Better Wages, Better Lives

Not all waiters are compensated equally. Service industry employees in states like New Jersey and Texas earn as little as $2.13/hour, provided that tips bring them up to the full federal minimum of $7.25, while waiters in seven states—Alaska, California, Oregon, Montana, Nevada, Washington, and Minnesota—must be paid no less than the the full federal minimum before tips. The city of San Francisco, in turn, boasts the country’s highest paid waiters, who by city ordinance make—not including gratuities—an hourly wage of $10.74, which might go up to $15 by 2018.

But do these wages result in higher prices at restaurants? And what happens a waiter still earns less than the minimum wage after tips? Eater’s Ryan Sutton spoke with Restaurant Opportunities Centers United’s Saru Jayaraman, one of America’s leading labor activists for hospitality industry employees. Jayaraman, a graduate of Yale Law School and Harvard University’s Kennedy School of Government and author of Behind the Kitchen Door, works to bring these issues to the attention of the American public.

RS: Do you go out to eat a lot?

SJ: Yes, I do. The nice thing about San Francisco is I can eat there as somebody in my line of work, because wages and benefits are so good. Everybody, universally, is what we call a "high-road employer" in San Francisco because the minimum wage is so high, and everybody has paid sick days and even health care.

It makes me wonder: Just as modern diners are willing to pay more for local food or for the peace of mind of knowing that the animals that died for their enjoyment lived good lives, wouldn’t consumers also be willing to pay more for food delivered by waiters who are better compensated?

That kind of change can happen if consumers were to speak up, express their values, express their concerns around wages and working conditions. But consumers don't have to pay a much higher price. The minimum wage is $9 across the board in the state of California, and it’s going up. I promise that your food prices in Fresno or Bakersfield are not higher than they are in Washington, D.C., where the minimum wage is $2.77 an hour. We've got high-road employer partners around the country who have reasonable, affordable menu prices at all levels: small mom-and-pop shops, very large restaurants, fine dining, casual dining, quick service.

There’s a San Francisco chef who tells me his tasting menu would be $20 cheaper in New York because waiters in California earn the full minimum wage on top of tips. Adding to that problem is the fact that you can’t really redistribute tips to back of the house. That restriction makes sense in New York, where the tipped minimum is $5, but that restriction is less compelling in California, where at the very high end, you have waiters making more money than cooks. That's also a problem, I would argue.

It is a problem. But I don’t at all buy that it would cost a restaurant $20 more because there's no tip credit. That's just not true for the vast majority of restaurants in California. Restaurant prices in all of the state of California are not generally $20 higher than they are elsewhere.

But the issue of inequality between front and back of the house—I definitely think that's a problem at fine dining restaurants. But it’s not true for the vast majority of restaurants in America and for the vast majority of workers in America, who don't work at those kinds of restaurants. They largely work at the Denny's and IHOP, Applebee’s and family restaurants, and government data shows that at restaurants like those, the median wage of the front and back of house is almost exactly the same. Of course, it’s a poverty-level wage, so if one day we made it to some utopian world where there's no tips at all and everybody just gets a livable wage, that would be wonderful. That model actually does exist in other countries—in Australia, the wage for restaurant workers is the equivalent of $17 an hour, and in Norway it’s $25 an hour.

“If one day we made it to some utopian world where there's no tips at all and everybody just gets a livable wage, that would be wonderful” But that’s not the world we're in here in America, where the minimum wage is actually not a livable wage. You need tips in order to actually remunerate servers at a level that reflects the professionals that they are—and they are professionals in this industry. In any other profession—health care, education—there's a ladder you can move up to reflect higher levels of skill. The fact that you could move within the hospitality profession from being a server at a Denny's to being a server at a high-end San Francisco restaurant like Saison, where you're making five times more, well, in any other field that would make sense.

But there are a couple of reasons why this is a problem in the hospitality industry. One, the industry doesn't see serving as a profession, and therefore hasn't created a real ladder. We’ve created training programs that help people move from fast food or casual serving into fine dining, but the much bigger problem is not only is there not a ladder, there's a very severe glass ceiling, especially for people of color and women and immigrants. You're very unlikely to ever see a person of color move from the back of the house or from serving at a Denny's or Red Lobster into a fine dining server position, because the industry and consumers have so universally accepted this norm that a fine dining server is a certain kind of person who has a certain kind of look.

The assumption that the guy from Mexico in the back of the house could never be that fine dining server—that's the real problem. It's not that there are gradations in income. In any profession, there are gradations of income. The problem is when you block certain groups of people from getting to the higher levels in the profession.

Back in my restaurant-work days, I recall making less than $20 during a lunch shift because of a snowstorm. If tips don’t bring servers up to the full federal minimum of $7.25 an hour, employers are supposed to make up for the difference. But how often do employers actually follow through on that?

That’s a widespread problem in the restaurant industry. The Department of Labor has said that it has found an 83 percent violation rate with regard to restaurants actually making up that difference between the tipped minimum and the regular minimum. We've surveyed about 6,000 workers nationally, and I have only ever encountered one worker who told me that her employer went back and counted every hour to make sure that tips made up the difference between their subminimum wage and the regular minimum.

What changes have you seen in the livelihoods of front-of-house workers in states like Washington, California, and Alaska, where restaurants have to pay employees the state's full minimum wage rather than a tipped minimum? Are workers’ lives improving?

Absolutely. We’ve found in the seven states that require full minimum wage that there are far lower rates of poverty among restaurant workers. There's also a higher restaurant sales rate per capita on average than in the forty-three other states. There's higher overall job growth in five of the seven states than there is in the restaurant industry nationally. We're just finding that there’s a better ability to survive among all restaurant workers in these seven states, servers in particular. There's also less of a gender pay gap in these seven states in the restaurant industry. On almost every measure, these seven states, they're doing better.

We see servers in some states arguing against parity in wages because they've been told by the National Restaurant Association that raising the wage will end tipping as we know it. I've had restaurant workers call me from all over the country saying, "How dare you argue for the end of tipping!" I tell them that I'm not arguing for the end of tipping. I'm demanding a wage, a real wage for everybody in the industry.

But also, tipping rates are definitely not lower on average in the seven states where there’s a full minimum wage. In fact, the state with the highest tipping rate is one of these seven states. People don’t tip less. I don't tip less. I'm sure you don't tip less when you eat in San Francisco. Everybody just tips at 20 percent. It’s what you do.