Five by 8 – 7/6/10: Working for tips

1) Republican gubernatorial candidate Tom Emmer held one of the stranger campaign events on a day when nobody was likely to notice yesterday. He stopped at the Eagle Street Grille in St. Paul, learned that some waiters there make $100,000 a year, and proposed cutting minimum wage for employees “making a lot of money.” What’s a lot of money? He didn’t say. What should the minimum wage be reduced to? He didn’t say. How many jobs would be created at the Eagle Street Grille? He didn’t say.

“With the tips that they get to take home, there are some people earning over $100,000 a year; more than the very people providing the jobs and investing not only their life savings but their families’ future,” Emmer said.

One of the grille’s owners said three of his employees make at least $100,000. Why not all of them? Two things are happening in the situation. People are running up big tabs when these waitpeople work. That’s a direct benefit to the employer, that may be reflecting on the quality of the worker. Isn’t that a win-win? And the waitpeople are probably working more than 40-hour weeks, in which case why would the employer hire more people if he’s got people doing more than the job of one? Oh, there’s also a possibility that these super-waitpeople are making a wage higher than the minimum, in which case, the discussion is irrelevant.

There is an argument on a broader scale about the competitive nature of wage laws from state to state, but restaurants are a different beast from other businesses that pay minimum wage. If someone doesn’t like the price of a burger — because of a higher minimum wage — it’s not as if they’re going to go eat in Mississippi instead (There’s no minimum wage law in Mississippi, where the unemployment rate is 10.7%). And the waitperson is the face of an establishment and is the difference between whether you stay in business or whether you go out of business. You often get what you pay for.

Are these employees victimizing the restaurant owners? Let’s do the math: Someone making $5.25 (the minimum wage for small businesses) in Minnesota, working 40 hours a week, taking no vacations, grosses $10,920 a year. Someone making $89,080 in tips at 20% of the bill (minus alcohol) means the establishment has billed the customers of that waitperson $445,400, not including alcohol. The restaurant is reaping $214.32 an hour return on a $5.25 labor investment in the wait staff. Chances are, there are no benefits being paid.

Is this good or bad? The person with the tips is pushed into a higher tax bracket and is paying a larger percentage of income in taxes. They might even be making enough money to take their family out to restaurants. So — at least with restaurant workers — what’s the problem here?

Let’s go to the mailbag. Here’s Gerald of North Mankato:


Those kind of jobs are rare. If I could find a job that paid 60k a year within 80 miles of where I live I would be there along with another thousand or so people I know. For a 100k a year job I would relocate and pay the employer a 10% finders fee. If Emmer really thinks this is an issue it is a demonstration of being out of touch with the public.

In any event, it’s the restaurant version of “I know a woman on welfare who drives a Cadillac,” a common complaint by those opposed to welfare programs in the ’70s. Few of them actually knew such a woman, but the details — and the facts — didn’t matter. It might well be that a candidate has a logical position on creating more jobs by reducing the minimum wage, but if he can’t say how many jobs and what the minimum wage should be, more than likely he’s telling you about a woman who drives a car.

Let’s hear from you. If you’re a business owner, how many jobs would you promise to create per $1 reduction in the minimum wage? If you’re working for tips, let’s hear about your budget.

2) Are we a region just barely hanging on? Or are we the next success story? It depends on whom you listen to. Joel Kotkin, in a Newsweek article called “Why the Great Plains Are Great Once Again,” says education, energy, and agriculture have the region ready to cash in:


The public schools are excellent; the Dakotas, Iowa, Minnesota, Nebraska, and Kansas enjoy among the highest graduation rates in the country. North Dakota itself ranks third and Minnesota fourth (after Washington, D.C., and Massachusetts) in the percentage of residents between 25 and 34 with college degrees.

Nowhere is this potential clearer than in Fargo, which is emerging as a high-tech hub. Doug Burgum, from nearby Arthur, N.D., founded Great Plains Software in the mid-1980s. Burgum says he saw potential in the engineering grads pumped out by North Dakota State University, many of whom worked in Fargo’s large and expanding specialty-farm-equipment industry. “My business strategy is to be close to the source of supply,” says Burgum. “North Dakota gave us access to the raw material of college students.”

North Dakota gets the most love, though Kotkin acknowledges many of its small towns won’t survive.

For the record: North Dakota’s minimum wage is $7.25 an hour.

3) I’ve long thought that air conditioning and the backyard deck killed America’s sense of community. With air conditioning, we didn’t need porches anymore, where we’d sit and drink our lemonade, fan ourselves, and chat with the widow Hooper about the neighborhood news. And yet, when it gets hot and humid, our love of the American community spirit is sorely tested.

Salon.com, however, says there’s more to the equation. Science writer Stan Cox appears to suggest, and this seems a bit of a stretch, air conditioning is nearly a tool of the Republican Party:


Love it or hate it, refrigerated cooling has been a major boon to the Republican Party. The advent of A.C. helped launch the massive Southern and Western population growth that’s transformed our electoral map in the last half century. Cox navigates all of these scientific and social angles with relative ease, providing a clear explanation of how A.C. made the leap from luxury to necessity in the United States and examining how we can learn to manage the addiction before we refrigerate ourselves into the apocalypse.

Things could be worse. You could live in the northeast, where temps will hit 102 today. But it’s a wet heat.

4) What are the limits of charitable giving? Oil spills, American Public Media’s Marketplace suggests. Charitable Gulf relief efforts have raised very little money, unlike recent disasters in Haiti and elsewhere. What’s going on? “When there’s a natural disaster, people feel like there’s nothing anybody else could do about it; we all have to chip in. But in this kind of thing, people expect the corporation and they expect the government to do things,” Stacy Palmer of the Chronicle of Philanthropy says.

Like other disaster efforts, this one comes with its own music video. But it’s not doing any good.

5) Hardball Times today has issued its annual ranking of baseball teams’ surcharges on ticket prices. The Twins finish 14th. The average additional fees amount to $6.75 per ticket. The lowest is Milwaukee ($2.50). “Biggest shock on the list?” Writer Chris Jaffe says. “Easy one: The Twins didn’t go crazy with increasing their gouging costs now that they have a new stadium.”

Bonus: Mouse and scientist sleep together; scientist thrilled. “No big whoop, as they say in my neighborhood, just your average little-mammal-snoozes-next-to-big-one story,” says NPR’s Robert Krulwich.

TODAY’S QUESTION

Minneapolis is one of four possible sites for the 2012 Democratic National Convention. For the host city, is a national political convention worth the trouble?

WHAT WE’RE DOING

Midmorning (9-11 a.m.) – First hour: Corporate money and the 2010 midterms. The Supreme Court’s ruling in the Citizens United case caused an uproar among advocates of campaign finance reform, and raised concerns over an influx of corporate cash into political campaigns.

Second hour: Dubbed “the word merchant,” federal judge James M. Rosenbaum will retire this summer after almost a quarter century of hearing famous cases. He tells us about some of his most challenging cases, and how a judge knows he’s right.

Midday (11 a.m. – 1 p.m.) – First hour: Is the economic recovery stalling? Chris Farrell and Louis Johnston explore that question.

Second hour: Short presentations from a variety of people presenting their one “big idea” at the 2010 Aspen Ideas Festival.

Talk of the Nation (1-3 p.m.) – First hour: Barbara Bradley-Hagerty discusses a new twist in murder trials: Neuro-law, or “my brain made me do it.”

Second hour: Redefining adulthood. For years we’ve heard about boomerang kids and extended adolescence. Now, the new health care law allows parents to cover their kids until they’re 26. And some college graduates who can’t find work can find their way back to mom and dad’s.

All Things Considered (3-6:30 p.m.) - In the first four months of this year, Immigration and Customs Enforcement deported more than 3,000 people from the region that includes Minnesota. That’s on pace to be a third higher than last year. Many of these were people who came to authorities’ attention when they were booked into county jails. ICE’s top priority is deporting criminals. But fewer than half the people returned to their home countries had any criminal convictions. MPR’s Sasha Aslanian will have the story.

The final section of the Paul Bunyan Trail connecting Brainerd to Bemidji will soon be completed, says MPR’s Tom Robertson. That’s a 100-mile stretch. What’s been the impact? Has it been a boost for the economies of the small towns along the route? More tourists? Is there a greater interest in biking these days?

Laura Yuen will have the latest on the contract settlement vote by Twin Cities nurses, while Jess Mador looks at how common — or not — retirement pension plans are these days.

  • http://www.skyseastone.net/jvstin/ Paul

    When I think of Waitresses, I certainly think “Hey, now that’s a job whose workers are definitely overpaid. Let’s pay them less!”

    Mr. Emmer unfortunately seems to be of the class of people who would eliminate the minimum wage entirely, in the name of “creating jobs”.

  • Bob Moffitt

    I overheard a waitress and a cook at a local diner discussing Emmer’s proposal this morning. I don’t think either plan to vote for him.

    I predict slow service and cold coffee will follow the Emmer for Governor campaign bus like a dark cloud.

  • Keith

    Tipping continues to be one of the most abhorrent practices in modern civilization. It breeds a worker with their hand constantly out because their employers are legally free to pay them less and make the employees hustle to make up the difference. I think all tipping should be abolished and employers forced to pay these people a decent wage, rather than make the employees victim to some arbitrary (or, in some cases, forced upon us by the restaurant, in the case of large groups) tipping system. Raise your prices accordingly. Customers are paying for this one way or the other. I would rather pay it as part of the bill rather than have to feel obligated to enhance the employees salary, regardless of whether I think they deserve it or not.

  • Kris

    That’s odd. A vaguely pro-business policy position with few, nonspecific benefits from Tom Emmer? Who does he think he is? MAK?

    I don’t know that “Let’s make jobs pay less” is going to be a viable platform this election cycle.

  • Leeja

    I think the example given by Emmer is definitely an exception, NOT a rule in the world of restaurant employees. I feel he’d be hard-pressed to find many servers outside of the Eagle Street Grille who make anywhere near 100K per year. As a waitress at a small town restaurant where the hourly wage for wait staff is $7.25 plus tips, the majority of my co-workers that are considered full time employees share a car amongst their whole family, live in modest apartments, and/or mostly live hand-to-mouth, while the owner drives to work every day in a BMW. The idea that any employee is making more money than their employer at a restaurant is pretty far-fetched. Judging by the three employees making 100 grand at the Eagle Street Grille and the math done by Collins above, there’s no way those employees’ earnings surpass the earnings of the owner(s) of the Eagle Street Grille. I think Emmer’s proposal, if it did anything, has lost him more votes than it could have ever earned him.

  • JenB

    Thank you so much for this story.

    I think what Mr. Emmer was trying to say, he doesn’t think a server should make that much money. PERIOD.

    No. It’s not the norm. Servers who work at places like Kincaids, Capital Grille, Manny’s, Oceanaire are in the range of $100,000 per year (before taxes most likely). The people who dine there on average spend $100-$150 per head going out for dinner. Either because they can afford it, or expense account, or whatever. Being a server is a service, it’s not something everyone can do. On average I think a server would normally make around $25,000 -$50,000 working for minimum wage + tips.

    If a restaurant is well run the owners should profit 30-40% of the sales of the restaurant. Who are the sales people, the servers.

  • Heather

    If Emmer wants servers to make less, he should tip less. I’m sure that will get his point across!

  • Kassie

    I wonder if the people making more than $100K a year are making that because they have another job aside from waiting tables. Like they are the manager of the place, or the accountant, and also wait tables.

    And, Bob pointed out, any place where a server is making $100k+ a year probably isn’t hurting for money. And if they are, dropping someone’s pay $3/hr isn’t going to make the difference.

  • Michael

    Jen nailed it — Waitstaff are the SALES staff. I see people who title themselves SALES people who routinely pocket 30-40% of the total bill as their just reward for their hard work hustling up the business. And, I daresay I’ve yet to hear a Republican complaining about that. Yet, call them waiters, and the standards change. Shameful yet again.

  • TJ

    I thought Republicans were all about people working hard for their money and charging what the market will bear.

    Interesting to see principles taking a back seat to pure mean-spirited pandering. Not surprising – interesting.

  • Duke Powell

    The minimum wage should be $0.00/hr. Wages should be a private agreement between the employee (or their bargaining group) and employer. The government has absolutely no business inserting itself into the transaction.

    Tips should be a private transaction between the server and the customer. The server should keep all his/her tips and not be forced to pool them with co-workers. The servers should be responsible to report the tips as income on their tax returns.

    Raising minimum wages increases unemployement. Here in Minnesota, a higher minimum wage drives job creation to other states. It especially has an adverse impact on unskilled workers.

    Most minimum wage earners work at entry- level jobs, they are not supporting a “family of four”; and most minimum wage earners remain at the minimum wage for brief period of time.

    Tom Emmer has it right. Remember, the reason we are in the economic fix we are in is because liberals love to be generous with other people’s money. The minimum wage debate is just another example.

  • http://www.skyseastone.net/jvstin/ Paul

    I politely disagree, Duke.

    The Free Market is a platonic ideal that is exactly that–an ideal. In practice, it is not as perfect as one might hope.

    The minimum wage and other labor laws were set in place to level the playing field in situations where employers have an overwhelming advantage over workers, and provide for the common welfare of the people.

    To give a simple example. Suppose in Town X, there were three employers, Company A, B and C. They decide, in a land without minimum wage, to collude to set artificially low wages. Now you might say that the Free Market will cause people to move away or not seek employment there, and the employers will have to raise their wages.

    However, people are NOT a perfect fluid that acts that way,, no matter what economists like to believe. People are more complicated. There would be people who would be forced to take those jobs, at those low wages.

    Removing the minimum wage would be a step back toward the Gilded Age. Unless you were rich, the Gilded Age wasn’t very gilded.

  • Chris

    I wonder if Emmer would agree to work for minimum wage and let us, the tax-payers, decide an amount (based on his performance) that we would tip him.