Discussions about the minimum wage, like every perceived partisan issue, are fraught. It is my personal belief that they become more fraught the more abstract the conversation is; boring data – and a genuine curiosity about what that data means – is an antidote to cognitive knee-jerks. So I invite you to bear with me, and first consider some raw numbers that directly affect more than 1.2 million people in New York City.
The minimum wage in NYC is $13 per hour. In 2017, it was $11 per hour, and by the end of this year it will be increasing to $15 - an amount now almost synonymous with "livable" thanks to the tireless organizing of the Fight for $15. All non-exempt employees must receive this amount, or half again as much for hours worked over 40 in a work week. In addition, employees who work shifts that begin and end more than 10 hours apart must receive an additional hour's pay at the minimum wage for each of these shifts. To be considered exempt, there are several criteria employees must meet - including having administrative duties and making at least $975/week - both of which rule out most restaurant workers.
For employees who earn a significant amount of money in tips, employers can claim a "tip credit" of no more than $4.35 per hour this year, thus paying their tipped employees only $8.65 per hour. This "tipped minimum wage" was $7.50 in 2017 and will be increasing to $10 at the end of this year. Governor Cuomo has held hearings on potentially eliminating this credit entirely, motivated by the argument that tipped employees are more vulnerable to harassment, discrimination and wage theft. Of course, eliminating the credit employers receive does not eliminate tipping as the industry norm. Patrons with money in their pocket would still have every avenue to tip based on race, gender, or receptiveness to sexual harassment, but servers would at least be slightly less reliant on their good will. The exact data isn’t readily available, but the clear majority of New York City restaurants accept gratuity, and of those nearly all take at least some tip credit.
Most people are aware of the minimum wage as one of three things: a political talking point, a hard-won but essential protection against poverty, or an inevitable compression of their bottom line. The reason I can rattle off the numbers above without a second thought is that I have the unlikely task of thinking of it as all three.
I have earned both the minimum and tipped minimum wages, fortunately with the luxury of not having to fully support myself or anyone else on that amount. I have also known many other restaurant employees earning the minimum wage and working 60+ hour weeks, who could not afford to give up shifts or take a vacation because they depended on at least 20 hours of overtime to cover their daily expenses. Even guaranteed paid sick leave, a hard-fought progressive win, does not protect you when you need overtime to pay your rent – which might help explain why an alarming number of restaurant employees go to work with coughs, fevers, or worse. These are also not low-skilled employees. They are people with years of experience in the industry, who may never see that effort rewarded with coveted celeb-chef or management positions but work themselves to the bone because we are taught almost paradoxically the importance and virtue of “doing what you love.” They loved a thing that society valued – shouldn’t that be a win-win?
If you’re not used to thinking in terms of hourly earnings and the above feels especially difficult to imagine, it is worth noting that the minimum wage in NYC has not been livable for a long time. A 40-hour work week at $11/hour is only a $22,943 annual salary. Even at $15/hour, it is only $31,286 annually. According to Rent Jungle, the average annual rent for a 1-bedroom in this city is $32,171, and while needing a roommate isn’t “unlivable,” per se, anyone who has tried to live on that amount knows there are plenty of other concessions that get made – not just avocado toast at brunch, but health insurance, travel to see your family, and vegetables in your diet.
A common conservative argument is that the minimum wage is not meant to be livable; it is a stepping stone for teenagers and working students; an encouragement to better oneself and thus be worth more to employers. This argument begins and ends here, and I don’t feel the need to refute its myopia at length. Consideration of the single parents, students without financial aid and immigrants should negate it. If it doesn’t, consider instead an adult with a skill – perhaps a skill in which they’ve invested considerable time – who suddenly finds there is no longer a market for that skill. Without free technical training and respectable welfare programs, there are few options available to them to reestablish a career. Until we have determined the workability of a guaranteed basic income or other safeguard, I believe that any job done by a human being should provide that human being enough to survive. To do less is to trap that person in a cycle of poverty, which is not only cruel but wasteful – of their potential, the value they could ultimately contribute if food and housing were not a constant concern.
When I am not working at the minimum wage, I am working for restaurant owners, looking at the issue from the bottom line up. And unlike huge companies with offshore accounts – the Walmarts and McDonalds of the world, who have proven that they need the legal impetus to treat their employees like humans – my experience tells me that small restaurants would very much like to provide their employees a decent, sustainable life. They simply don’t know how to and remain in business.
I can rattle off the minimum wage increases because I have made dozens of projections, moving schedules and operating hours, changing prices and adding revenue streams, to answer panicked questions that mostly boil down to: “can I afford to keep my doors open?”
It used to be considered normal for a restaurant to make 10% of their sales in profit, with 30% going to labor, 30% to the cost of ingredients, and the rest to the countless other costs associated with running a business. Over 2 years, the minimum wage is increasing by 36% - so if half of a business’s employees make that amount, the increase eats up over half their profit. (even before factoring in the increases in related expenses like workers compensation that go along with it). Many employers will also have to increase pay for employees who already make $15 per hour to maintain pay differentials. And if the business wasn’t making much to begin with, the situation is much more dire.
But maybe a business which can’t afford to pay its employees shouldn’t exist at all. Restaurants are a passion project, a status symbol, and a well-publicized bad investment. Given just how many of them there are in this city, maybe one could fairly argue that point even if it meant the closure 75% of them (although such a radical change would make the city a very different place overnight, both economically and culturally). But the culprit isn’t just mediocre restaurants clotting the market and making do with an exploited workforce, and it isn’t a grossly inflated real estate market (though that certainly doesn’t help). The culprit also isn’t the Fight for $15 – instead, it’s the fact that this fight was so stymied and delayed.
The minimum wage simply hasn’t been livable for a long time, and an increase of 200% over 4 years is unheard of. The economics of the entire industry will need to change. Prices will increase to better reflect the true cost of the experience of eating out. Rents would ideally decrease (or at least stabilize) to reflect the decrease in demand for storefronts that can’t fit into a working business plan. For those places that do weather the storm, there will also be a new market they may have been conditioned to ignore – the very people they’ve been paying the bare minimum to wash dishes and bus tables.
I have no perfect solution. What I do have is a call for patience on the part of restaurant guests, and transparency on the part of business owners. When prices inevitably increase, know that that may reflect the true cost of eating out, and understand that the value of food, whether from a grocery store, a street cart, or a Michelin starred restaurant, is skewed in all sorts of ways before it reaches you. Prioritize eating at places where meals are prepared with care, where the staff seems genuinely happy, and where your money has a chance of staying in the community (especially communities that have had money systematically funneled out for so long). And of course, cross your fingers for your favorite bakery down the street.