Waitstaff Raises Decades Overdue - but You Can Help

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Samuel Schimek founder of I HEART Denver store in Denver at the restaurant Jelly and the Kirkland Museum on Tuesday, March 20, 2012. Waitress Christina Smith pours coffee at Jelly. Cyrus McCrimmon, The Denver Post
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Has it been a few years since you got a raise at work? Or did you get a raise this year, but one that was less than you expected or needed?

Well, imagine not getting a raise for 22 years.

That's been the fate of many of America's tipped restaurant workers -- that is, servers who receive tips as part of their pay -- whose last minimum-wage rate increase occurred in 1991, bringing the hourly rate up to a mere $2.13.

The assumption is that these workers will receive enough in tips to bring their pay up to at least the overall federal minimum-wage level, which is currently at $7.25. If and when tips don't do the job, the employer is to make up the difference.

But that doesn't always happen. And there's a movement afoot to do something about it.

Working for Poverty-Level Pay

So what does a 22-year span with no raise really mean?

Employing a handy inflation calculator, we see that something worth $2.13 in 1991 was worth $3.54 last year. Those might both look like low numbers -- and they are -- but the latter is 66 percent higher than the former. That's how much costs have risen, and these workers' incomes haven't kept pace.

What's more, there are more than 2 million restaurant servers affected by these pay levels, as well as many other service workers who rely on tips, such as hotel bellhops.

Former waitress Gina Deluca has asserted on her WiserWaitress.com blog that more than 19 percent of waitstaff who have a $2.13 minimum wage live below the poverty level.

Plans to Raise Rates

There's reason to be hopeful, though. For one thing, only 13 states rely on the $2.13 minimum. Most states have set higher minimums for tipped workers, though many would argue that those rates aren't high enough, either.

Legislation has also been proposed, by the Obama administration as well as others, to raise the rate.

The Obama plan is to hike the federal minimum wage to $9 an hour, and also raise the tipped minimum wage, to an unspecified level. Sen. Tom Harkin, D-Iowa, and Rep. George Miller, D-Calif., have proposed setting the federal minimum wage at $10.10 an hour by 2015 and gradually boosting the tipped minimum wage -- first to $3 an hour and then by an additional 95 cents an hour until it reaches 70 percent of the full federal minimum. Not surprisingly, the National Restaurant Association is not a fan of these plans, suggesting that pinched profit margins will lead to lost jobs.

What Diners Can Do to Help

Diners aren't powerless in this situation. Restaurant Opportunities Centers United has been organizing restaurant workers, pushing for an increase in the minimum wage, and has published the Diners' Guide to Ethical Eating, highlighting those restaurants and restaurant chains that are doing right.

Restaurants are awarded points for achievements such as paying their tipped workers a minimum wage of at least $5 an hour and their non-tipped workers at least $9, as well as offering paid sick days and promoting workers to higher-level jobs.

In the 2013 Diners' Guide, the restaurants or chains that received gold or silver stars were mostly small outfits. But there were some relatively bigger ones, such as Shake Shack.

However, the big, well-known restaurant chains generally fell quite short of the mark:
  • Not meeting any of the five possible criteria for points were companies such as Bob Evans (BOBE); Buffalo Wild Wings (BWLD); California Pizza Kitchen; Outback Steakhouse and Carrabba's Italian Grill -- both owned by Bloomin' Brands (BLMN); Chick-fil-A; Denny's (DENN); Ruby Tuesday (RT); and Applebee's, owned by DineEquity (DIN), which also operates IHOP outlets.
  • Declining to provide information on four of the five criteria, and not meeting a fifth, were companies such as Krispy Kreme Doughnuts (KKD); Panera Bread (PNRA); Wendy's (WEN); Waffle House; Texas Roadhouse (TXRH); and Yum Brands' (YUM) KFC and Pizza Hut units. Even Chipotle Mexican Grill (CMG) falls in this category, despite having a reputation for progressiveness on some counts, such as providing "Food With Integrity."
  • Several companies were highlighted for facing or having recently faced lawsuits or legal charges tied to discrimination or wage theft. (Remember that employers are expected to make up the difference between the prevailing overall minimum wage and the total of the tipped minimum wage and actual tips received.) These companies included Darden Restaurants (DRI), which runs Olive Garden, Red Lobster and Longhorn Steakhouse.
  • Among publicly traded big outfits, Cracker Barrel (CBRL) earned a point, for promoting at least 50 percent of its workers to higher positions.

Next time you eat out and are calculating your server's tip in your head, keep in mind that he or she has very likely not received a raise in 22 years. And perhaps consider favoring eateries that are doing right by their employees. Consider sharing your views with your elected representatives, as well.

Motley Fool contributor Selena Maranjian owns shares of Chipotle Mexican Grill. The Motley Fool recommends Buffalo Wild Wings, Chipotle Mexican Grill, Cracker Barrel Old Country Store and Panera Bread. The Motley Fool owns shares of Buffalo Wild Wings, Chipotle Mexican Grill, Darden Restaurants and Panera Bread.


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49 Comments

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oxytocin92115

i am not the brightest person, nor am i that motivated. if i can mange thru a 2 year tech school to break the shakels of the waiting biznes, then any one else should be able to as well.

study hard and make me proud

May 30 2013 at 10:12 PM Report abuse rate up rate down Reply
setanta54s_back

gee won't those tatts look really cute twenty years from now.

she'd do better by wearing long sleeves.

May 29 2013 at 10:22 PM Report abuse rate up rate down Reply
tma2c

22 years ago i tipped 10 % now its 18 % they should more in wages but if it results in too much of an increase in food prices the tip percentage will have to go down

May 29 2013 at 2:40 PM Report abuse rate up rate down Reply
davefromfwb1

The biggest scam ever is the Pizza Places that charge "delivery charge". I have worked for Papa John's and Pizza Hut and THOSE DELIVERY CHARGES DON"T GO TO THE DRIVER!!! It's just a way for the pizza places to make more money....it looks like they're selling their pizza's for 10 dollars but with the added on delivery charge of 2.50 it's 12.50 per pizza....PLUS tax at 6% and the pizza ends up being 13.25 plus a 3.00 tip and the original pizza that cost 10 bucks is now 16.25....now that's a scam!

May 29 2013 at 2:38 PM Report abuse +2 rate up rate down Reply
Rick

Not mentioned was that for most of these folks THERE ARE NO BENEFITS, such as health care. I'm no big fan of Obamacare, but if it helps folks like this... I'm willing to wait and see. I know two waitresses locally who work sixty-eighty hours a week, seven days a week, in multiple jobs, just to try to make ends meet. No benefits, very little social life, and no days off. It's tough to go to school to better yourself with that kind of killer schedule. I'm glad I'm retired and don't have to live like that, if you even call that living.

May 29 2013 at 2:37 PM Report abuse rate up rate down Reply
1 reply to Rick's comment
setanta54s_back

ooooh PLEASE

why hasn't the public EVER QUESTIONED THE FACT
that 20-30 years ago
BASICALLY NO ONE HAD THIS BS
and SOMEHOW their BILLS WERE PAID
and even hospitalizations had PROPER LENGTH OF STAY
WITHOUT
DRIVE BY SURGERIES AND BIRTHS.

and SOMEHOW the hospitals stayed OPEN and the true INDIGENT WERE TAKEN CARE OF.

sick and tired of this crap.

and IF YOU ARE A RETRE_EEEEE
you know i AIN'T BS_ing anyone either.

what INSURANCE DID YOU HAVE back then outside of the BASIC
BLUE CROSS BLUE SHIELD MAJOR MEDICAL ?????

May 29 2013 at 10:27 PM Report abuse -1 rate up rate down Reply
Xamnevets

What a scam restaurant owners have. The huge markup on food and the customers have to do payroll for the waitstaff because the owners are too cheap.

May 29 2013 at 2:15 PM Report abuse -1 rate up rate down Reply
1 reply to Xamnevets's comment
setanta54s_back

guess YOU NEVER EVER IMAGINED the COSTS of overhead
as in RENT
GAS ELECTRIC
insurances
food
TAXES
etc.
it's ALL FOR FREE,right ?

May 29 2013 at 10:29 PM Report abuse -1 rate up rate down Reply
1 reply to setanta54s_back's comment
shapierce

no...but the waitstaff is underpaid....

May 30 2013 at 6:45 PM Report abuse rate up rate down
setanta54s_back

if ANYONE THINKS,
that THEY WILL TELL...
what they are TRULY GETTING VIA TIPS..
i gotta couple of bridges and a building FOR SALE TO YOU
at a special price.

May 29 2013 at 2:14 PM Report abuse -1 rate up rate down Reply
pickleboatwilly

Some servers are not worth the $2.13 they are now paid. If they are good servers and work hard for their money like most us had to do then they don't need a raise. Obammie and the liberal Democraps keep the hell out of it you have screwed the country up bad enough as it is!!!

May 29 2013 at 2:13 PM Report abuse rate up rate down Reply
1 reply to pickleboatwilly's comment
shapierce

Seriously? The restaurant should pay that much just to have the servers on hand at any given moment...not to mention the side work...and I am not a democrat...can you think of any other employment that pays this little? Would you really be so offended if these folks made $3.00 an hour? Or would you just deduct it from their tip:)

May 30 2013 at 6:55 PM Report abuse +1 rate up rate down Reply
mike at home

Time for another line of work. That does not depend on tipping that i never did like a fair days wages for a fair days work has always been my motto thank you

May 29 2013 at 2:11 PM Report abuse +1 rate up rate down Reply
hgeorgech

Whoa, wait hold on .. no raises for 22 years? Don't you believe it!

Meal prices (and drinks) over 22 years have at least TRIPLED - sometimes more than that. Since tips are based on a % of the tab, so have tips - which, by the way for parties of 6 are often AUTOMATICALLY added to the bill at 20% of the tab, so give us a break here ... we know servers who on Friday and Saturday nights take home $400-500 ... not bad for 16 hrs worth of work! If they work another 2 days during the week, they typically make $230-300 more ... so, $630-800 for a 4 evening week (mostly in ca$h) sounds pretty darned good .. and that is strictly on tips!

Who's crying now???

May 29 2013 at 2:07 PM Report abuse +2 rate up rate down Reply