PAYDAY Workforce Solutions Blog

Minimum Wage Challenging for Restaurant Industry

On Jul 11, 2014

The California Restaurant Association is opposed to minimum wage increases and encourages the restaurant industry to tell Congress to do the same. As the voice of the restaurant and hospitality industry in California, the CRA reminds voters and legislators alike that the restaurant industry creates and sustains more than a million jobs and billions in sales and sales taxes per year.

Unique Challenges for Restaurant Employers

CRA reminds local governments that the newest 25 percent increase to the minimum wage poses a tough burden on restaurant businesses still undergoing economic recovery. With cost pressures and the need to keep jobs available and businesses open, they can’t keep meeting wage hikes and stay operational.

The cost increases faced by restaurants in addition to minimum wage increases include higher commodity prices of fresh foods due to drought and other factors like perishable shelf life, higher taxes under Proposition 30, and Affordable Care Act employer requirements.

Minimum Wage Hikes Will Reduce Jobs

Most minimum wage earners are teenagers and servers who earn tips in addition to minimum wage. The Bureau of Labor Statistics reports that almost half of restaurant workers are under 20 years old and 80 percent of them work part time, making their employment entry level.

Increases to the minimum wage mean fewer entry-level jobs. With a shortage of entry level work nationwide recognized recently by Hillary Clinton, CRA urges people not to reduce jobs even more with higher minimum wage demands.

Most Restaurant Employees Already Make More Than Minimum

CRA calls for a tipped wage structure that never goes below the existing minimum wage and excluding tipped employees from future minimum wage increases. The reasoning is that many tipped employees earn much more than the state minimum wage and 43 other states consider tips to be part of income.

For most restaurant employees, the minimum wage is a foundational wage that earning tips expands based on the volume of business and quality of service. Tips often increase restaurant servers’ wages to much more than minimum wage.

With very slim profit margins in the restaurant industry, the results of further minimum wage hikes would be limited hiring, increased prices, and reduced employee schedules. Since young and less-skilled people depend on restaurant jobs for first-time and entry-level work, increasing the minimum wage would reduce opportunities for this part of the workforce that has few other options to earn a living.


For more information take a look at our previous minimum wage blog posts:

Contact PAYDAY for more assistance about minimum wage challenging the restaurant industry.

Blog Comments

Subscribe to Email Updates

Posts by Topic

see all