This month, the Massachusetts legislature will reveal its decision for or against a $15 minimum wage: Specifically, lawmakers will act on two initiatives (House bill H.2365 and Senate bill S.1004) that would make a $15 minimum wage the law.
To help readers understand the different sides of this complicated political issue, Eater Boston offers this primer, including a breakdown of the law, its proponents, and its detractors. Note: The Fight for $15 affects more than just tipped restaurant workers, but it’s tipped restaurant workers who are the scope of this piece.
Background on the Fight for $15
Raise Up Massachusetts — a coalition of more than 250 faith groups, labor groups, and grassroots organizations across Massachusetts helping activists in the state fight for fair wages — recently collected almost 140,000 signatures to get a $15 minimum wage question on the ballot in 2018. The Massachusetts legislature has until the end of June to act on the initiative (House bill H.2365 and Senate bill S.1004). If the legislature passes a bill in chambers before then, a $15 minimum wage will become law — similar to laws that have been passed in cities like Seattle and San Francisco.
If the law is instated, the current regular minimum wage of $11 an hour will increase $1 per year until it reaches $15 in 2021. The current tipped minimum wage of $3.75 an hour will increase over the next eight years, eventually dovetailing with the full minimum wage in 2026.
A worker making the current minimum wage of $11 an hour — which after taxes looks more like $8 an hour — would have to put in 30 nine-and-a-half-hour days of work per month to earn enough money to afford the median one-bedroom apartment in the city, which costs $2,270 a month. Rent is, of course, just one expense — factor in utilities, food, and other miscellaneous bills (health insurance, for example), and suddenly the outlook gets worse.
There are subsidies available to low-income workers through programs like the Supplemental Nutrition Assistance Program, aka “food stamps,” as well as Medicaid and various public housing programs, but bureaucracy is notoriously difficult to navigate — some people spend years on wait lists for public housing and Medicaid, for example — especially when the majority of a worker’s time is spent working. Bottom line: Getting by on the minimum wage in Boston —and anywhere else in the country, for that matter — can be a difficult endeavor.
Now cut $7.25 off of that $11 minimum wage to get to the local tipped minimum wage of $3.75 an hour. (It should be noted that this is slightly higher than the federal tipped minimum wage of $2.13 an hour for workers who make at least $30 an hour per month in tips.) Add in the fact that tipped workers like bartenders, bussers, expediters, and servers in Massachusetts have to rely on the generosity of strangers — while hoping their managers are behaving according to the law — to make ends meet.
What’s Happening at the Federal Level?
In March, U.S. Congress passed an omnibus spending bill that includes a provision ensuring restaurant owners, managers, and supervisors cannot control, collect, or retain tips made by tipped restaurant employees. Were it not for this tip-pooling provision, wage theft — which is what happens when operators, owners, or management literally pocket or steal wages from their tipped workforce — could run rampant. Wage theft is pervasive in the restaurant industry, so the provision is important.
New regulations proposed by President Donald Trump’s Department of Labor (DOL) in December 2017 sought a regulatory rollback that would have allowed employers who pay their employees the full minimum wage to become the owners of whatever tips patrons doled out to their servers. In other words, the regulatory rollback could have hypothetically allowed wage theft. After announcing its proposal, the DOL hid data from the public that showed its new regulations would cost workers billions of dollars in tips.
If not for a report on February 1, 2018, by Bloomberg, the public would not have had access to this information before the public comment period ended on February 5. The DOL announced its proposed regulations on December 4, 2017. The reporting in Bloomberg was timely and crucial, but even then the public only had four days to consider the new information before the comment period ended.
Sexual Harassment and Minimum Wage
Tipped restaurant workers who experience sexual harassment are often reluctant to report it because it could result in the loss of tips. Many advocates for a $15 minimum wage believe that sexual misconduct is a direct symptom of the tipped work model: Eliminate the tipped minimum wage, they reason, and restaurant workers will feel empowered to stand up to such bad behavior because they’ll no longer feel as though making rent depends on whether or not they can grin and bear sexually inappropriate behavior from management and clientele.
According to data compiled by the Restaurant Opportunities Center of Boston (ROC), nearly 70 percent of the city’s tipped workforce is made up of women, and 35 percent of tipped workers in Greater Boston — more than twice as many as non-tipped workers — have experienced sexual harassment on the job. These numbers align closely with national trends and illustrate the stark reality that tipped workers are often subjected to sexism and sexual harassment by their customers and colleagues.
“Literally everyone has power over your income,” says Marie Billiel, who’s worked in the restaurant industry in Massachusetts for 10 years, eight of them as a tipped worker. “You’re forced to act on the whims of everyone else. Maybe that means flirting with a customer that’s creeping you out, or enduring your manager coming onto you and talking about your looks. If you make your manager angry, maybe they’ll give you a bad section. But it doesn’t matter to them because they’re going home with their paycheck.”
On the other side of the coin, Bob Luz, the president and CEO of the Massachusetts Restaurant Association (MRA) — a not-for-profit trade organization that represents the interests of restaurant owners in the state, and which is therefore against the elimination of the tip credit — said “sexual harassment is a societal issue.”
“It’s not happening in just one industry,” Luz said. “And I can tell you our owners and operators believe that 100 percent ... You’re not always going to have 100 percent great people in an industry, but that doesn’t represent the whole group.”
He continued by recounting his time spent in the human resources department of a large restaurant group:
“I represented 34,000 employees, and I’m very passionate about this stuff,” said Luz. “22,000 of those employees worked in the front of the house. In all my years in HR, I never had one server pick up the phone and say, ‘I’m paid inappropriately, I need an hourly wage.’ Because it worked for them. Restaurateurs and our members treat their employees like family.”
Luz’s statement doesn’t take into account the fact that many workers don’t feel empowered to speak up about such matters in the restaurant workforce.
Michael Saltsman recently wrote in Forbes that there is no link between the sexual harassment of tipped workers and the tipped labor they rely on to make ends meet. In his piece, Saltsman attacked ROC, calling it “a controversial labor advocacy organization with its own history of alleged bad behavior.” Saltsman links to his own research, which suggests ROC’s data is flawed, and which also suggests there’s no connection between tipped minimum wage work and sexual harassment.
“Regardless of your stance on an increase in the overall minimum wage, there’s broad agreement among owners and employees that making changes to the tipped minimum wage is unnecessary, unwanted, and harmful,” said Saltsman to Eater via email. “Anti-tipping groups like ROC have the support of celebrities and wealthy donors, but not most workers. We’ve collected the worst of their myths about tipping and tip credits at ROCFactCheck.com.”
Saltsman is the research director at the Employment Policies Institute (EPI), a conservative D.C. think tank that opposes legislation aimed at raising the minimum wage. EPI is owned by Berman & Co., a D.C.-based public affairs firm whose company’s founder, Richard Berman, was nicknamed “Dr. Evil” by labor unions and the media. Berman is quoted in a PR Watch article from 2001 as saying, “Our work is restricted to and focused on issues that affect shareholder value. These big issues include labor costs as they relate to health insurance and the minimum wage, achieving operator sales increases, and tax rates as they are affected in particular by payroll and excise taxes.” (Side note: Back in 1995, Berman offered advice to Philip Morris U.S.A. on advocating for smoker’s rights in restaurants.)
Meanwhile, Joshua Chaisson, a member of the board of directors of the Restaurant Worker s of America, emailed Eater with his own protestations, against both ROC and the Fight for $15 generally: “The Restaurant Workers of America (RWA), an employee advocacy organization dedicated to the preservation of tip income, is actively fighting against ROC’s false claims. RWA members believe that servers do not ‘need to be saved’ by ROC and do not want to increase their tipped wage.”
The Independent Restaurant Operator’s Story
It’s not just CEOs and think tank directors who are apprehensive about eliminating tipped wages. Some restaurant owners who are sympathetic to the idea are worried about the execution. Mary Dumont, owner and chef at popular downtown restaurant Cultivar, told Eater she has no problem with restaurant workers agitating for a fair wage but said that the imperatives of running a business make it a nettlesome conversation.
“People don’t want to pay more for a burger or a salad,” Dumont told Eater. “I have no issue with the Fight for $15, but you open a business, and you want to support your family, and you need to be able to do that. So somebody has to pay [to cover a higher wage] — prices need to increase, other things have to happen, and I don’t think the general public fully understands that.
“The margins are already so tight,” she said. “Restaurants are lucky to make 8, 10, 12 percent profit. And now that’s going to go down to 4 percent? Why would anyone be in the business, then? I think people need to recognize their burger is going to be $15, maybe $18, maybe $20.”
Josh Lewin and Katrina Jazayeri, who own Juliet in Somerville, found a different solution. They eliminated tips from the get-go and opened the business’s books to everyone on payroll, with help from a local firm called ReThink Restaurants that helps restaurants employ an open-book management strategy.
“We always wanted to open something without tips,” says Lewin. “And that was about building a career as a server, a job often thought of as menial or temporary. We wanted to create something that could be meaningful on its own. We love the industry, and we wanted to create an atmosphere that creates a career pathway for any job in the industry.”
Lewin and Jazayeri are able to pay their employees a fair wage by controlling food cost on their menus more strictly. To pay their employees a fair wage, Juliet factored in a 20 percent increase to menu prices, which is roughly what servers and bartenders would expect to be tipped at the end of service.
Even though their menu prices may be higher, the cost for the customer has remained the same. Think of it like this: Instead of ordering $50 worth of food and drink and tipping $10, Juliet charges $60 for the same amount food and drink, but the customer isn’t required to tip at the end of the meal. Lewin and Jazayeri are able to take that extra 20 percent and factor it into their labor budget.
Another Boston restaurateur, Bon Me’s Ali Fong, starts her employees off at $11 an hour and increases wages as employees gain experience. Within a month of great performance, employees get bumped to $13 an hour. Fong’s goal is to pay her employees $15 an hour by the end of this year. But for Fong, it’s not only about paying employees a living wage.
“There’s wage theft everywhere in the industry,” says Fong. “You have to be operating with really great practices along with a wage increase. You have to respect your employees. Not only is a wage increase necessary, there’s a lot more that needs to come along with that, too.”
And just as Juliet does, Bon Me accounts for the higher wages through menu pricing. Still, Bon Me’s vice president of community, Rebecca Simonson, said that they’ll continue to advocate for a legislative change. She adds that it’s difficult to remain above water as an independent business without major financial backing while also paying employees a fair wage. She hopes that legislative action to raise the minimum wage for all employees would help level the playing field.
“Certain companies coming into Boston with investor money and large financial resources can keep their prices relatively low because they have the ability to lose money,” said Simonson. “These are the kinds of companies that are also paying their employees the same low wage. It can be stifling, because people in Boston expect certain prices. And if we go too high, we won’t be able to do business, which means we won’t be able to pay anyone.”
There are two scenarios that could play out that lead to Massachusetts adopting a $15 minimum wage. If the legislature acts on House bill H.2365 and Senate bill S.1004 by the end of June, it could enact a $15 minimum wage independent of voters. If the legislature fails to act, Raise Up Massachusetts and other advocacy groups involved with the Fight for $15 would have to collect 10,972 signatures by the end of June to ensure a question regarding a $15 minimum wage makes it to the ballot in November.
If history is any guide, the first scenario is likely to play out — in 2013 and 2014, the state legislature acted decisively to raise the minimum wage. But if the legislature doesn’t stick to the script and the question goes to the ballot, it’s Massachusetts voters who will have the final say on whether or not to raise their state’s minimum wage.
Correction (June 7, 2018, 1:10 p.m.): The article has been corrected to accurately reflect Rick Berman’s ties to the tobacco industry and the Employment Policies Institute’s stance on labor costs.