Recently I posted on a debate between union leaders and restaurant owners over the minimum wage. That debate focused on what workers earn. Laura Clawson of Daily Kos flips the question: Let’s look at the earnings of restaurant CEOs. Between 2006-2013, incomes of large corporate restaurant CEOs increased from 621% ratio to the minimum wage to 721%. Clawson notes that these well-paid CEOs often hire well-paid lobbyists to sell their sob stories. As I noted in my last post on this topic, a business person who owns a hot dog stand or small restaurant might have a different argument. CEOs of large corporations can’t make the same claim. They have taken raises and bonuses while their employees have been forced to apply for food stamps and Medicaid. America needs a raise.
Today’s Chicago Sun-Times features a debate on the minimum wage. Tom Balanoff a labor leader, argues that a $15 minimum wage would provide a decent standard of life for workers. Mayor Emanuel’s commission has proposed a $13 an hour minimum phased between now and 2018. Balanoff notes that Los Angeles and Seattle have already passed $15 minimum wage laws. His argument focus on the needs of workers.
Sam Sanchez and Sott Defife, a restaurant owner and an official from the National Restaurant Association, argue that a minimum wage increase will hurt business, that it is “not a silver bullet for addressing the city’s economic challenges.” Twice they call for “comprehensive” measures, but never spell out what they would change. Their focus is on the economy, not the lives of individual workers. Still, they claim that most restaurant workers are young, “first time workers.” Once upon a time, that may have been true. Today most restaurant workers I encounter are adults, often in their thirties or forties. As Sanchez and Defife state, youth unemployment is now over 25%, in no small part because adult men and women who once worked in factories now fill low wage jobs in restaurants or retail.
It’s easy to agree with one side or the other in this debate. I’m for a living minimum wage, which could be index from state to state or region to region. In most places, that would mean at least $15 per hour (an average salary of $30,000 a year). At the same time, small businesses have some reason to be fearful of a minimum wage that would put them at a competitive disadvantage. Franchise restaurants work by economy of scale, which lets them control spending in the way that a small hot dog stand or corner store cannot. If it can be done, minimum wage laws could be written in a way that would protect small businesses. In some ways, that is the current standard in the restaurant industry where tipped workers in many states can be paid less than the minimum wage.
This debate is not simple or easy. My primary concern is with what is fair to working people. A good business will adapt its practices to meet what the market demands. Tax payers should not have to pay for services that help large corporations hire workers at a low wage. We need to demand a society where no one who works full time has to depend on state aid for food, shelter, and healthcare. We need to reward work. America needs a raise.
Think Progress reports that some businesses are asking their customers to do something very odd: Stop tipping wait staff. Instead, these moral businesses are pricing their food and drink in a way that lets them offer living wages and benefits, which is a common practice in other countries. The article also notes that under the current tip based system, the poverty rate for restaurant employees is three times higher than other workers. If the average tip is 20% and the restaurant raised its price by that amount, we could be confident that hard working people are being properly compensated. Anyone who thinks that paying such a small amount is unfair has another option: Cook your own meals.
I found a frightening article in the food section of today’s Chicago Sun-Times. David Hammond, the “Food Detective,” talks about the prospect of a world in which restaurants would not have waiters. Instead of placing an order with a person, we would place our orders via a hand-held device. Hammond says that this system would not work for high-end or low-end restaurants, but would be a good alternative for mid-level, casual restaurants (I’m guessing he means places like Fridays) where waiters often don’t care about their job.
From the perspective of the diner, Hammond’s outlook works, and I share his dislike of service that comes with a scowl or shrug. However, from a jobs point of view, this news could be catastrophic. We have adapted to do-it-yourself service at gas stations and at grocery/drug stores. How many jobs will be lost forever if restaurants find a way to go to do-it-yourself menus? If consumers accept this technology at mid-level restaurants, it will find its way up and down the food chain. It’s safe to assume that millions of jobs will be lost with people replaced by machines. Technology makes our life easier – except when it takes jobs away, and it’s doing that more and more in our self-service world.