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To start with, Colorado maintains the differential between minimum wage and tipped-employment minimum wage. As of 1/1/20 the former is $12; tipped base base rises to a comparatively generous $8.98. (And, I believe, minimum pay still has to meet $12/hr, subject to all the usual employee/employer fandango over tip reporting etc.)
Tipping and service compensation are essentially unlinked in US culture. We are conditioned to put down that 20% or a bit more whether it's Dennys or the most exclusive fad kitchen and we know the service staff make several hundred a night. Recent rises might be used by some minority to reduce their tip amounts, but they will be seen as the usual tightwads and, on repeat visits, suffer the usual consequences.
It's going to be a long time before anything, substantial statutory-pay increases included, breaks a hundred years of tipping one's inferiors for not spilling soup in one's lap. With all the classism, accounting, tax, employer control and deeply entrenched customer guilt-tripping nonsense the whole concept involves.
To start with, Colorado maintains the differential between minimum wage and tipped-employment minimum wage. As of 1/1/20 the former is $12; tipped base base rises to a comparatively generous $8.98. (And, I believe, minimum pay still has to meet $12/hr, subject to all the usual employee/employer fandango over tip reporting etc.)
Tipping and service compensation are essentially unlinked in US culture. We are conditioned to put down that 20% or a bit more whether it's Dennys or the most exclusive fad kitchen and we know the service staff make several hundred a night. Recent rises might be used by some minority to reduce their tip amounts, but they will be seen as the usual tightwads and, on repeat visits, suffer the usual consequences.
It's going to be a long time before anything, substantial statutory-pay increases included, breaks a hundred years of tipping one's inferiors for not spilling soup in one's lap. With all the classism, accounting, tax, employer control and deeply entrenched customer guilt-tripping nonsense the whole concept involves.
It might not necessary be a decrease in tip amount, but instead is giving the same tip as it would be without the price increases that were a direct result of wage increases. If tipping at the new prices, then the waitstaff gets both a higher wage as well as a tip based on a higher amount, in essence increasing wages even more. At the same time, people going to restaurants are spending an ever increasing amount for the same food and the same service. It might not make a difference to you, but for lots of people it adds up to significant amounts. And eventually there’s a breaking point where it’s unsustainable and those restaurants lose business, net revenue, and eventually a cut in staffing/hours and possibly closing doors altogether. I saw that scenario play out all over here in SF. It was expensive to eat out before. But now it’s flat out laughable. All the “affordable” places (except some cash only spots) went out of business or left the city shortly after the wage increases (of course, tip based employees get MW here, so it hurt businesses here a lot worse and more efficiently/quickly).
At the same time, people going to restaurants are spending an ever increasing amount for the same food and the same service.
Restaurant prices have increased steadily in the last decade, without any wage issues driving them. And, although I can't point to any hard data, the rate of increase seems to be ahead of actual inflation.
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I saw that scenario play out all over here in SF. It was expensive to eat out before. But now it’s flat out laughable. All the “affordable” places (except some cash only spots) went out of business or left the city shortly after the wage increases (of course, tip based employees get MW here, so it hurt businesses here a lot worse and more efficiently/quickly).
San Francisco, to put it bluntly, doesn't exist in the same economic universe as any other city in the US. Even NYC has always been an expensive but accommodating place. SF's exploding cost structure has created a Frankenstein's monster in absolutely every respect. Not calling this good, bad or sourdough; it's just irrelevant to the rest of the country, especially a fairly balanced wage/COL/growth based place like Denver. The "affordable" places left SF and its sister cities because only those with the highest revenue/margin could survive and the insane income levels supported them.
I don't believe most of the arguments about increased minimum wage driving businesses to bankruptcy, especially not ones with tipped-wage staff. But then, I have zero regard for any business, individual or general, that can only survive with a grossly underpaid labor force. It means they are surviving through an indirect form of corporate welfare, and I'm a total darwinist in that respect. If a business doesn't/can't/won't stand on its own economic legs, we owe it nothing.
And tipping is a rancid custom long overdue for oblivion anyway. Pay staff a competitive wage (with or without commission), let prices adjust, and get rid of this 'betters slipping their servants a shilling' crap so that owners can underpay them.
It's going to be a long time before anything, substantial statutory-pay increases included, breaks a hundred years of tipping one's inferiors for not spilling soup in one's lap. With all the classism, accounting, tax, employer control and deeply entrenched customer guilt-tripping nonsense the whole concept involves.
I think you could have chosen a better word than "inferiors" to refer to waitpersons. (I have never been a waitress or server, but I have respect for anyone who works very hard for a living, and I am sure that many past servers are now in highly respected careers.)
[quote=Therblig;57406720]Restaurant prices have increased steadily in the last decade, without any wage issues driving them. And, although I can't point to any hard data, the rate of increase seems to be ahead of actual inflation.
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Originally Posted by Therblig;
San Francisco, to put it bluntly, doesn't exist in the same economic universe as any other city in the US. Even NYC has always been an expensive but accommodating place. SF's exploding cost structure has created a Frankenstein's monster in absolutely every respect. Not calling this good, bad or sourdough; it's just irrelevant to the rest of the country, especially a fairly balanced wage/COL/growth based place like Denver. The "affordable" places left SF and its sister cities because only those with the highest revenue/margin could survive and the insane income levels supported them.
There are many documented cases of restaurants with marginal finances going under or having to substantially reduce service levels because of minimum wage issues. This has happened up and down the west coast and even here in Denver.
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Originally Posted by Therblig;
I have zero regard for any business, individual or general, that can only survive with a grossly underpaid labor force. It means they are surviving through an indirect form of corporate welfare, and I'm a total darwinist in that respect. If a business doesn't/can't/won't stand on its own economic legs, we owe it nothing.
Leaving minimum wage to the market forces of supply and demand is what is called "nature" and not corporate welfare. You are describing the situation completed backwards. Artificially interfering in the laws of supply and demand is called socialistic welfare. Now, I'm not 100% against minimum wage increases but l absolutely feel adjustments should be left to the COMMUNITY level. NYC was mentioned earlier - the COL there is significantly higher there than 40 miles out. Setting it at a national level is like using a bomb to kill an ant. If NYC wants to raise the MW to $50/hr thats their matter.
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Originally Posted by Therblig
And tipping is a rancid custom long overdue for oblivion anyway. Pay staff a competitive wage (with or without commission), let prices adjust, and get rid of this 'betters slipping their servants a shilling' crap so that owners can underpay them.
I pretty much agree with you here, but l am OK with a small tip as a gesture for good service. It serves as an incentive.
I don't believe most of the arguments about increased minimum wage driving businesses to bankruptcy, especially not ones with tipped-wage staff. But then, I have zero regard for any business, individual or general, that can only survive with a grossly underpaid labor force. It means they are surviving through an indirect form of corporate welfare, and I'm a total darwinist in that respect. If a business doesn't/can't/won't stand on its own economic legs, we owe it nothing.
And tipping is a rancid custom long overdue for oblivion anyway. Pay staff a competitive wage (with or without commission), let prices adjust, and get rid of this 'betters slipping their servants a shilling' crap so that owners can underpay them.
Eh believe what you will. I ran a small business in the city, and while I wasn’t myself directly impacted by needing to raise MW employee wages, I saw the fallout through other indirect factors. I won’t get into all of that, since most people don’t or won’t understand it who haven’t run a business for themselves.
That being said, it was very obvious the impact of MW in the city. Every year, I kept an eye on (and could even see it through menu pictures taken by yelp users) prices shoot up dramatically literally the month of each MW hike (almost to the day) every year. Most menu items went up at least a dollar per year. One place I went to a lot that used to be in $30-35 range for two people eating brunch is now pushing $50. That’s quite an increase within a few years. I laugh when people deny this is happening. It’s literally impossible to find a sandwich anywhere around where I live for under $14 now, and that spot cut their meat on them to less than 50% what it used to be, again, almost to the day of one of the yearly hikes.
Another example, a number of spots posted signs at the registers telling customers that they had to increase all items x% because of MW increases, so be upset at the voters, not them.
Also keep in mind, just because restaurants pay MW to their employees does NOT mean they are underpaying them. Many waitstaff make a small fortune off of tips regardless of the wages paid out. You do a good job, you get good tips. Now, it doesn’t matter if you do a good job. You still get a raise and now you expect to get 20-25% tips on top of that, even if you suck at your job.
The only way these places kept prices relatively reasonable was because of the tip based wages they paid. Once payroll went up literally 50%, where do you think that money is coming from...? Business owners can’t afford to keep up.
For every $1 increase per full time employee, the business has to pay roughly $2000 per year. And that’s off of net income, meaning income to the business has to go up more than $2k unless it’s 100% from price increases. So...if a restaurant has 20 full time employees (or equivalent part timers), that’s $40k per year per dollar increase. MW went up from under $11 to $15 within a few years. Yep, you can do the math. That’s 4 times $40k increase in fixed operating costs they have to be able to absorb almost instantly. Maybe you could handle an additional $150k annually in expenses, but most can’t (without a dramatic overall in business plan).
In the end, a restaurant can do one of three things.
1. Increase prices to compensate
2. Cut expenses - decrease quality or quantity in food, cut staffing (hours or number of employees), etc.
3. Say screw it, payroll ate such a huge amount into profit that it’s not worth it anymore and either close up shop or (more often) move to a different and less business-unfriendly region
Most places were a variation of 1 and 2, and often quite dramatically. None that survived did neither.
As I mentioned before, many of the basic food places (diners, sandwiches, etc) that shouldn’t cost that much, can’t raise prices enough and expect people to still go there. So when they leave, they are replaced by trendy, yuppie, hipster-driven places where customers are willing to spent that higher amount from day one.
I saw this firsthand in my neighborhood. During the past 5 years or so (coincidental timing?), this has played out exactly as I predicted, and all we have now are trendy places where $8 toast is the norm. They’re the places that still thrive, and a lot of that is due to perception and the expectations that it’s ok for them to be expensive. Do you really think people would pay $17+ for a diner burger? Because I wouldn’t.
MW took an expensive city, and through forced and artificially inflation, made it unsustainable for those it tried to help. The buying power is now actually lower for those making minimum wage (and especially those making a little over MW who didn’t get raises since money went to intro employees instead) since everything is so much more expensive than if the free market had been allowed to determine things.
While I agree this is an anomaly compared to everywhere else, forcing inflation anywhere will have a similar impact. Not nearly as dramatic, of course, but it never helps those who it is intended to help. Blame the businesses all you want. But the impact is a net negative towards the employees.
I can’t wait (sarcasm) until $15 goes statewide in a few years. I just hope that Colorado is watching California and how harmful this is before they do something foolish over there. Needless to say, $15 nationwide would be devastating. But hey, it feels good to help them through making it happen, and it’s easier to blame the evil business owners instead of those who actually imposed this destructive policy. Many would feel the bern...
I think you could have chosen a better word than "inferiors" to refer to waitpersons.
You're taking that out of context.
We get service from a lot of people. The only ones we tip are those that evolved to waged equivalents of servants, who even in their day were paid far less if they were in a position (doorman, butler, floor maid) to receive tips from house guests. It is a custom driven specifically by what I said: "betters" showing their obliged gratitude to their underlings.
Really, it should be so insulting that no one takes those jobs. But we've evolved this modern fable about how it directly controls the level of quality and service and is thus some sort of egalitarian, respectful exchange and doesn't in the least demean the servicer and blah blah... when really, what it is is another shuck to offload business costs on customers. Not share the cost, not divide the cost - push off staff costs directly to the customer's billing. In no other situation would we tolerate that - imagine a remodeling contractor who separately billed for his workers' time and basically did not factor that cost into his estimate.
It's all blithering, self (business) serving nonsense from the gaslight age.
Eh believe what you will. I ran a small business in the city, and while I wasn’t myself directly impacted by needing to raise MW employee wages, I saw the fallout through other indirect factors. I won’t get into all of that, since most people don’t or won’t understand it who haven’t run a business for themselves.
That being said, it was very obvious the impact of MW in the city. Every year, I kept an eye on (and could even see it through menu pictures taken by yelp users) prices shoot up dramatically literally the month of each MW hike (almost to the day) every year. Most menu items went up at least a dollar per year. One place I went to a lot that used to be in $30-35 range for two people eating brunch is now pushing $50. That’s quite an increase within a few years. I laugh when people deny this is happening. It’s literally impossible to find a sandwich anywhere around where I live for under $14 now, and that spot cut their meat on them to less than 50% what it used to be, again, almost to the day of one of the yearly hikes.
Another example, a number of spots posted signs at the registers telling customers that they had to increase all items x% because of MW increases, so be upset at the voters, not them.
Also keep in mind, just because restaurants pay MW to their employees does NOT mean they are underpaying them. Many waitstaff make a small fortune off of tips regardless of the wages paid out. You do a good job, you get good tips. Now, it doesn’t matter if you do a good job. You still get a raise and now you expect to get 20-25% tips on top of that, even if you suck at your job.
The only way these places kept prices relatively reasonable was because of the tip based wages they paid. Once payroll went up literally 50%, where do you think that money is coming from...? Business owners can’t afford to keep up.
For every $1 increase per full time employee, the business has to pay roughly $2000 per year. And that’s off of net income, meaning income to the business has to go up more than $2k unless it’s 100% from price increases. So...if a restaurant has 20 full time employees (or equivalent part timers), that’s $40k per year per dollar increase. MW went up from under $11 to $15 within a few years. Yep, you can do the math. That’s 4 times $40k increase in fixed operating costs they have to be able to absorb almost instantly. Maybe you could handle an additional $150k annually in expenses, but most can’t (without a dramatic overall in business plan).
In the end, a restaurant can do one of three things.
1. Increase prices to compensate
2. Cut expenses - decrease quality or quantity in food, cut staffing (hours or number of employees), etc.
3. Say screw it, payroll ate such a huge amount into profit that it’s not worth it anymore and either close up shop or (more often) move to a different and less business-unfriendly region
Most places were a variation of 1 and 2, and often quite dramatically. None that survived did neither.
As I mentioned before, many of the basic food places (diners, sandwiches, etc) that shouldn’t cost that much, can’t raise prices enough and expect people to still go there. So when they leave, they are replaced by trendy, yuppie, hipster-driven places where customers are willing to spent that higher amount from day one.
I saw this firsthand in my neighborhood. During the past 5 years or so (coincidental timing?), this has played out exactly as I predicted, and all we have now are trendy places where $8 toast is the norm. They’re the places that still thrive, and a lot of that is due to perception and the expectations that it’s ok for them to be expensive. Do you really think people would pay $17+ for a diner burger? Because I wouldn’t.
MW took an expensive city, and through forced and artificially inflation, made it unsustainable for those it tried to help. The buying power is now actually lower for those making minimum wage (and especially those making a little over MW who didn’t get raises since money went to intro employees instead) since everything is so much more expensive than if the free market had been allowed to determine things.
While I agree this is an anomaly compared to everywhere else, forcing inflation anywhere will have a similar impact. Not nearly as dramatic, of course, but it never helps those who it is intended to help. Blame the businesses all you want. But the impact is a net negative towards the employees.
I can’t wait (sarcasm) until $15 goes statewide in a few years. I just hope that Colorado is watching California and how harmful this is before they do something foolish over there. Needless to say, $15 nationwide would be devastating. But hey, it feels good to help them through making it happen, and it’s easier to blame the evil business owners instead of those who actually imposed this destructive policy. Many would feel the bern...
You make an excellent point as a business owner- thank you!
I wonder when minimum wage jobs were seen as a CAREER and not as a stepping stone to a better job when you gained experience.
When did that change?
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