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Jason Murphy's blog

Raising Industry Standards and (Tipped) Minimum Wage

As a current restaurant owner and former restaurant employee, I’m well aware of the difficulties that arise from living off of minimum wage or “living hand-to-mouth” as it is commonly referred to.  Before purchasing my restaurant, Russell St. Deli in Detroit, with my partner Ben Hall, I spent 15 years as a restaurant employee. For most of that time, I earned minimum wage or just slightly more -- and I found that I simply didn’t have enough cash to pay my bills. Like too many Americans, restaurant employees work long hard hours and yet often do not have enough money to make rent and provide adequate groceries for their families.  It doesn’t have to be this way.

The U.S. restaurant industry generates more than $1.7 trillion in revenue each year, yet provides 7 of the 10 lowest paying jobs in America.  That is why I joined RAISE (Restaurants Advancing Industry Standards in Employment), a new restaurant association for small business owners that supports the Fair Minimum Wage Act.

Introduced this March by Representative George Miller (CA) and Senator Tom Harkin (IA), the Fair Minimum Wage Act will ensure a fair living wage for the 10 million employees in the restaurant industry. The bill aims to raise the national minimum wage rate from $7.25 per hour to $10.10 per hour and raise the national tipped employee minimum wage from $2.13 an hour, an amount that has not increased since 1991, to around $7.10 per hour over the next six years. This means an effective increase of just $0.95 per year.

Opponents of the bill include the National Restaurant Association, which has successfully lobbied to keep the tipped minimum wage frozen at $2.13 for over 20 years. They argue that the wage increases will destroy the restaurant industry by driving up expenses for employers.  They argue that the cost of dining out will become too great for the patrons.  However, these arguments are inaccurate and unpopular.

According to a recent poll, 2 out of 3 small business owners are in support of raising the minimum wage. The reality is that a higher minimum wage serves as an economic stimulus by increasing consumer spending and can even decrease unemployment.  Additionally, a study by UC Berkeley on the effects of raising the national tipped and non-tipped minimum wage concluded that the increase in food cost for the average American household would only be about a dime a day

In Detroit, where small businesses are the engine of economic revitalization, Ben and I pay our tipped employees as much as $10.00 per hour and our non-tipped employees as much as $15.00 per hour. And it is because we pay our employees well above the national minimum wage -- and raise the standards for a professional and fulfilling workplace-- that our restaurant has experienced an 11% growth rate annually. 

The question isn’t whether paying people at the current minimum wage in large multinational chains, like Darden and McDonald’s, who are supported by the National Restaurant Association, have a far greater rate of success, in terms of capital growth (the paper money system), than do most small businesses.  The question I would instead like to ask is how long can we allow these big businesses to earn large sums of money off the backs of underpaid American workers?  How can this current model be sustained where the vast majority of the wealth goes to the few?  It is time for America, “the wealthiest nation in the world,” to start taking care of those who take care of their everyday food needs. It’s time to support an increase in the minimum wage.

By Jason Murphy, Co-owner of Russell Street Deli and Steering Committee member of RAISE