Our Editorial: One Fair Wage isn’t fair to staff
One Fair Wage, a proposal to incrementally raise the minimum wage to $12 by 2022, could appear on the general election ballot in November. While it boasts a hopeful sounding name, the proposal’s implications put at risk the livelihoods of restaurant workers.
Michigan One Fair Wage, the committee supporting the measure, submitted its petitions on May 21, and if enough signatures are validated, the proposal will appear on the fall ballot.
The proposal is being passed off as a simple minimum wage increase, something Michigan is used to seeing. Yet there is one aspect that voters likely won’t hear much about, but should. The proposal seeks to raise the minimum wage rate for tipped employees until it matches the full minimum wage.
On the surface, this may seem fair. However, there would be several negative consequences.
Michigan’s restaurants industry would be forced to raise prices, a cost that certainly would be passed on to customers. Some would likely have to go out of business, since restaurants operate on thin profit margins.
But the bigger impact would be on the restaurant workers themselves. Currently, tipped employees are guaranteed to make at least the full minimum wage, when the base tipped wage of $3.52 an hour is combined with tips from customers. If the combination doesn’t add up to the current $9.25 an hour minimum wage, the employer must make up the difference.
The One Fair Wage proposal would do away with this system. Instead of a tipped minimum wage, employers would be forced to pay incrementally higher wages to wait staff and bartenders, eventually paying them the full $12 an hour minimum wage by 2024.
The Restaurant Opportunities Center, a major financial supporter of Michigan One Fair Wage, argues that while tips are meant to be a reward for good service, customers often tip the same amount to every server.
But sharing payroll costs for servers with the customers keeps costs down for the restaurant operators, and may drive them to find alternatives to employing a full wait staff, including automation. Some restaurants already have opted for tabletop ordering devices or having customers order at the counter, says Michael Saltsman, managing director of the Employment Policies Institute.
Justin Winslow, president and CEO of the Michigan Restaurant Association, says it is rare to find a tipped server who does not make at least the minimum wage. Quite often, servers make far beyond the $9.25 minimum, he says.
But higher prices and knowledge that the servers are being paid a full wage may discourage customers from leaving the standard tip.
That’s why many of them are speaking against the One Fair Wage proposal. Groups such as the Restaurant Workers Association are fighting against the elimination of the tipped credit. Their members gathered this past month at Lansing Brewing Company to protest the proposal.
Maine passed One Fair Wage in November 2016. That state’s tipped servers began protesting the new pay structure just eight months later, when they realized it was not delivering the promised benefits.
Michigan should look to how the Fair Wage proposal played out in other states, and listen to the concerns of wait staff who have benefited from a framework that encourages tipping for good service.