Calling All Rich Waitresses: Step Forward for Pay Cuts
By Tim Nesbitt of Portland, Oregon. Tim is the president of the Oregon AFL-CIO.
In the last legislative session, attempts to reduce our voter-approved minimum wage law centered on changes for all workers. But in this session of the legislature, the Oregon Restaurant Association is trying to jam through changes that would boost the profits of its member restaurants while reducing the wages of tipped workers.
The story this year: HB 2409, sponsored by Rep. George Gilman (R-Medford) would cancel scheduled cost-of-living adjustments to the minimum wage for workers who receive $30 per month or more in tips. SB 451, sponsored by Sen. Jeff Kruse (R-Roseburg) would reduce the minimum wage from $7.25 per hour to $6.90 per hour and freeze it there for workers who receive $30 per month or more in tips.
The rationale for these bills is that tips can provide a generous income far above a poverty wage for servers in higher-priced and high-volume establishments and that these servers don’t need the minimum wage. But that argument in effect asks lawmakers to determine what amount of tips is too much to justify getting the minimum wage. How much might that be?
As one focus group participant stated on this subject, "I have never met a rich waitress."
And as Oregon AFL-CIO Political Director Steve Lanning sees it, "All versions of tip credit proposed in the bills we have seen in this legislative session ask lawmakers to define and find that rich waitress so that you can make sure she returns some of her excess compensation to her employer."
But, he asks, why would legislators want to do this? "They don’t appear to be as eager to try to define and find rich restaurant owners who should be able to pay higher-than-minimum wages," notes Lanning, "much less require that that they do so."
Still, that question from the focus group participant is haunting. So if there are rich waitresses out there who would like to "tip out" some of their wages to their bosses, please let us know. It's last call, and Republicans in the House and Senate are waiting to hear from you.
Meanwhile, the rest of us will be over here: Protecting Oregon's Minimum Wage. Unless you're a rich waitress, please join us.
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February 23, 2005 |
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Posted by: Kari Chisholm | Feb 23, 2005 4:12:09 PM
Todd, are you suggesting that if the service staff at restaurants made less money, then the kitchen staff would make more?
It's different everywhere, of course, but at most restaurants, the wait staff 'tip out' the hostess, the busboys, the kitchen, etc.
Posted by: Pat Ryan | Feb 23, 2005 6:54:33 PM
There's one juxtaposition that must be made here. The restaurant owners are screaming bloody murder becuase the state wants a bigger slice of the profits that they make from gambling machines that just sit in the corner puking out money.
Then they want to offset the requirement for a below poverty level minimum wage, by taking it out of their employees tips, which by the way are already subject to taxation.
The vast majority of wait staff are classified as "part time" as well, and hence are not elegible for whatever benefits might be offered to the few full timers at the top of each restaurant or chain.
I've done my fast food stint back in the day. Assistant manager of the McDonalds just east of the capitol building back in the 70s. $500 per month, average of 55 to 60 hour weeks, no overtime pay for "management" and no benefits for anyone. They did allow us to eat the "pre garbage" food that was destined for the dumpster. I gained 25 pounds in three months. (Shades of "Supersize Me") My wife also cocktailed at the sports bar Chuck's in the early 80s.
It's a brutal degrading line of work for most, and in return for getting pawed by drunks and harrassed by customers, they deserve to keep any paltry benefits that accrue.
Posted by: Steve Bucknum | Feb 23, 2005 7:19:12 PM
Some of us aren't taking this minimum wage issue sitting down. Our local Sen. Whitsett was confronted in advance of this issue with a letter to the editor of our local paper stating it was poor practice to lower the wages of the people that just voted for you! Incredibly, Sen. Whitsett wrote back a letter to the Editor published 1/28/05 in which he claimed, "I have not introduced, co-sponsored or supported legislation that will reduce the Oregon Minimum wage." On February 7th we learned he was a co-sponsor of Senate Bills 451, 452, and 455 that will lower the minimum wage for waitresses (451), students (452), and everyone (455).
So, our local Democratic Central Committee followed up with another letter to the editor in which this lie to the people was revealed.
We have to hold their feet to the fire. If you can write to Blue Oregon, you can certainly write to the Oregonian or your local paper. Legislation is online at www.leg.state.or.us The Oregonian accepts emailed letters to the Editor.
Get out there and do something. Writing to Blue Oregon is nice and all, but really it is preaching to the choir!
Posted by: John Dunagan | Feb 23, 2005 7:26:47 PM
WTF? Aren't we in the majority in the Senate? How is such a bill even seeing the light of day?
I suggest this amendment to Kruse's bill:
Restaurant owners get two choices. They can either pay minimum wage the way it is, with the COLA, to their wait staff regardless of tip income (which is still taxable, btw), just like it is now, or they can elect to institute the lower min. and denial of COLA, provided that:
Such employees are immediately classified fulltime-eligible for major medical, dental, vision, and pension/retirement, premiums to be paid by the employer.
Posted by: Cody | Feb 23, 2005 10:44:03 PM
Speaking of pensions, I notice that the ad on the right hand side of the screen here is for "There is no Crisis". That is a terrible name for the group. You don't have to read Lakoff's "Don't Think of an Elephant" to know that the first thing you think of when someone says that to you is an elephant (or, in this case, a crisis). By so naming the organization, they already play into the hands of those who claim there is a crisis. Why not call the group something like "Defend Your Retirement" or "Your Check's in the Mail".
Posted by: PanchoPdx | Feb 24, 2005 8:53:53 AM
Are you guys really defending the lack of a "tip credit" provision in Oregon's high minimum wage on the basis of "waitresses work hard"?
So do a lot of other people.
I had a couple jobs in the restaraunt and bar industry and I had the chance to see the effect of minimum wage increases on a small operation. Decent cooks were in higher demand than servers yet often made less (and you couldn't force servers to tip cooks because that was against the law too).
The cost structure usually resulted in management doing a couple of things: hiring fewer servers or bussers, using inferior products (processed cheese on the nachos and HRD in the wells)and/or raising prices.
End product was that quality of food and/or services suffers while prices rise.
I suppose that the consumer is just collateral damage in the battle for "economic justice" (or whatever you're calling it these days).
In other words:
Get used to spending more to receive less when you dine, because waitresses have a difficult job.
Posted by: Randy Leonard | Feb 24, 2005 9:14:21 AM
It simply amazes me how the republicans get away with all out war on the working class yet it is some of those same working class people that continue to vote to put that party in positions of power.
That anyone would support, defend or rationalize why it is that a working class person -often a single Mom trying to put food on the table for her kids- should subsidize a business owner with her/his hard earned tips (which we customers voluntarily give out of our own pocket to that person) reveals a contempt for the working class.
Frankly, those that support tip credits disgust me.
I say, thank God for great working class leaders like Tim Nesbitt. He is, in my opinion, one of the most outstanding leaders on working class issues alive in the United States today.
I consider myself enriched that I count Tim Nesbitt as one of my friends.
Posted by: Jim | Feb 24, 2005 9:44:58 AM
Randy,
Republicans get away with war on the working class because people are largely too lazy or stupid to find out how their vote is really impacting them. Sand but true. The GOP has also done a tremendous job in the PR department of convincing the working class that "tax cuts" and the like benefit them when in reality they hurt them...the old bait and switch.
Posted by: Joe "Chubby Gazelle" Baessler | Feb 24, 2005 10:08:56 AM
John,
I think your idea of giving benefits to wait staff is nice but it's tricky. First the republicans and the restaurant association offered it as a compromise last session. (If I remember correctly) It looks great on the surface. However, most wait staff are part-time and would not have been eligible for the benefits under that compromise. You can bet all wait staff would have been Wal-Marted to part-time soon after.
I was a waiter and bartender in Michigan and Ohio where there is a tip credit. It sucks ass. My rent was completely dependant on whether I worked good shifts. Your income is very unstable. Working in a nice fancy joint in Cleveland was fine I made good money even on Tues. evenings. In Michigan I worked at lower end place where you had to fight for the good shifts. All wait staff are not equal and this would really hurt many of them.
I like the fear that the food will start to suck if we don’t start a tip credit. Why is it bad for restaurants to make up for lost profits by serving bad food and ok for them to make up for lost profits on the backs of the working class. I’d be less worried about substandard cheese and more worried about creating a generation of the working poor.
Gazelle
P.S. Thank God for Randy Leonard, I didn't vote you for you in 2002 and that was stupid. I'll totally vote for you from now on.
Posted by: Tom Civiletti | Feb 24, 2005 10:33:07 AM
The R's and their lapdogs in the thinktanks and media are effective in diffusing the class consciousness that would allow most people to understand why they should support a living wage for waiters [as well as janitors, farmworkers and others]. Instead, people see others income as coming from their own pockets, effectively adopting the world-view of the ownership class.
I think changing this paradigm is one of the big challenges for progressives.
Posted by: PanchoPdx | Feb 24, 2005 10:38:44 AM
Randy,
So the ability for a server and a restaurant owner to freely negotiate terms of employment is "subsidiz[ing] a business owner" in your book?
Well allow me to express some of my "disgust".
You butcher the meaning of "subsidize", heap an emotion-laden image of single mothers juxtaposed with evil business owners on a faulty premise, then demonize minimum wage critics as showing "contempt for the working class."
I have news for you Randy. The attempts to lump people into working class/proletariat and pit them against greedy aristocrats are not as persuasive as they used to be.
The minimum wage initiative just squeaked by in '02.
The "us vs them" concept evaporates as more folks attempt to move their way up the ladder and start their own businesses and find their path clogged with regulatory obstacles and illogical mandates.
It is sad (but telling) that you are generally considered the most "business friendly" Commissioner on the Council.
I'm with Todd. Nobody should be bleating about protecting the sanctity of the (narrowly) voter-approved minimum wage unless they first renounce any and all attempts to weaken M37.
Posted by: Todd Birch | Feb 24, 2005 11:02:29 AM
Kari Chisholm: Todd, are you suggesting that if the service staff at restaurants made less money, then the kitchen staff would make more? It's different everywhere, of course, but at most restaurants, the wait staff 'tip out' the hostess, the busboys, the kitchen, etc.
You’re right, unless a "minimum tip-out” law has been enacted in Oregon that I’m not aware of, the transfer of money from servers to other staff is voluntary, and the waiter makes the final call as to who gets what, and how much - at least that’s the way it’s been at the restaurants where I’ve worked. Maybe a statutory change is warranted. I bet I can find some dishwashers and line cooks who’d vote for it if given the chance.
As far as a restaurant manager being able to pay individual staff a better share of their worth in the absence of the state minimum wage mandate...well, if she's got more money in her budget (money the government isn't telling her exactly how to spend), then yes, I am suggesting she might throw a little extra in the direction of employees she thinks deserve it (and a little less to those she judges do not, it is alas also true).
Or, it might mean she hires more employees - although I'm fully aware that unions and their fellow travellers reject the notion that there's any conceivable correlation or connection between a sky high minimum wage and a sky high rate of unemployment, both of which we have here in Oregon at present.
Posted by: Adam | Feb 24, 2005 12:01:02 PM
I love how Republicans always assume that any money not paid out to workers in wages will go directly towards hiring more employees or spending more money on better ingredients, decorations, etc. Surely none of the savings would simply be pocketed by the owners in the form of higher profits!
As with most debates, the truth lies somewhere in the middle of both extremes. If you have sky high wages, businesses won't be as successful and they won't hire as many workers, but if wages are too low, people can't make a decent living even though they work their butts off and they won't be able to buy the things the businesses are trying to sell.
Although it's not required, waitstaff should be encouraged to tip out the kitchen staff as well as the bartender, busers, and hostesses. After all, it takes the full team to deliver good service to the customers and the waitstaff couldn't earn those tips without everyone else doing a good job also. Maybe we need some kind of mandatory tip sharing law?
Posted by: Anne Dufay | Feb 24, 2005 12:52:18 PM
Hum. So, as server's wages rise, the quality of the food goes down...
Over the last 20 years I've been a happy and increasingly well-fed Portland restaurant-hopper. As minimum wages have risen, so has the quality and variety and sheer quantity of Portland restaurants, and the food they serve. Why, I can remember a time when one could count the number of really great eateries in this town on one hand. Now -- I've given up on the notion that I will be able to try them all, even just once.
Once we were a pale also-ran to SF or LA or NYC eating-out opps. These days we're a hopping, exciting restaurant scene. Much of that is thanks to a wave of local restaurateurs focused on high quality, local, and oft organic ingredients. From the neighborhood sandwich-and-fresh-roasted coffee cafe, to the most expensive once-a-year special treat place, the food here in Portland is fresher, wilder, more adventuresome and just plain better with every year, and every cost of living increase, that passes...
Every ingredient I can think of is now offered in more variety, and of higher quality than it was when server's wages were lower. Fresh-made local cheeses? Fingerling potatoes? Fresh, tender greens? Beef so tender and mouth-watering flavorful I shouldn't think about it for too long or I'll be tempted to leave my desk and work? Wine and beer to match?
PanchoPdx - you gotta get out more :-)
Posted by: Todd Birch | Feb 24, 2005 1:21:01 PM
For the record, Todd Birch, detesting nationalist socialism as he does, is not now, nor has he ever been, a Republican. (More than anything he leans toward "Marxism": He'd never belong to a club that'd have him as a member.)
Posted by: Jesse | Feb 24, 2005 11:56:54 PM
I think unemployment is far too complex an issue to draw a direct correlation to minimum wage levels.
If there are reforms that would provide more tip-sharing with other staff, then I'd welcome the discussion. But our nation's largest employment sector after the government is the restaurant industry. I would imagine that's mirrored here in Portland. It is sustained growth, albeit with high turnover, but not a market in danger of going under from employment costs. So I don't see a very compelling case on exempting restaurant employees from minimum wage laws.
In fact, as more Americans look to the service sector for jobs--one of the largest growth sectors I think--their ability to provide living wages will be an increasingly important issue.
Posted by: ron ledbury | Feb 25, 2005 8:39:03 AM
Tom -- can a waiter plan to one day open their own restaurant?
There should be greater flexibility to flipflop from owner to laborer and laborer to owner. Which is a belief that there is no predefined life long class to which anyone belongs. The class is one of agreement on a common set of rules of the game.
The owner of a start up usually starve themselves, and their own family, and give up health insurance while they live out their dream of running their own business. In this context, mandated wages and health insurance coverage impose a barrier to entry into the market. If policy makers make some trade off or concession on behalf of entrenched existing businesses then the market gets stale. Such a stale climate works to the benefit of franchise outfits over mom and pops.
A tip that goes exclusively to staff works to the benefit of the owner. It makes staff attend to the needs of the customer and thus results in more repeat business. I would rather this remain a qualitative assessment. If the owner wants to place a tip jar with “owner tips” taped onto the empty jug, in lieu of focusing on getting repeat business, then they are in the wrong business. Customers go out for service not prices. If price were the issue they would stay home.
I oppose bad service restaurants, thus I oppose the fly-by-night and non-customer-oriented restaurant owners.
Posted by: Tom Civiletti | Feb 25, 2005 9:18:01 AM
Ron,
I've got nothing against a waiter opening arestaurant. It would be nice if he remembered his roots and didn't proceed to f-over his employees the way he was f'd-over earlier.
I am self-empolyed, but I realize my common interests with peple who work for a wage. But I'm a realist. I expect most restaurant owners to be exploitive a-holes, and my expectations seem verified by the restaurant association activities.
Most people who eat in restaurants are wage earners. they are the folks I believe should feel solidarity with waiters.
Posted by: PanchoPdx | Feb 25, 2005 11:59:51 AM
Anne,
I probably get out more often than you think. FWIW, I've probably dined in about half of the restaurants in the latest WW top 100 list.
You've concluded that the Portland's historically good restaurant scene is due to a generally high minimum wage over the last decade, while I believe it has prospered in spite of it and is now reaching a tipping point (no pun intended).
We can continue to trade anecdotal observations, I suppose. Eventually it will all come out in the wash (unless the unions find a way to blame M5 or M37 for it).
Some years ago, I worked in a restaurant during a minimum wage hike and I saw negative results on service, prices and food quality during the adjustment. I was only there for six months, so maybe the effects were only temporary there, but I learned a little bit about the challenges involved in running a restaurant.
I learned that restaurant owners often work very hard at significant financial risk. If their bottom line suffers for too long they'll get out or take their show somewhere else. They aren't running charities.
As Ron alluded earlier, it's the Olive Gardens and Applebees that benefit most from the barriers to entry.
The increasing minimum wage is only one factor driving the increased costs of dining and the failure of some (otherwise great) restaurants. Lots of other things (price of ingredients, customers' disposable income, shifting trends, cost of leasing space, ability to retain good cooks/managers, etc) also factor in.
I'm not suggesting that increasing the minimum wage is the death knell for certain restaurants (although it's usually a factor), but that the current increase (2nd highest in the country) couldn't have come at a worse time (with staggering unemployment) for the restaurant industry. Customers have less disposble income while the price of dining out goes up.
Is it just me, or has anybody else noticed that happy hour prices seem higher (and offerings less generous) lately?
Hasn't anyone else felt mildly disappointed in the last year after dropping $150 on a dinner for two?
Less bang for my buck, means that I'm more likely to dine in next year.
Things might seem different in your circle Anne, but I doubt that I'm the only one who senses this.
Posted by: Tom Civiletti | Feb 25, 2005 12:15:37 PM
Pancho, how much did the incresesed minimum wage add to your $150 tab? Not much. How then can it be blamed for your disappointment.
I eat in restaurants quite a bit. I think service is generally good. I don't want to feel like I am exploiting my waitress so I can have a low effort meal. Has anyone here lived on minimum wage recently, especially with out accessing government aid programs? It's damn tough. How can you expect cheerful service from someone struggling to feed and shelter herself [let alone any dependents]?
Of course, I imagine some masters expected their slaves to smile as they worked.
Posted by: Kari Chisholm | Feb 25, 2005 12:27:22 PM
As always, it can be useful to do the math.
$7.25 per hour X 40 hours per week X 52 weeks a year.
No vacations. No days off. That's $15,080 a year. That's $1256.67 a month. Before taxes.
Repeat after me: Someone working full-time shouldn't make less than a thousand bucks a month after taxes.
Not in the richest country in the world.
Posted by: Frank Dufay | Feb 25, 2005 12:49:05 PM
Panchopdx,
As part of Anne's "circle" and a former waiter, bartender and wine-steward...
Most restaurants fail. Most bars fail. It is the nature of the business, here in Oregon and elsewhere. The minimum wage plays a minimal role in that because good restaurants that succeed generally ensure that their employees are well-compensated. (Unlike the "Applebees" of the world where food isn't the passion or the point.)
Working in the food industry should be a viable career, with decent wages and benefits, and not just a thing to do while in college or between "real" jobs (my daughter was a part-time waitree at Applebees in college). Sub-minimum wages, or scams that let employers skim the tips, do nothing to give that sense of worth and dignity to what is an honorable profession. And the reality is that over-priced wine lists, skimping on quality food, and redundant "remodeling" schemes drive the bottom-line negative far more often than any minimum wage issues.
Keri's Blazer nachos weren't served cold because of an inflated minimum wage. They were served cold because Blazer management failed to provide the framework for good, quality service. The heart of which is good employees, adequately and appropriately compensated...both on and off the court.
Frank Dufay
Posted by: Pat Ryan | Feb 25, 2005 1:08:04 PM
I'm with you Pancho. Screw 'em. We should remember the words of Anatole France:
The law, in its majestic equality, forbids the rich as well as the poor to sleep under bridges, to beg in the streets, and to steal bread.
It's as if some misguided liberals mistakenly imagine that one of government's most important roles is to provide a few tools to the huge majority of citizens that make up the bottom of the pyramid. I mean imagine that. These bleeding hearts think that a job ought to provide sufficient income to afford food, housing, clothing, and medical care. That's just un-American in my book.
And yes, people have bought into the concept of voting the values of the social class that they hope to rise into rather than the social class where they actually spend their lives. Just because they've drunk the kool-aid doesn't mean they made the correct choice for themselves, for their children, or for society in general.
Posted by: Russell Sadler | Feb 25, 2005 2:00:05 PM
Hey PanchoPdx,
NO employee EVER negotiates "freely" with an employer. That bit of Dark Ages rationalization went out with Lochner. The employer and the employee are not equals and never will be, despite the prating of "Libertarians."
Posted by: PanchoPdx | Feb 25, 2005 2:07:51 PM
Tom,
I don't know, perhaps 5-10% of the total tab. A higher minimum wage increases the costs of all sorts of things beyond paying servers, bussers and valets (not to mention inflating the base calculation of a presumed 20% tip for decent service).
It's funny you bring up the master/slave metaphor. The insitution of slavery (supported by Democrats back in the day) required the force of government to restrict the natural freedom of individuals bargain for the value of their services in the marketplace. Modern democrats still see no problem with corrupting market decisions that could be left to free individuals.
Nobody is forced to be a server, you don't have to work in a restaurant if you don't want to, but restaurant owners have no choice whatsoever about paying the minimum wage.
As you sneer at selfish restauranteurs, you might want to reflect on just who is curtainling the freedoms of whom nowadays.
##########
Kari,
Shouldn't a person's wage accurately reflect the value of their work?
If so, what gives you the keen insight to determine a person's minimum value in the marketplace better than the marketplace itself?
PS - I hope you aren't suggesting that minimum wage policies are responsible for making the US the richest country in the world?
#####
Pat,
In the same spirit, I'll leave you with a quote pertinent to progressive philosophies (with respect to minimum wage policies, at least):
"Exitus acta probat"
(translated)
The ends justify the means.
Posted by: ron ledbury | Feb 25, 2005 2:10:49 PM
Imagine if a grocery checkout clerk can be characterized as a service employee just like a waiter. How long before the owner sets up a tip jar on the counter and says “have pity on the clerk” for they have a lower minimum wage than their peers [blah and blah]. . ?
The issue is not waitresses and waiters it is all workers that have face to face contact with customers. Suppose Portland's good tipping attitude spread to the bank clerk, anyone with face to face contact. The economist in me recognizes that if you reward behavior, here enabling lower wages under particular circumstances, then the employers will adapt to it. In order to prove their point they could demand that waiters reveal their tips to the boss just to prove the point; even if it is to turn over a cut to the boss. Try tipping a gas pumper at Albertson's - - - it is against the company rules . . . would Albertson's pay less wages while abandoning the prohibition on accepting tips?
The principal of distinguishing between minimum wage earners based on tipping opportunity is more important than the minor COLA adjustment in this particular instance. It could extend all the way toward charging the worker a stage fee even if the worker is “assigned” a bad shift and gets only 15 bucks for 6 to 8 hours of demeaning work.
Having said that, the owners themselves are no less vulnerable to the whims of customers than are the tippable employees; unless one can come up with a gimmick like state mandated car insurance among a small group of oligopolists etc. The second car discount ended with the mandate for car-specific insurance, . . wonder why?
Kari needs to go run a business someday, perhaps a flower shop, and then contemplate the wisdom of believing that the customer owes a duty to buy from her. A minimum wage, if applied uniformily and treats all businesses alike, keeps the employers battling with one another on a level playing field. The swiss cheese style of application among different businesses is no longer a public policy question but is designed to give one employer, or group of employers, an advantage over another via the political process.
The courts, by the way, authorize swiss cheese by allowing the legislature to make class distinctions in the economic context as long as the government can dream up any conceivable rational explanation at time of any court action to challenge the distinctions drawn. The distinction here is the tips. I would expand the inquiry to all tipping opportunities, that is face to face contact with customers, regardless of whether or not tips are exchanged.
Do we want our bar owners barking at their staff to reveal all their tips just so the owners can then appease the labor division that the workers did indeed receive tips? I bet the tax man is licking his chops on this one, for sure . . . his army of tax collectors would get a boost at the expense of the wages of the poor waitresses.
Posted by: Leslie Carlson | Feb 25, 2005 2:14:25 PM
Kari needs to go run a business someday, perhaps a flower shop, and then contemplate the wisdom of believing that the customer owes a duty to buy from her.
Ron, I don't know which Kari you are advising to open said flower shop, but if it's Kari Chisholm, "she" is actually a "he."
Posted by: Kari Chisholm | Feb 25, 2005 2:28:02 PM
Thanks, Leslie for the gender clarification. There's a reason why my photo (and everyone else's) is posted for all to see with our bios.
Also, Ron, um, yeah - I am in business for myself. See MandateMedia.com. Nice to meet ya.
Posted by: Kari Chisholm | Feb 25, 2005 2:33:56 PM
Pancho said, "I hope you aren't suggesting that minimum wage policies are responsible for making the US the richest country in the world?"
Um, yes, Pancho, I am. Remember your high school social studies chapter on Henry Ford? He raised wages so that people could afford to buy his cars - leading the way to the modern American consumer economy.
The minimum wage created the American middle class. No amount of Ayn Rand theoretical libertarianism is going to change that fact.
...Ford, believing "men work for only two reasons: one is for wages, and one is for fear of losing their jobs," dealt with labor turnover by doubling pay to $5 a day; that other manufacturer's emulated Ford's wage policies along with his production methods; and that eventually all employers were forced to bring wages into line with those offered unskilled labor in manufacturing.
Regardless of the means, unskilled assembly workers eventually reaped substantial gains from increased industrial productivity -- a forty percent reduction in working hours and a twenty-five-fold increase in wages. ... Coordinated wage setting between national associations of employers and national labor organizations, usually led by blue-collar unions, achieved both high wages and considerable income equality.
Posted by: Patty | Feb 25, 2005 2:34:12 PM
I'm happy to see such a lively debate on whether we should have a reduced wage for tipped workers.
Some clarity on the question of whether the increase of the minimum wage hurt unemployment: There is absolutely no evidence of that at all. None. Zip. Nada. I'm not kidding.
In fact, an October 2004 study in Oregon Labor Trends published by the Employment Department has tracked job growth in all employment sectors since June 2003 - right after Measure 25 passed. According to the study, low-wage jobs in Oregon are growing faster than other wage levels. In fact, low-wage jobs grew by 3% while the other sectors grew by only 2%.
All a reduced wage for tipped workers does is put money in the pocket of the restaurant owner. There is no evidence that in the states that have tip credit, the back of the house workers make more money. If there was, the Restaurant Association would be waving the reports in our faces.
Here's the reality: People that have worked in other states with a tip credit report that not only do the owners keep the extra money, individual tip earnings are reduced because wait staff can be hired at bargain prices - encouraging restaurants to overstaff.
The reduced wage also pretends that every single minute a tipped employee is earning tips. Anyone who has worked in a restaurant knows how much side work there is and that there is slow time. That’s time when tipped workers would be getting ripped off if Oregon had a tip credit.
To argue that it cuts into the profits of business owners misses the point entirely. As a society and a state we set minimum standards. For example, we have a 40-hour work week and we don't let children work in sweat shops.
And in Oregon we believe that that no one who works full time should work in poverty. That's what the voters decided and special interests like the Oregon Restaurant Association shouldn't be trying to mess with it.
Posted by: ron ledbury | Feb 25, 2005 5:03:56 PM
I used flower shop as an illustration of a small business where the owner is likely to be the worker too, with even a zero or negative salary. If I had a greenhouse full of flowers, rather than tomatoes, would that imply anything about gender, or gender preferences? I do not subscribe to any theories that correlate artistic talent and some gender this or that. Lest I would have to find the artistic use of the English language is somehow indicative of something else in all writing today and in ancient times.
If someone were to take offense I would rather it be to my implication, in my last sentence in the preceding post, that a waitress might be free to escape the reach of the tax man on their unreported tips. Is that a loophole in the enforcement of our regressive tax law that needs closing?
Kari – if you are both an owner and employee, and understand first hand the concept of consumer sovereignty, how then can you phrase wages as something that one deserves or does not deserve? Let me flip it over again . . does a homeowner “deserve” to have the taxpayer preserve the value of their home by interfering in the marketplace with interest rate tweaks and such; effectively making homes too expensive for the poor? M5 includes a provision prohibiting the decrease in the tax appraised value of homes, for purposes of taxation. This distorts the tax man's view of a freewheeling home market that might go down half the time rather than always going up. Artificial markets create disequilibriums.
If anything, the waitress does “deserve” not to have to suffer the consequences of political favoritism given to asset holders in maintaining a perpetual bubble, not through affordable housing programs via rent assistance but by removal of the price supports on property they cannot now afford due to the favoritism. The forces that keep home prices high do not stem from capitalism but rather from political chicanery, on behalf of mortgage lenders.
If Russel wants to enter the fray . . I suggest reading some Veblen to see some economic descriptions that have historical parallels.
The Lochner era lives on, but through other devices today, not withstanding the illusions of wealth by some. How would you describe a situation where a poor person's SS payment can be used as an offset against their lod student loan balance that they never made enough money to cover? They are a government slave if you ask me. Have they freely negotiated away their right to relief via bankruptcy merely because they did not borrow as an incorporated entity rather than as an individual? The lender can accomplish their guarantee via the government intervention that they could never accomplish directly today through free negotiation.
Posted by: PanchoPdx | Feb 25, 2005 6:51:14 PM
So Kari,
Exactly which law required Henry Ford to offer his employees better wages?
Posted by: Anthony | Feb 25, 2005 7:03:21 PM
I did waited a lot of tables in New Jersey, where we had a very low base rate. The argument was that one made one's money on tips. And so it was. It would have been nice to get more money. How could it not be? But I made more money waiting tables than I would have at many other jobs, and the hours made sense.
I guess it amounted to a living wage, since I didn't die.
But I have to say, I did have other options, so I don't see how it wasn't a free negotiation with my employer. I could have left at any time. The automatic villification of employer I see here strikes me as a kind of moral hysteria.
Nor do I understand how one arbitrarily assigns value to any given occupation outside what the market demands. No doubt a robust economy can tolerate some amount of that falsification of value, but it's bound to cause mischief.
I'd love to hear some elaboration on how the Ford example proves the economic correctness of the minimum wage. Surely Ford's attitude toward pricing the commodity is at least as important. And if Ford and other manufacturers paid workers artificially high wages, it would ultimately cost them in a free market, and probably very quickly.
Posted by: Anne Dufay | Feb 25, 2005 8:03:26 PM
Wow. Get a life for a few days and this place explodes...
Many an interesting comment, though I found PanchoPdx's snarky presumption as to my presumed abundant wealth really the funniest.
Actually, people who shop with coupons CAN be foodies, too! (Well, I can't take the credit here, my hubby Frank is the coupon master. They bow down to him at Safeway. He should go into consulting on this... In the meantime we feed an army of teenage boys at all hours of the day and night thanks to his smart shopping. Hey -- you know anyone else who's actually gotten cash back for buying a gallon of milk? :-))
As for the rest of it, there is no free market. That's an ideological construct, closer to "virgin birth" than anything else.
Posted by: Anthony | Feb 25, 2005 8:17:16 PM
Anne,
How would you describe the difference between an economy in which prices are determined by the government and prices determined predominantly by market forces? Perhaps you could further enlighten us as to the hilarious folly of believing in something like a free market.
Another question: where does value come from? What makes a thing valuable? (Smart ass preemption: that's one question phrased two ways.)
Posted by: Anne Dufay | Feb 25, 2005 8:29:01 PM
Anthony -- define "predominantly". Define "value" :-)
Posted by: Anthony | Feb 25, 2005 10:07:42 PM
"Predominantly" means mostly, Anne. "Value" means the worth of something.
Show us there's something more than flippant bluffing behind your remarks.
Posted by: Kari Chisholm | Feb 25, 2005 10:52:40 PM
Ron... Leslie and I weren't suggesting that you were making some sort of complex argument about flower-shop owners and their gender.
It was this sentence: Kari needs to go run a business someday, perhaps a flower shop, and then contemplate the wisdom of believing that the customer owes a duty to buy from her.
Unless I'm really confusing your meaning, you called me a "her". I'm a "him". Simple as that.
Blame my mother. In Finland, "Kari" is a guy's name. Go figure.
Posted by: Jesse | Feb 25, 2005 11:44:06 PM
Was it a "free" market that led to a stock market crash in 1929? Or was that the minimum wage that did that? Is it me, or is it government regulation that attempts to protect us from such catstrophic failures of the market?
It seems that what we're arguing about is how much the government ought to participate in the market.
"Nor do I understand how one arbitrarily assigns value to any given occupation outside what the market demands. No doubt a robust economy can tolerate some amount of that falsification of value, but it's bound to cause mischief."
I think arbitrarily isn't quite the word you're describing. Take that word out and the argument makes a bit more sense. I think when you ask what the market demands, you ought to define what you mean a bit more specifically.
I think plenty people in the market would love to have more discretionary money in the hands of consumers. And employers, if driven by their own market interests, would like to pay you as little as they can to make a profit they see as acceptable. What's missing is the human element that employers aren't always focused on the bottom line. And employees aren't always free to pick up and leave.
Many are arguing that the cost of doing business for restaurant employers--and I suppose for other small employers--is too much to bear with a minimum wage in place. Yet, for all the volatility of the restaurant business nationally, and the fact that restaurants have a range of choices in responding to local employment conditions, and the fact they are growing locally at a rate faster than the national average doesn't offer a compelling reason to exempt them or anyone from minimum wage laws.
The argument comes down to what level of regulation the government should have on the market. And for me, the market is more than capital flowing, it sustains us. I believe that it should do so taking into account that we are human, not pieces of money, and that a relative level of dignity and stability are integral to our (and its) success.
Posted by: ron ledbury | Feb 26, 2005 1:27:24 AM
Jesse, the author of The Great Crash – the book – has also written about his experience trying to set price controls during WWII. The cause of crashes is not mandated minimum wages but comes from excess debt; which today is exacerbated by ever more creative derivatives upon debt. A bit of runaway wage inflation would be just what the doctor would order to restore a more natural equilibrium between debt and the ability to pay on the debt. It is a part of the remedy, not the cause.
The proposed legislation to selectively lower the minimum wage does not prohibit the payment of greater than the minimum wage. What it does offer is safety in numbers for the Oregon Restaurant Association members.
Imagine if Kari built a site that listed the offending employers availing themselves of the lower wages and thus the proper target of a boycott and protests. Should I think that a boycott and perhaps even a strike, because it might harm the workers at a particular restaurant, be an invalid weapon? Of course not.
Why not isolate any member of the Association that is using its statewide influence, and the cover of numbers and policy blah blah, and then STIKE and BOYCOTT them preemptively, immediately. There are quite a wide range of rules about when and whom may lawfully strike and boycott. The effort to isolate folks that get tips opens a rather large door of opportunity for a labor protest and BOYCOTT. So, the question is, what business is owned or partially owned by the President of the ORA. It seems a good a target as any, don't you think? Why wait until the law passes? There is no need whatsoever to wait, because the ORA has opened the labor negotiations already. Imagine if the ORA President tried to get a court order, or change the law, to make a statewide boycott or strike unlawful, because it is too selective. (You could, or should, be able to hear the judge laughing already.) Demand double the standard minimum wage for the employees.
[This is not about the OEA/lottery dispute or the OEA's effort to get more tax dollars, is it? From the tips of waitresses? Would the OEA support the strike/boycott even if it would hurt their source of revenue from the waitresses tips? Could the waitresses compete with the OEA for a larger cut of the lottery revenue from establishments hosting the state's lottery games via a statewide strike? That does seem to be the preferred bargaining unit today; statewide class distinctions.]
Suggested targets anyone? Is today as good a day as any to figuratively poke someone in the eye?
Posted by: PanchoPdx | Feb 26, 2005 2:13:53 AM
Anne,
Didn't mean to suggest that you are wealthy...not that it's a bad thing.
Just pointing out the obvious, we travel in different circles with different perspectives.
Posted by: Anthony | Feb 26, 2005 8:19:55 AM
Jesse,
I'm not taking issue with government regulation per se. There are areas of common concern where there exist no incentives to get important work done. That's when it makes sense for government to step in and regulate.
Of course I also agree that employees should always be treated not merely as means to an end but as ends in themselves.
In the case of employement, both sides have incentives and disincentives.
What I mean by "arbitrarily" is assigning worth based on what you fancy something should be worth. Perhaps what I said was inexact. What I mean is however non-arbitrary (i.e., conditioned by set criteria) your procedure may be for assigning value, it is still disconnected from the actual value of a thing -- including labor for a given task -- which is driven by demand.
One can regulate markets in various ways, but it seems that one must always keep real value in sight. I'm no student of economics, but I can't understand how departing from that real value can fail to have proportionate costs.
For example, suppose the demand for a certain task were to decline. Those skilled at that task would have likely have a chance to continue earning something longer if wages for the task weren't artificially inflated. Certainly the worker skilled in that task would have a threshold beneath which it would no longer be gainful for him to work at that task, but it may be that his threshold is considerably lower than the artificially inflated wage. In other words, both he and his employer might agree that it was worthwhile to continue the relationship below the artificially set wage, but that option is taken away.
Posted by: Frank Dufay | Feb 26, 2005 9:00:12 AM
Random thoughts from the Waffle House:
The "wait staff" at the Florida "Waffle House" I ate at this morning all wear American flags sewn into their uniforms. Their name tags all say "God Bless America."
Wages aside, does this employer have the right to force employees into this kinda, sorta cheesy display of "patriotism?" AND belief in God? Oh, I can hear the libertarians straining at their leashes: "Of COURSE. NO one HAS to work there."
Nor did I have to eat there. But my Dad took me there, and there were no "warning label" outside the building. And the pecan waffles were OK. But I also remember when they used to have signs saying "We reserve the right to refuse service to anyone" and we all knew what THAT meant.
I think wait staff should get a premium for having to wear their employer's political messages. And I think government employees --y'know, the guy behind the desk getting you your driver's license-- should have tip jars.
And why not? Politicians already have them...they call them campaign contributions.
Frank Dufay
Posted by: Anne Dufay | Feb 26, 2005 10:57:02 AM
Ok Anthony. I'd argue that the free market exists, predominantly, at garage sales or swap meets. But even there you have distortion resulting from such things as the price of gas (the way most people get to garage sales is by car).
Can we agree the market for gas is not "predominantly" a free market?
I agree our desires and appetites do move the market in some areas, (the explosion of good restaurants serving high-quality local foodstuffs is an example) but not all such market movements are "predominantly" free. Ref the Pharmaceutical industry and their little purple pills...
My point was that all markets are manipulated and regulated to some extent. One chooses what one will tolerate/support based on one's value system. The Reagan Republican likes the notion that "a rising tide lifts all boats." That's 'cause they're pretty sure they've gated off all the beaches and the tide, and the boats, belong only to them...
When you start talking about using tax structures or regulatory means to lift the row-boats of poorer folks, well, all of a sudden the line changes. Now there is no tide, or the tide flows backward, or the tide's going to eat the world...
So yes. Value. I value a regulatory structure that reflects/supports/promotes my desire for a society where no one who works hard and productively should go hungry or without access to health care. Nor should their children.
I realize that's not what you meant by "value". So, the waitress - ok. I'd submit that we pay her based on how we value her services, that's why we passed the minimum wage law. It is the mechanism and expression of this society's cumulative efforts to place "value" on less-well paid work and less economically powerful citizens. I'd submit that the waitress is paid closer to how society values her work, than is the average ad agency account executive. And that in fact she provides society with higher "value-added" returns than many a higher-paid person does.
And, I haven't even gotten to childcare workers or the folks taking care of our poor elderly in nursing homes. I submit they provide our society more "value" than many a higher-paid executive running his corporation into the ground and collecting big bonuses as a reward... The fact we choose to pay them less is not about value, or some non-existent free market, but about power and deeply-rooted societal roles.
Posted by: Anthony | Feb 26, 2005 2:18:03 PM
Anne,
You wrote: "The fact we choose to pay them less is not about value, or some non-existent free market, but about power and deeply-rooted societal roles."
Do you really believe this? If so, I guess my question would be what would a market look like if it weren't "manipulated and regulated to some extent"?
Your concern for your fellow man is admirable, but how much you honor any given honest occupation has nothing to do with its monetary value, i.e., what anyone is willing to exchange for it.
The average ad exec, for example, has the potential to influence a business' course significantly. Successful ad agencies, moreover, are in short supply compared to unskilled workers. It doesn't take a lot of skill to wait tables, so lots of people are available for that kind of work, as compared to civil engineering, management consulting or surgery.
In some sense a child care worker is more valuable than the best athlete in the world, because childcare is necessary and entertainment is dispensable. But the star athelete has vastly more monetary value as measured by supply and demand.
Also, one might fairly say that a dishwasher is more valuable than a CEO who runs a company into the ground. But of course no one hires that (presumably highly qualified) CEO expecting he'll destroy the company. But in a free economy there is risk, and the buyer must beware. On the other hand, the value of a dishwasher is monetarily insignificant compared to the value of a successful CEO.
Maybe it would be helpful to think of someone in an obsolete occupation. Say a person had expertise in the rendering of whale oil. In the not too distant past that was worth something, since society depended on whale oil for lighting and other purposes. But when petroleum use became widespread the demand for such expertise quickly declined. Compensation dropped accordingly until no one was willing to hire anybody for the job. This of course had nothing to do with how whale oil renderers were held in esteem as persons, but how much demand there was for the skill and how many people there were who could provide it.
Posted by: Frank Dufay | Feb 26, 2005 3:22:23 PM
Anthony writes <<<< In some sense a child care worker is more valuable than the best athlete in the world, because childcare is necessary and entertainment is dispensable. But the star athelete has vastly more monetary value as measured by supply and demand.<<<
There is an over-abundance of potential "star athletes." What sets their price tag is not "supply and demand" economics but rather how much surplus value the chosen few can create for their owners. Or do you really think the number of guys who can excel at basketball so limited?
<<< But of course no one hires that (presumably highly qualified) CEO expecting he'll destroy the company...<<<
Of course? I don't accept your presumption. Short term profitability, and inflated stock values are too often far more important --along with the hired-gun CEO's skills at achieveing THOSE goals-- than a company's long-term profitability...or even viability. How much money do we see invested in companies that excel at taking other companies apart?
We bemoan the fact that restaurants go belly up all the time. (With the resultant negative impact on loyal wait staff...remember them?) But even failure in the marketplace provides profits for some: the kitchen equipment re-seller, the construction re-modelers...the restaurant owner who fails to turn over the taxes collected from his employees. The wine inventory that disappears. Oops!
Frank Dufay
Posted by: ron ledbury | Feb 26, 2005 3:24:17 PM
I value the right to bargain, the right of employees to bargain collectively so as to balance out the imbalance of the bargaining parties. The ORA seeks to exacerbate imbalance through collective action, by the employers, in the legislature.
Anthony, would it be OK to strike and boycott “Cafe Today” in perpetuity, demanding that the staff get double the standard minimum wage, even if it ultimately drives it's owner out of business?
The recent replacement to the vacant seat in the legislature owns “Cafe Today” that has a retail outlet in the basement of the Capital Building. Could I wear a “Double Pay at Cafe Today” tee-shirt in the basement or would I have to prance back and forth out on the “public” sidewalk out front, way beyond the front steps? Where would you draw the line, based on the value you place on the tools of economic coercion so as to derive a value of the labor in question?
Posted by: Anthony | Feb 26, 2005 5:45:46 PM
I'm not sure what your point is, Ron.
What exactly do you mean by "the value [I] place on the tools of economic coercion"?
My interest here has been recognizing what value is and what the consequences might be of failing to appreciate it.
People are free to advocate whatever economic positions they like. Consumers can refuse to buy something if they want.
Posted by: Anthony | Feb 26, 2005 7:08:21 PM
Frank wrote:
"There is an over-abundance of potential 'star athletes.' What sets their price tag is not 'supply and demand' economics but rather how much surplus value the chosen few can create for their owners. Or do you really think the number of guys who can excel at basketball so limited?"
I just take this as another example of inapprehension of a basic concept of economy or parsimony, without which it's impossible to reason about monetary economics. The supply of basketball players is finite and consists of people at all different levels. Whatever "surplus value" any star might have is heavily influenced by both individual and team performance. All the teams strive to have the best players. It's not as if there's just some mass of "potenial star athletes"; the longer competition occurs, the more the level is driven up. The top rung will contain the best players. I'm don't happen to be a big fan of basketball, but every other sport I've ever been interested in displayed a constant striving to acquire and keep the best starting team. The top is the top, and there is always some smaller cohort of standouts. The same is true of other fields of endeavor that have economic significance, from salespeople to surgeons.
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Posted by: Todd Birch | Feb 23, 2005 3:23:37 PM
I love these predictably selective refrains from Oregon’s various political cabals, right and left alike, extolling “our voter-approved” laws when it’s something they favor.
They’re usually the same people who tend to exhibit utter disdain for direct democracy when they don’t like an outcome - like, say, with Measure 37 last year, which garnered a hell of a lot more support than the 2002 M25 minimum wage initiative, which squeaked by with 51 percent.
(I wonder if Mr. Nesbitt ever considers that “the voters just didn’t understand” the economic ramifications and consequences of forcing employers to pay more money to their least qualified employees - or in the case of waiters and waitresses, to people who're often already making more in tips alone than the poor wretches in the kitchen who actually prepare the food take home in their entire paychecks.)
It’s no secret of course that the righties do everything they can to undermine individual freedom and expressions of the people, too, like crying to the feds to try and stop assisted suicide or drug war reform initiatives.
The whole phenomena reveals the authoritarian tendencies of Oregon’s major political players, and shows how ineffective and two dimensional politics in the state would be without the initiative system as a rudimentary check on an otherwise corrupt system. Too bad we don’t have it for the nation as a whole.