NY considers raising minimum wage for tipped workers

In just one example of government action unfolding in many parts of the nation, New York’s wage board (summoned into being by 2016 Democrat presidential hopeful Andrew Cuomo) is today considering whether or not to raise the state’s minimum wage for tipped workers from its current rate of $5.00 per hour.

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Gov. Andrew Cuomo promised to look raising tipped workers’ wages, too. He put together a state wage board to examine the issue and listen to what people on both sides have to say. The first public hearing is at noon today in Syracuse.

Roughly a dozen people have signed up to speak. About half of them are restaurant owners and managers who are against the increase.

Joey DeCuffa, the owner of Joey’s Restaurant in East Syracuse, said businesses like his are already getting hit with rising costs.

“Everyone is already bringing home at least minimum wage, and most make much more, so any increase to tipped employees’ wages is just another unnecessary cost on small business,” DeCuffa said in a press release put out by the New York State Restaurant Association.

Government reps – and many of their allies in the media – are claiming that such protests are nonsense and citing various sources which proclaim that increasing the tipped minimum wage won’t hurt businesses’ bottom line. That’s got to be some fascinating math. Holding all other expenditures and sources of revenue static, increasing your labor costs by 37% across the board won’t change the bottom line? It turns out that these amazing new math claims seem to be coming from labor unions, and they are not only wrong, but they are not terribly popular with most of the people who actually work for tips.

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Tipped employees in New York are subject to the same minimum wage as all other employees.

Yes, advocacy outfits like the National Employment Law Project and the Restaurant Opportunities Center dishonestly talk of a “subminimum wage,” but state law is clear:

Tipped employees must earn at least the full minimum in wages and tip income. When tips and wages don’t add up to the minimum, the employer must make up the difference.

In practice, this system works out well for the employee: In reported earnings alone, Census Bureau data show that servers and bartenders average $13 an hour nationwide, with top earners collecting $25 an hour or more.

Where do labor groups get their “subminimum wage” charge, then? As it turns out, they refuse to count tips as income earned on the job — no matter that both the IRS and the state Taxation and Finance Department say otherwise.

Well, knock me over with a feather. Imagine that. Unions citing wage statistics for tipped workers which don’t include the tips which the workers – and the employers – are required by law to report as earnings.

I spoke with two people just in the last month about this subject who shed some light on it for me. One is a nice young lady named Gina who works the counter at a diner in my home town where I have breakfast or lunch at about once per week. It’s a small, family run joint with great prices and a steady stream of local regulars as customers. Gina gets the minimum wage and works six to eight stations on the counter, depending on staffing that day. The prices – and the tips – are low, but regular. She gets a few people here and there who might be bigger tippers and some who may stiff her, but most people leave a buck or two.

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I asked her if she ever thought about taking a job at the mall or a fast food joint for minimum wage. She informed me that she would be hard pressed to do it, since she winds up making between 14 and 20 dollars per hour with her tips and couldn’t afford the pay cut.

A second example is a friend of our family’s who is one of the owners of a top end restaurant in the city nearest to us. The demands on his wait staff are high. They only hire people who are neat, clean and well presented, with a good ability to interact with customers. The work is hard, carrying heavy trays of food, pushing carts, dashing from station to station keeping drinks filled and checking to see who needs what. The average bill each night for a four top there – even without a big wine or cocktail bill – is more than $200. The average tip for each group like that is more than $40.

Even with the fact that the wait staff has to do tip sharing with the bussers and the kitchen workers, they can, and frequently do, take home more than $250 in one shift. When that restaurant has an opening for a waiter / waitress there are people lined up across the dining room to apply for the jobs, and the owners are able to hire only the very best. And those jobs don’t open up often.

So what happens to these tips if labor costs go up and the size of your check at the restaurant does as well? And will knowing that the server is getting the same wage as other workers in the labor affect the tips they receive? Just take a guess.

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This move to demand the tipped wage increase is, in my opinion, coming from a lot of people who have never worked that industry. It makes for a great talking point if you’re trying to gin up liberal support against conservatives and their War on Workers, or whatever it’s called this week. But they will probably wind up cutting into the income of those they profess to be helping.

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