Minimum Wage Increases Affect on Tipped Workers

Sarah patiently waits for the older couple to put the check on the table. She walks over, grabs the check, and thanks them for their business. She opens the black folder that holds the payment, and hopefully a tip. No tip. Sarah is beside herself, she had delivered wonderful customer service and explained the recent rise in prices very politely, but the couple took it out on her.

The restaurant senior, Sarah Couture works at raised their prices in December in advance of the minimum wage increase going into effect this January. The increase will affect the workers and business owners alike, but in what ways the impact of this new law will be felt are still largely unknown.

Question Four which passed 54% to 44% on the state ballot this fall, imposed a $1.50 initial increase in Maine’s minimum wage, going into effect January 2017, making the minimum wage $9 an hour. After this initial increase there will be a $1 increase every year until 2020 when the minimum wage will reach $12 an hour.

Workers whose partial pay is in tips will get an increase of a $1.25, going into effect January 2017, making the minimum wage for tipped workers $5 an hour. The minimum cash wage for tipped workers would then increase by $1 every year until 2024, when it will reach $12 an hour.

Bao Bao Dumpling House in Portland already got a jump on the raise. Portland Press Herald reports that the dumpling house charges an additional 18% in the check to cover the “tip”, but there will no longer be tipping at Bao Bao Dumpling House. The percentage covers the wages of the workers, “We also didn’t want to raise the prices on the food.” This percentage will avoid the impending rise that other business owners feel.

The Maine Center for Economic Policy estimated that 133,000 people would be affected by the increase and felt that the increase would  reServe chilled.store the value of work. Sarah Austin wrote this in her report called ¨Restoring the Value of Work¨  written in August of 2016.

Sarah Austin, a policy analyst at the Maine Center for economic policy says that with the increase one in two workers will see an increase in their incomes. “Which is huge,” Austin said. “The increase also promotes job growth for good jobs that are going to increase income. The increase gets people into jobs that will support their families.”

Mike Tipping, communications director for Mainers for Fair Wages said, “The tipped wage has been stuck at $3.75 in Maine and hasn’t increased in eight years.” Mike said that tipping has never been
higher in the seven states that have passed the minimum wage increase.

In Washington D.C. the minimum wage is going to increase from $10.50 an hour to $15 by 2020 but tipped workers will only increase $2.23. Tipped workers in D.C. will have a base of $5 and only increa
se with inflation.

Lisa Guerin of Nolo.com explained the way employers and tips are supposed to work. If the employee’s hourly wage plus tips earned don’t add up to at least $7.50 an hour, the employer must make up the difference. Guerin also states in her article that tip pooling is legal in Maine; all of the employees pool their tips together and they are then separated evenly with all of the servers. In a way a flat rate of $12 an hour would work, tips wouldn´t have to be separated from a pool and employers would no longer have to make up the difference.Austin explained tipping in Maine,

“While there is an employee in a popular Portland restaurant making a good wage because of tips there is an employee in other parts of Maine that
rely on seasonality.”


She said with the flat rate wage employees won’t have to rely on seasonality.

The Maine Restaurant Association doesn´t see the issue the same way. In their 2016 Fall newsletter they argued for the
“defeat” of question 4. In the article, the association stated that many restaurants are going to move to automated machines to place orders and could possibly get rid of wait staff all together because of the continuous increase. The machines do not require wages and in turn help the restaurant turn a bigger profit with no need to pool tips or match minimum wage.

Steve Hewins, the CEO of Maine Restaurant Association, stated his concern with the fast food restaurant

t switch to tablets.  “Fast food restaurants that do not have tipping will definitely increase prices, and more troubling is that they will likely hire fewer workers,” Hewins said. He worries this will affect teen employment. “Many are considering replacing staff with tablet ordering systems.”

Austin said that the tablet ordering system sweeping the country is just the natural curve of technology.

As for full service restaurants, they face the reality of losing the tip credit. “The tip credit allows restaurants to pay waiters and waitresses half the minimum wage. This exists because they earn most of their income from tips and generally make more than any other restaurant employee.” Hewins stated, “If for some reason a server does not earn at least the minimum wage with tips combined, the restaurant owner is required to make up the difference so that no employee can earn less than the minimum wage.”

Hewins said that if the tip credit is not reinstated tipping could disappear as consumers learn that wait staff is earning higher wages.

Austin said that adding the tip credit back into the bill could be harmful, “Tip credit gets back into the issue of seasonality and sexual harassment.” Austin argues that with the option to receive a lot of tips female workers get the pressure to please consumers in a visual way.

In New York there is a fight for a freeze on the minimum wage increase. The Wall Street Journal reports on the issue; more than 100 restaurants signed a letter sent to government officials to get the freeze put into place. Restaurant owners in New York want time to adjust and understand what this will do to the economy. A restaurant owner in Hudson Valley, New York said he is going to raise his prices and offer smaller portions to compensate for the increase.

Sarah continues to support her work place and have a good attitude about the adjustment. She hopes the increase will give everyone an equal and fair wage while also offering the extra benefits to wait staff. The Maine food industry is changing, hopefully for the better.

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