Restaurant Group: Freeze Minimum Wage Increase For Tipped California Workers

TOP STORY A MIDDAY EDITION, AS THE CALIFORNIA SENATE BEGINS DEBATE ON ANOTHER PROPOSED MINIMUM WAGE INCREASE, OPPONENTS ARE LAUNCHING THEIR OWN POST LEGISLATION TO FREEZE THE MINIMUM WAGE FOR TIPPED WORKERS. THE CALIFORNIA RESTAURANT ASSOCIATION WANTS TO EXCLUDE TIP-RELIANT WORKERS FROM ANY BOOST ABOVE THE PRESENT CALIFORNIA MINIMUM OF NINE DOLLARS PER HOUR. THIS CONTINUES A LONG TRADITION FOR RESTAURANTS. THEY PAY LOW WAGES TO SERVERS WITH THE IDEA THAT THEY WILL MAKE UP THE DIFFERENCE AND MAYBE MORE FROM CUSTOMER TIPS. ECONOMIC ANALYSTS CLAIM THAT MANY TIP WORKERS WILL END UP MAKING LESS THAN THE MINIMUM WAGE IF THEY ARE EXCLUDED FROM BASIC WAGE HIKES. JOINING ME ARE ROBERT NOTHOFF OF THE CENTER ON POLICY INITIATIVES AS A RESERACH AND POLICY ANALYST. AND JANNA HAYNES, COMMUNICATION MANAGER WITH CALIFORNIA RESTAURANT ASSOCIATION. THE CALIFORNIA RESTAURANT ASSOCIATION IS A MAJOR SUPPORTER OF THIS BILL. CAN YOU TELL US WHAT IT WOULD DO? SO THE BILL IS DESIGNED TO HELP MITIGATE THE POSSIBLE JOB LOSS IN BUSINESS CLOSURE OF A PROPOSED MINIMUM WAGE HIKE. WE ARE SITTING AT NINE DOLLARS PER HOUR IN CALIFORNIA WHICH ARRAYS GOING UP TO $10 IN JANUARY 2016. WE HAVE NO SENSE OF WHAT THAT ECONOMIC IMPACT IS GOING TO LOOK LIKE YET. WE ARE STILL ADJUSTING TO THE NINE DOLLAR A WAGE AND NOW WE ARE TRYING TO RUSH AHEAD AND INTENTIONALLY LOOK AT HARRY WAGERS -- HIGHER WAGES SUCH AS $30 AN HOUR WE CAN ALL AGREE -- $13 AN HOUR. WHAT A BE 669 IS LOOKING TO DO IS KEEP THE WAGE, THE MINIMUM WAGE AND NINE DOLLARS AN HOUR FOR HIGHLY COMPENSATED WORKERS WHICH ARE WORKERS THAT EARN TIPS. OUR DATA SUGGESTS THAT THE MAJORITY OF THE TIPPED WORKERS MAKE UPWARDS OF $20-$25 PER HOUR CONSIDERING THE FACT THAT THEY MAKE NINE DOLLAR AN HOUR MINIMUM WAGE PLUS AN ADDITIONAL $10-$15 AN HOUR IN TIPS. AND WHAT THAT DOES IS IT MEANS THEY ARE NOT AS LABOR DOLLARS TO PAY BACK THE HOUSE WORKERS. WORKERS THAT DO NOT EARN TIPS. WHAT WE WANT TO DO IS BRING EQUITY INSIDE THOSE WALLS. WE WILL BREAK THAT DOWN A BIT AS WE CONTINUE THE CONVERSATION. JANA WHO THE BILL APPLY TO PICK THESE ARE NOT JUST RESTAURANT WORKERS, RIGHT ? THE BILL APPLIES TO ANYONE WHO MAKES A COMPENSATION THAT IS MORE THAN $15 AN HOUR TAKING INTO CONSIDERATION MINIMUM WAGE AND TIPS. SO THAT DOES APPLY TO COMMISSIONED WORKERS IN OTHER INDUSTRIES OBVIOUSLY WE FOCUS ON RESTAURANT WORKERS. SO WE ARE TALKING ABOUT ANYONE WHO GETS IT, RIGHT ? YES. ANYONE WHO GETS A TIP THAT EQUALS $15 PER HOUR OR MORE. OKAY. LET ME START WITH YOU, ROBERT BY GIVING US BACKGROUND ON WHERE WE STAND WITH THE MINIMUM WAGE NOW. BOTH AT THE STATE LEVEL AND THE CITY OF SAN DIEGO LEVEL. RIGHT NOW, THE STATE MINIMUM IS AT NINE DOLLARS PER HOUR. IS THAT RIGHT ? CORRECT. IT'S SET TO GO UP TO $10 PER HOUR BEGINNING JANUARY 1, 2016. AND THEN LOCALLY WE -- CITY COUNCIL WITH A SUPER MAJORITY PAST A LOCAL INITIATIVE THAT WOULD RAISE SAN DIEGO'S MINIMUM WAGE TO $11.50 PER HOUR BECAUSE AS FOLKS ARE SAYING, SAN DIEGO IS EXPENSIVE. IT IS THE FOURTH MOST EXPENSIVE PLACE TO LIVE IN THE COUNTRY AND WE ARE TRYING TO BOOST MINIMUM WAGE TO $11.15 BY 2017 AND THEN WE WOULD INDEXING TO INFLATION BEGINNING JANUARY 1, 2019. UNFORTUNATELY, THE RESTAURANT ASSOCIATION AND OTHER BIG BUSINESS INSIDERS AND LOBBYIST PUT TOGETHER REFERENDUM PROCESS TO RAISE HALF $1 MILLION AND FORCED US TO THE BALLOT AND WE WILL BE VOTING ON THAT ON 27 2016. AND THE BENEFITS, TANGIBLE BENEFITS ARE IT WOULD IMPACT ONE 72,000 LOCAL SAN DIEGANS WHO WOULD GET AN INCREASE OF PAY AND IT WOULD INJECT AN ADDITIONAL $260 MILLION INTO OUR LOCAL ECONOMY WHICH ACTUALLY HELPS SMALL BUSINESSES AND WHY WE HAVE A LOT OF SMALL BUSINESSES SUPPORTING THIS AND WHY IT WOULD BE GOOD FOR LOCAL RESTAURANTS AS WELL. THE MINIMUM WAGE NOW IN SAN DIEGO AND IN THE STATE OF CALIFORNIA IS NINE DOLLARS AN HOUR ? CORRECT. AND JANA, THE MANY COMMUNITIES THOUGH, THAT IS HIGHER, RIGHT? YOU GO TO PLACES LIKE BERKELEY AND OAKLAND AND THEY ALREADY HAVE A $12 AN HOUR WAGE. IS THIS PROPOSAL TO FREEZE THE MINIMUM WAGE FOR TIPPED WORKERS IN RESPONSE TO ALL OF THESE EFFORTS UNDERWAY NOW TO PUSH THAT MINIMUM WAGE HIGHER ? I THINK THAT WE HAVE DECIDED THAT IT MAKES SENSE TO DO THIS ON STATEWIDE LEVEL BECAUSE IN [ INDISCERNIBLE ] YOU HAVE AREAS THAT HAVE A HIGHER WAGE BASED ON THEIR CITY WAGE AND THEN UNINCORPORATED AREAS THAT MAY BORDER THOSE DO NOT HAVE A HIGHER MINIMUM WAGE. SO IT CREATES A LOT OF UNCERTAINTY IN THE BUSINESS COMMUNITY BECAUSE YOU HAVE SOME BUSINESSES THAT HAVE TO RAISE PRICES OR CUT HOURS OR JOBS AND OTHERS THAT DO NOT. SO THE COMPETITION MAKES IT HARD TO RUN YOUR BUSINESS EFFECTIVELY SO THAT IS WHY WE ARE LOOKING AT THIS ON A STATEWIDE LEVEL AS OPPOSED TO THESE INDIVIDUAL CITY ORDINANCES. IF THE STATE BILL, 80 669 BECAME LAW, WOULD IT DECREASE THE MINIMUM WAGE PAID TO TIP WORKERS IN CALIFORNIA CITIES LIKE BERKELEY AND OAKLAND CURRENTLY HAVE A $12 MINIMUM ? NOW. IT WOULD NOT. WE ARE NOT TRYING TO REDUCE ANYONE'S WAGES. WHAT WE WANT TO DO IS PROVIDE THE OPPORTUNITY TO MAKE AT LEAST $15 AN HOUR FOR WAGES AND ANY CITY HAS THE OPPORTUNITY TO -- IF A LOCAL JURISDICTION DISAGREES WITH THIS, THEY CAN OPT OUT EVEN IF THE BILL PASSES. SO THEY CAN OPT OUT OF THE STATE MINIMUM WAGE AND CONTINUE TO RAISE THEIR CITY MINIMUM WAGE IF THE VOTER SO CHOOSE. SO THEY WOULD HAVE TO PUT IT BEFORE VOTERS, THOUGH, THEY CAN DO IT BECAUSE THEY WANTED TO PICK RIGHT. CPI IS A BIG PROPONENT OF BOOSTING THE MINIMUM WAGE, ROBERT. WHAT IS YOUR TAKE ON THIS PROPOSAL BY THE RESTAURANT ASSOCIATION ? OUR TAKE IS IS IS THE RESTAURANT ASSOCIATION DOING THE BEST DOING WHAT IT DOES. IT'S A SENTIMENTAL INSIDE, LOBBIES ORGANIZATION, THE FOURTH-LARGEST LOBBYING GROUP IN THE COUNTRY. AND IT IS JUST ABOUT THEM TRYING TO THEM NOT MAKING THE -- PAYING THE MINIMUM WAGE THAT EVERYBODY ELSE DOES. THE DATA THAT SHE'S PUTTING FORWARD IN TERMS OF PEOPLE MAKING $25 AN HOUR, WE JUST HAVE NEVER SEEN THAT. WE HAVE BEEN ASKING FOR YEARS NOW TO PRODUCE THAT DATA AND WE HAVE NEVER SEEN IT. ESSENTIALLY, WHAT THIS DOES IS THIS IS IN THE UNITED STATES WITH CORE VALUES WE HOLD NEAR AND DEAR. THE RIGHT TO DEMOCRATIC WE CHOOSING POLICIES THROUGH ELECTORAL PROCESS AND REWARDING AN HONEST DAYS WORK FOR 90 -- HONEST DAY PAY AND WHAT A BE SICK 69 DOES IS [ INDISCERNIBLE ] CALIFORNIA RESTAURANT ASSOCIATION. AND TRYING TO SNEAK PAST THE PUBLIC SO THAT THEY CONTINUE TO AVOID PAYING PEOPLE A DECENT LIVING WAGE AND OF PARTICULAR NOTE IS AS YOU HAVE RAISED HERE IN TERMS OF WHAT WOULD HAPPEN IF FOLKS IN OAKLAND AND BERKELEY AND OTHER PLACES WHERE THEY HAVE ALREADY VOTED INTO BREEZING -- RAISING THE MINIMUM WAGE AND MAKE SURE THEY DON'T PAY THE RESTAURANT WORKERS A SUB MINIMUM WAGE WHICH IS WHAT THIS IS, THEY WOULD HAVE TO THEN TAKE THIS BACK TO THE POLLS AND SAY THAT THEY WANT TO ACTUALLY IMPROVE OR BE EXEMPT FROM IT EVEN THOUGH 82% OF FOLKS HAVE IN OAKLAND PAST AND SAID WE WANT TO INCREASE MINIMUM WAGE $12.25 PER HOUR. SO WE SEE THIS AS UNDERMINING DEMOCRACY AND THEY HAVE BEEN SAYING THEY WANT TO REFERENDA TO HAVE FOLKS VOTE ON SENATE INITIATIVE AND WHAT THIS WILL DO IS UNDERMINE AND UNDERCUT THE INITIATIVE BEFORE WE HAVE A CHANCE TO VOTE ON IT. SO WHAT SIDE IS A QUITE WHAT DO THEY WANT TO DO ? JANNA, ONE OF THE THINGS THAT OCCUR TO ME READING ABOUT THIS AND I BELIEVE I UNDERSTAND IT CORRECTLY IS THAT IT WOULD FREEZE THE ACTUAL MINIMUM WAGE THAT RESTAURANT EMPLOYERS PAY THEIR SERVERS AT NINE DOLLARS AN HOUR. BUT, -- NINE DOLLARS AN HOUR BUT ONLY AFFECTING THOSE SERVERS WERE MAKING OR TWO BURNERS WERE MAKING $15 AN HOUR OR MORE. HOW WILL ANYONE -- EMPLOYEES KNOW WHICH TIP WORKERS MAKE $15 AN HOUR OR MORE ? THE IDEA ALREADY EXIST. MORE THAN 90% OF TRANSACTIONS ARE THROUGH EITHER CREDIT CARD OR DEBIT CARD SO THAT INFORMATION IS VERY TRACKABLE. EMPLOYEES ALSO -- EMPLOYERS HAVE TO FILL OUT IRS FORMS THAT REPORT THE WAGES AND TIPS OF WORKERS AND THEY ALREADY HAVE THAT DATA. AND I THINK IT IS IMPORTANT TO MENTION THAT IF YOU WORK IN A SITUATION WHERE YOUR ARE A TECH WORKER BUT DO NOT MAKE UP TO $15 PER HOUR WITH YOUR WAGES AND TIPS, YOUR EMPLOYER CAN VOLUNTARILY CHOOSE TO OPT OUT OF THIS AND JUST PAY YOU THE STATE MINIMUM WAGE. AND SO IT IS UP TO THE EMPLOYER WHETHER OR NOT THEY FEEL THAT THEIR EMPLOYEES ARE HIGHLY COMPENSATED AND THAT THEY CAN STAY AT THE NINE DOLLARS PER HOUR AND USE THE DOLLARS FOR THE BACK OF THE HOUSE. OR THEY CAN SAY, I DON'T KNOW IF MY EMPLOYEES MAKE UP TO $15 AN HOUR AND I DON'T WANT TO CUT THEM SHORT, SO I'M GOING TO GO AHEAD AND KEEP THEM AT THE STATE MINIMUM WAGE. ROBERT, DO YOU THINK SOME TIP EARNERS WOULD END UP MAKING LESS THAN THE MINIMUM WAGE IF THIS BILL WERE TO BE APPROVED ? I THINK WE HAVE SEEN THAT. 40 YEARS AGO CALIFORNIA DECIDED TO ELIMINATE THE SUB MINIMUM WAGE. AND ESSENTIALLY COUNT WHEN YOU RESTAURANT ASSOCIATION IS TRYING TO ROLL BACK THE CLOCK. THE SUPPORT UNDERSTAND WHAT 40 YEARS AGO CALIFORNIA DECIDED TO ELIMINATE THE PRACTICE THAT THEY ARE NOW -- ACCOUNT WHEN YOU RESTAURANT ASSOCIATION IS TRYING TO BRING BACK. WHEN YOU ARE WORKING FOR TIPS, IT IS ALMOST IMPOSSIBLE TO ENFORCE THE $15 TRACKING THAT, THAT'S A LOGISTICAL NIGHTMARE. BUT WHEN YOU HAVE A SUB MINIMUM WAGE, IT OPPOSED WORKING POVERTY SO PEOPLE WORKING FULL TIME AND ARE NOT ABLE TO MAKE ENDS MEET. OPPOSED WAGE THAT BECAUSE IT IS VERY DIFFICULT TO TRACK ANY OF THESE TIPS AND WHO'S MAKING 15, SOMEONE'S ALWAYS GOING TO WORKING GREAT YARD CHIP, WORKING THIRD SHIFT, ETC. AND IT ALSO HAS TO DO WITH SEXUAL HARASSMENT. 72% OF WOMEN OF WAITRESSES ARE WOMEN AND HAVE TO PUT UP WITH THE SEXUAL HARASSMENT TO MAKE SURE THEY GET A TIP. TIPPING IS NEVER A GUARANTEE. IT FLUCTUATES HERE AND THERE. AND PEOPLE HAVE TO PUT UP WITH ABUSE ADJUST IF THEY TALK BACK TO STAND UP FOR THEMSELVES, THEY HAVE BEEN PUT BACK AND DON'T GET A TIP. AGAIN, IT'S DIFFICULT TO ENFORCE AND RIGHT WITH ABUSE, WHICH THAT, AND WHY WOULD WE DO THAT? THE FACT, A NUMBER OF THE REST OF THE COUNTRY IS MOVING IN THE DIRECTION THAT CALIFORNIA SET 40s ALSO WHY DO WE OPEN THIS PANDORA'S BOX AND ROLL THE CLOCK BACK ? YOU RUN INTO THIS A LITTLE BIT IN YOUR OPENING REMARKS WHEN I ASKED THE FIRST QUESTION. MAYBE YOU COULD GO BACK TO IT A LITTLE BIT. WHAT IS THE BASIC CONCERN THAT RESTAURANT OWNERS HAVE WITH PAYING SERVERS A HIGHER MINIMUM WAGE ? THE BASIC CONCERN IS THAT WHEN YOU LOOK AT MINIMUM WAGE, THE INTENT OF MINIMUM WAGE IS TO COMPENSATE THOSE THAT ARE WORKING IN ENTRY-LEVEL JOB THAT IS MINIMUM WAGE AND THEY ARE TRYING TO MAKE A LIVING AND TIPS SERVERS ARE MAKING WELL ABOVE THAT AND THEY DO NOT -- THE ONES THAT NEED IT THE MOST, THE WORKERS THAT ARE -- BUSES, COOKS, WASHERS, THEY DON'T SEE THE BENEFIT OF THAT MINIMUM WAGE INCREASE BECAUSE THEY OFTEN MAKE TWO, THREE, FOUR DOLLARS MORE THAN MINIMUM WAGE AND SO CONCERNED FROM THE RESTAURANT OWNERSHIP IS THAT IF WE CONTINUE TO RAISE THE WAGE FOR HIGHLY COMPENSATED WORKERS, THERE WILL BE LESS DOLLARS TO SPREAD AROUND TO THOSE THAT ARE NOT HIGHLY COMPENSATED. SO IT'S -- CUT HOURS OF LOST JOBS. IT'S A FAIRNESS ISSUE, JANNA IS THAT WHAT YOU'RE SAYING ? RIGHT. THERE'S INEQUALITY BETWEEN THOSE THEM A TIPS AND THOSE THAT DO NOT APPEAR SO WE ARE LOOKING TO ADDRESS THAT AND BRING MORE QUALITY TO THE BACK OF THE HOUSE WHICH IS 70% MINORITIES. AND SO THESE ARE THE PEOPLE THAT WE WANT TO BE ABLE TO GIVE WAGE INCREASES TO INSTEAD OF CONTINUING TO COMPENSATE THOSE THAT ARE ALREADY HIGHLY COMPENSATED. ROBERT, DO YOU AGREE THAT THERE ARE SPECIAL BUSINESS CONCERNS THAT NEED TO BE ADDRESSED WHEN THE MINIMUM WAGE IS BOOSTED FOR TIP WORKERS. LET ME POINT OUT THAT WHEN SEATTLE-BASED ITS MINIMUM WAGE TO $15 PER HOUR, THEY DID GIVE RESTAURANTS AND ACTION FIVE YEARS TO COMPLY WITH THAT. SO IS THAT A SPECIAL BUSINESS CONCERN FOR RESTAURANTS? I WOULD LIKE TO GO BACK TO THE FRONT OF THE HOUSE VERSUS THE BACK OF THE HORSE ARGUMENT I FIND IT DISINGENUOUS FOR THE CALIFORNIA RESTAURANT ASSOCIATION TO MAKE THOSE CLAIMS. WE'RE CLAIMING THAT IF THEY WERE TO HAVE A SUB MINIMUM WAGE FOR WAITERS AND WAITRESSES THAT THE THAT THEY WOULD BE ABLE TO SPEND MORE ON THE BACK ABOUT THE THAT THAT WAS THE CASE, JUST GO AHEAD AND AWAY THE BACK OF THE HOUSE. AND IF SHE WANTS TO TALK ABOUT RACIAL DISPARITIES, BY MOVING FOLKS IN THE BACK OF THE HOUSE AND GIVING THEM JOBS WHERE THEY CAN BE SERVERS. THERE IS NOTHING STOPPING PEOPLE FROM DOING THAT. HIDING BEHIND THE BACK OF THE HOUSE IS PRETTY COWARDLY AND AGAIN DISINGENUOUS TO WHAT I THINK THIS IS REALLY ABOUT. IT'S A DISTRACTION TECHNIQUE. AND IN TERMS OF THE ACTUAL IMPACT OF RAISING THE MINIMUM WAGE HERE, SO THERE IS A GENTLEMAN BY THE NAME OF SCOTTY'S IS THE EXECUTIVE DIRECTOR OF THE SAN JOSE DOWNTOWN ASSOCIATION. WHEN SAN JOSE VOTED TO RAISE ITS MINIMUM WAGE, HE WAS AN OUTSPOKEN CRITIC OF THIS HE SAID IT'S GOING TO BE TERRIBLE FOR BUSINESS. HIS DOWNTOWN BUSINESSES ARE FAMILY RESTAURANTS. WHEN YOU LATER, THEY ARE DOING BETTER THAN EVER. HE SAID THIS WASN'T A BIG DEAL AND AFFECT BUSINESSES RESTAURANTS HAVE CONTINUED TO GROW. THE INDUSTRY IS DOING BETTER THAN EVER. AND THE REASON IT'S GOT WHEN YOU RAISE LOCAL MINIMUM WAGE, IT SHOULD BE A TYPE THAT RAISES ALL BOATS. WE SHOULD PUNISH PEOPLE FOR GETTING -- RECEIVING TIPS AND TRY TO LOWER THEIR -- EVARISTO BUT RATHER THEY ARE WOULD BE A TYPE THAT RAISES BOTH, GIVING DISPOSABLE INCOME, AND A STIMULATIVE EFFECT WHEN YOU GIVE LOW-WAGE EARNERS AN INCREASE IN PAY AND THAT IS WHY WE SAW RESTAURANTS GROW HERE IN SAN DIEGO. THE EFFECT THAT SAN DIEGO WOULD BE TO ENTER $60 MILLION BACK AND IF THAT TO THE LOCAL ECONOMY GREAT FOR BUSINESS. THE PROPOSAL THAT WOULD FREEZE THE MINIMUM WAGE FOR TIP EARNERS IS CALLED A B6 X9. THERE IS ALSO ANOTHER BILL WORKING ITS WAY THROUGH THE SABER -- LABOR COMMITTEE SB THREE, THAT WOULD RAISE THE STATE MINIMUM WAGE TO $13 PER HOUR BY 2017. SO WE WILL KEEP OUR EYE ON BOTH OF THESE BILLS BEING DISCUSSED IN SACRAMENTO. I HAVE BEEN SPEAKING WITH STEPHEN HEVERLY RESERACH AND POLICY ANALYST FOR THE NONPROFIT CENTER ON POLICY INITIATIVES IN SAN DIEGO. AND JANNA HAYNES, COMMUNICATION MANAGER WITH THE CALIFORNIA RESTAURANT ASSOCIATION. THANK YOU BOTH VERY MUCH. THANK YOU. THANKS FOR HAVING ME, MAUREEN.