who would make up for the cost of increase wages? A burger and fries would probably cost $20 ;). I don't think a lot of restaurants would be able to survive if they had to pay out each server $7 a hour.

[Ronnie Dobbs2]

Yeah, you're going to end up paying the server's salary anyway, either through a tip or higher prices. At least this way you can tip how you please.

[stevew]

Appliance salespersons at Sears(which I'm not) are paid no base wage whatsoever. Good ones always make more than minimum wage, anyways.

But someone who isn't good, and is close to minimum wage in earnings can get screwed. If they have to come in early and do signing on the clock, and come up short in earnings for the week they get to pay for the privelidge. Because he has to pay back any draw pay(which is used to get them up to minimum wage)

[Ronnie Dobbs2]

It's odd. Server's get minimum wage (8.07/hr) + tips here in Washington, but yet, no giant move to the serving industry and burgers cost the same here as anyplace else. Hmmmmmm.

I would be very interested to know how restaurants can do that without higher prices since the margins in the industry are so thin. Do you have any actual insight to offer?

[molson]

It's odd. Server's get minimum wage (8.07/hr) + tips here in Washington, but yet, no giant move to the serving industry and burgers cost the same here as anyplace else. Hmmmmmm.

They're only competing with other restaraunts in the state that have the same rules, so that's not surprising.

I'd imagine that waiters do better in WA though, and particularly California. Unless there's fewer relative jobs because of the higher labor cost, which could eat into any advantage you get from making minimum wage.

It'd be hard to come up with data for that though, because there's so many variables. Tipping culture is going to very so much from state to state and especially city to city - say Seattle compared to rural Western MA.

[ISiddiqui]

I think the problem with allowing $2.13 an hour, assuming tips will make up for it is that tipping becomes assumed, rather than giving more money for a good job. It becomes ingrained that you have to give 15%-20% regardless of service. I'd rather the server always get that amount and then tips would be for a better than normal job.

Though with it being set up the way it is, it would be hard to change the idea that you must tip, I think even if servers were making min wage.

Though I usually end up tipping around 25%-30% anyways (and more if I'm at my regular pub).

[Lathum]

It's odd. Server's get minimum wage (8.07/hr) + tips here in Washington, but yet, no giant move to the serving industry and burgers cost the same here as anyplace else. Hmmmmmm.

Wrong.

I have lived and traveled all over the US, food here costs a good $2-3 more per dish than almost anywhere else I have lived (including NJ)

[Lathum]

I would be very interested to know how restaurants can do that without higher prices since the margins in the industry are so thin. Do you have any actual insight to offer?

My guess is this.

The higher the salary the better talent you attract. The better talent you attract the less bodies you need. Plus those people stay around longer, which means you need to spend less on training, inteviewing, training materiels, etc...

[Ronnie Dobbs2]

In an attempt to figure this out, I found this article:

Pagliacci Pizza will begin paying its delivery drivers and food servers nearly 50 cents an hour more today as part of a mandatory adjustment for minimum-wage workers in Washington state. While that might not sound like much, it adds up when you consider that Pagliacci employs 600 people at 21 locations throughout the Seattle area.


Co-owner Matt Galvin estimates the minimum-wage increase will add at least $100,000 to Pagliacci's 2009 payroll costs.


"Our business model is predicated on the fact that the minimum wage will continue to rise and be the highest in the nation," Galvin said, explaining that he takes it into account when setting prices and evaluating other costs annually.


Local News | State's minimum wage rises to $8.55 an hour | Seattle Times Newspaper (http://seattletimes.nwsource.com/html/localnews/2008579280_minimumwage01.html)

Makes me think that the prices HAVE to be higher, or for some reason food or other costs much lower than the rest of the nation.

[gstelmack]

I'm okay with it at places like restaurants where you want to encourage good service to make the wage. But do pizza delivery guys fit the bill? Counter at fast-food place? Basically it should not become a crutch for a business to keep "prices" down by making you pay for it via tips.

[Ronnie Dobbs2]

I waited tables/tended bar for years here in MA, and I always did pretty well for myself despite the tawdry paycheck.

[Lathum]

Meh. I must be going to the really cheap restaurants then. I've lived in FL, PA, and WA. No huge difference. Definitely not 2-3 bucks per entree/burger/whatever.

I just did a quick search of restaurants I used to go to ( and one in Seattle I still do)

All cheeseburgers-In Cinci $10, NJ- $9.95, WA-$11.99

granted, a small sampling, but just my experience.

[larrymcg421]

It's not fair for a employer to have to pay minimum wage if the employee makes more than that off of the job you give them.

I really don't understand the other side of that argument. Even if you resent tipping - your tip isn't required for the person to make minimum wage.

The problem with this theory is when the restaurant requires you to do side work outside of stuff that you get tipped for. I know when I worked at Folks I had to - fill sauce bottles, salt and pepper shakers, make salads and desserts, fold napkins, sweep, mop, vacuum, assist with takeout and numerous other duties. So if we're going by your theory, then I'd agree so long as the waiter only performs the duties of a waiter.

[Lathum]

FWIW I tended bar on the Jersey Shore all through my 20's. Granted I was in a prime location, but still I wouldn't even pick up my paychecks because they were always voided. After the taxes came out there was nothing left. I was also making $30-$50 an hour, so the $2.13 meant nothing to me.

I think a lot of tipped employees are better off only making $2.13. At such a small hit to the restaurant they don't care if people work over 40 hours. If minimum was $5.15 you can be certain no servers would work more than 40 hours, which means no extra shifts around holidays, times of need, etc...

[Schmidty]

Wrong.

I have lived and traveled all over the US, food here costs a good $2-3 more per dish than almost anywhere else I have lived (including NJ)

Maybe that's because you live in Seattle, because I've lived in different parts of the country too, and it seems about same here. Among many cases, take Red Robin as an example - I've eaten there in 3 different states in the past year and a half (California, Washington and Michigan), and the prices were exactly the same in all of the restaurants.

[Lathum]

The problem with this theory is when the restaurant requires you to do side work outside of stuff that you get tipped for. I know when I worked at Folks I had to - fill sauce bottles, salt and pepper shakers, make salads and desserts, fold napkins, sweep, mop, vacuum, assist with takeout and numerous other duties. So if we're going by your theory, then I'd agree so long as the waiter only performs the duties of a waiter.

This is an age old argument. Speaking as someone who use to be upper level managment the argument from managments POV is they take an average of what you make through the shift, week, etc...

Yes, you may have to do some work before the restaurant opens for an hour, technically for $2.13 for that hour. However, when the shift is over and you have worked 6 hours and made $90 you are making $15 an hour for that shift.

[Schmidty]

Dola.

If there was a difference, it was negligible. A dollar or less, tops.

[Lathum]

Maybe that's because you live in Seattle, because I've lived in different parts of the country too, and it seems about same here. Among many cases, take Red Robin as an example - I've eaten there in 3 different states in the past year and a half (California, Washington and Michigan), and the prices were exactly the same in all of the restaurants.

That's a corporate model, and all 3 examples I used are in cities or in the case of NJ a high cost of living area.

[Lathum]

Dola.

If there was a difference, it was negligible. A dollar or less, tops.

Is a dollar really negligable when you are talking about that kind of volume?

If you are paying a server $6 more an hour in WA, and raise the price of a burger by $1, all that server has to do is sell 6 burgers an hour to make up the difference.

[Samdari]

There are other places this happens, too. In some cases, employers use exceptions to get around paying ALL their employees minimum wage.

One is harvesting/migrant labor. I did this when I was a teen (i.e. sometime before the civil war). They generally pay per unit harvested. As long as their workers average minimum wage they can get away with paying half to more than half of their workers less than minimum. A few outstanding pickers, or workers in high yield areas can pump up the average so that most workers are earning less than minimum. Also, given that they don't exactly work with the most educated labor force, and don't exactly track their employees hours (or legal employment status, age, etc.) that well, most probably don't exactly meet that minimum wage requirement anyway.

Day laborers get paid, as you would expect, by the day, and in cash. Without any requirement to track who is being paid, and how much, I imagine most employers feel the need for strict adherence to minimum wage laws either.

Also many years ago, a local (non union) factory paid piecework. Some of their employees ended up getting less than minimum as well. I think they were technically required to make sure everyone made minimum, but the way it worked was, if you did not, and complained, you were fired. They could not fire you for complaining, but they could fire you for not performing. I don't know if this model even exists anymore, but I am sure it does in some places (the textile industry, for the scrupulous owners).

[molson]

I don't think there's any fair way to isolate the factor of minimum wage laws when comparing restaraunt prices from state to state. You'd have to assume that the difference in minimum wage laws is the ONLY reason for any difference in prices, and you just can't assume that.

[Schmidty]

Is a dollar really negligable when you are talking about that kind of volume?

If you are paying a server $6 more an hour in WA, and raise the price of a burger by $1, all that server has to do is sell 6 burgers an hour to make up the difference.

I understand what you're saying. I'm just looking at it from a consumer's point of view. .50 - $1 more a burger isn't really noticeable to me. I've noticed the same thing at local non-franchise restaurants.

I don't know, it's just what I've seen I guess.

[sooner333]

I understand what you're saying. I'm just looking at it from a consumer's point of view. .50 - $1 more a burger isn't really noticeable to me. I've noticed the same thing at local non-franchise restaurants.

I don't know, it's just what I've seen I guess.

I think it starts to be noticable because the price structure at a fast food restaurant is going to be stationary. You've seen burger places start whipping out quality burgers for a lower cost than sit-down places, wheras in the past there was no such thing as a specialty burger. When you start creeping into the double-digits, people will notice. Maybe they get something more expensive, which is good...but maybe they just stay home.

[RomaGoth]

Without tips, we wouldn't have strippers.

[stevew]

Is a dollar really negligable when you are talking about that kind of volume?

If you are paying a server $6 more an hour in WA, and raise the price of a burger by $1, all that server has to do is sell 6 burgers an hour to make up the difference.

Yeah, or throw another quarter onto a the quickly becoming insane priced soft drinks. I think a bottomless coke is now 2.29ish at applebees.

[RainMaker]

I don't really like minimum wage laws and feel they should only be in place to ensure there isn't slave labor taking place. I'd rather see less focus on the wage and more focus on labor safety laws.

[Vince, Pt. II]

As a point of clarity for "how restaurants manage," I used to work as a waiter for a large chain, and the company had three different price lists (cheap, medium and expensive, though they sugarcoated the names). The price list that each individual store used was based upon the area the store was in. Here in the San Francisco Bay Area, the stores use the highest price point.

[JonInMiddleGA]

Basically it should not become a crutch for a business to keep "prices" down by making you pay for it via tips.

But if they don't keep them down then the business is reduced by lowered demand, therefore fewer jobs as well as fewer options for the consumer. Damned if I see the winner in that.

[JonInMiddleGA]

I don't really like minimum wage laws

There we go agreeing on something again.

[lungs]

There are other places this happens, too. In some cases, employers use exceptions to get around paying ALL their employees minimum wage.


In a way I do this on my farm but the exception being what my employees make on paper is actually lower than what they actually make.

I pay by the shift and all shifts are considered 7.5 hours or 6.5 hours. Most of the time the workers complete the shift in 5.5 or 6 hours. So $8.00/hour is actually $10.00/hour if they complete the shift in 6 hours.

It's been a win-win situation. Before, the employees would stroke around trying to prolong their shifts for as long as possible. Now I have to try and get them to slow down. I also reserve the right to add extra work to their shift so long as it doesn't exceed 7.5 hours.

[gstelmack]

But if they don't keep them down then the business is reduced by lowered demand, therefore fewer jobs as well as fewer options for the consumer. Damned if I see the winner in that.

I just don't tip for most of those jobs. I'm not throwing a single penny in the tip jar at Jersey Mike's (local sub shop), for example. If the owner won't pay folks enough to work there, they can find someone who will, and either the owner will pony up, or quality will suffer enough that I'll go to one of the other sub shops in the area.

I'd tip the Jimmy John's driver if I asked him to deliver, though, as that's a convenience for me.

[RomaGoth]

In a way I do this on my farm but the exception being what my employees make on paper is actually lower than what they actually make.

I pay by the shift and all shifts are considered 7.5 hours or 6.5 hours. Most of the time the workers complete the shift in 5.5 or 6 hours. So $8.00/hour is actually $10.00/hour if they complete the shift in 6 hours.

It's been a win-win situation. Before, the employees would stroke around trying to prolong their shifts for as long as possible. Now I have to try and get them to slow down. I also reserve the right to add extra work to their shift so long as it doesn't exceed 7.5 hours.

This appears to be a very effective method of compensation. Out of curiosity, how did you come up with it?

[Schmidty]

This appears to be a very effective method of compensation. Out of curiosity, how did you come up with it?

In his car, smoking a spliff.

[lungs]

This appears to be a very effective method of compensation. Out of curiosity, how did you come up with it?

Several years back we were considering a significant expansion in the number of cows we milked. We can't be milking for 24 hours a day as we need time for maintenance and other things like that so we wanted to see how fast they could actually milk as we knew that they milked (pun intended) the timeclock for all it was worth. This gave us a true sense of what we could feasibly expand by.

With the tough economic times we've had in the last year my dad wanted to go back to straight pay by the hour and I had to fight him tooth and nail on that issue. Penny wise but pound foolish, as that would've driven morale down significantly and lowered efficiency. In the end we compromised that I'd add some extra jobs onto each shift that should've been done anyway.

I do have some employees that are on straight hourly rates. They are all paid a higher wage and I don't get too up in arms if they aren't working as fast as they can.

[lungs]

In his car, smoking a spliff.

Sidenote, I've given up the dope :)

[Lathum]

As a point of clarity for "how restaurants manage," I used to work as a waiter for a large chain, and the company had three different price lists (cheap, medium and expensive, though they sugarcoated the names). The price list that each individual store used was based upon the area the store was in. Here in the San Francisco Bay Area, the stores use the highest price point.

Very common for chain restaurants, they are called price tiers.

[Schmidty]

Sidenote, I've given up the dope :)

Next step - cigarettes!!!!! ;)

[lungs]

Next step - cigarettes!!!!! ;)

Haven't had one since Sunday morning.

[Schmidty]

Haven't had one since Sunday morning.

Nice!!!

[stevew]

If I ever owned a fast food joint or something like that I would pay average wages. But I would also have a "bonus pool" of say a dollar extra per hour that people could earn for various things like not calling off. Or picking up extra shifts or simply staying employed. I think you'd get better people to work for you.

[MrBug708]

I worked as a Server at places where I'd make so much in tips, I didn't pull a paycheck because the taxes were more then my hourly pay

[MrBug708]

Very common for chain restaurants, they are called price tiers.

Hell, Jamba Juice does it

[JeeberD]

I worked as a Server at places where I'd make so much in tips, I didn't pull a paycheck because the taxes were more then my hourly pay

Yup, the vast majority of our servers don't get any money on their checks for exactly that reason. You can tell the ones that aren't claiming all their tips because they're the ones who get $10-15 per paycheck...