One political and economic issue facing voters, restaurant management, and culturally the world at large is a simple question with a not-so-simple answer: how much should your employees be paid for working at a restaurant?
California has recently approved an increase in minimum wage from $8 to $10 an hour by 2016. The current Federal minimum wage is $7.25, so California was already ahead of the curve, and the increases will be spread out over two years. This pay increase followers a few months of protests by fast food employees, demanding a $15-per-hour minimum and the right to unionize without interference, according to Nation’s Restaurant News. The restaurant industry claims that unionization will hurt job creation, but workers argue that minimum wage and their pay hasn’t kept up with the rise in the cost of living for most Americans.
$15 seems to be the sticking point, the number most Americans at least refer to when it comes to a price raise. Too high and you start getting unrealistic, and too low, and it seems pointless. Ed Rensi, former CEO of McDonalds, has stated that $15 an hour would “absolutely” kill job creation in the country. In comparison, a Detroit-based burger restaurant, Moo Cluck Moo, has announced that they’re raising their pay for their employees to $15 an hour in October. The logic at this restaurant is that a raise in pay is an investment in the quality and future of their employees.
For restaurants that don’t include waiters and servers, and are more traditionally fast-food-stylized, a raise is purely up to the capabilities of the restaurant. If the restaurant is profitable enough, but not looking for expansion, renovations, and more, they may want to see if increasing the pay of their staff will increase employee satisfaction, retention, and quality.
When tipping is involved, it’s a little more convoluted. There have been many arguments for the dissolution of the tipping system in general. If you pay your staff in tips, you’re legally allowed to pay your staff less than minimum wage, as long as they make minimum wage or more via tips, and this varies by state. The Department of Labor has a guide for you to see what the minimums are. For a system where tips are established (and aren’t going anywhere), you can still raise their base pay; if anything, a raise to the federal minimum wage of $7.25, coupled with tips, could make this a significant increase to their pay. If you take away tips, an even more significant raise would be necessary.
Will government force your hands? It doesn’t seem likely, as the minimum wage for tip earners has stayed stagnant at $2.13 since 1991. Theoretically, that means that someone working as a waiter or waitress since 1991, without raises, has less spending money now than they did back then.
If you find that you’re staff are turning over at a higher rate than expected or you’d like, possibly a pay raise may lead to improvement in employee satisfaction. Greater satisfaction in their jobs would lead to less turnover, less training, and more sales from happy employees. It may take a bit away from your profits, but those same profits might just rise.