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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