A lot has already been written about GOP candidate for governor Tom Emmer's claim that forcing restaurant owners to pay minimum wages for workers who also receive tip income burdens the businesses.
Minnesota prohibits a "tip credit" that would allow these employers to avoid paying the full minimum wage. Both Emmer and Independence candidate Tom Horner contend that this potentially hurts businesses in the food service industry.
Too many pixels have died from bloggers and commenters focused on the wrong part of the question, doing speculative math because the Strib's story didn't ask the basic question: Is what Emmer said about $100,000 waiters true?
Strib columnist Jon Tevlin did talk to the owners who supposedly told Emmer about the highly compensated waiters they employed. Not surprisingly, the owner claims a misquote: "No way, shape or form did I [tell Emmer] anyone made $100,000."
The truth is, tips already enable the industry to get away with paying its hourly workers less. Minnesota eating and drinking establishments account for 7.6% of the state's hourly workers — but for almost 54% of all hourly workers at or below the federal effective minimum wage of $6.55 [Download]. And 69% of these workers receive overtime pay, tips or commissions. (The reports don't break out tips individually.)
The conservative spin on Emmer's position comes from Mitch Berg, who says:
This is entirely about bringing jobs back to the hospitality business in Minnesota.
If you've been paying attention at all to claims from Camp Emmer, you know you have to check these things.
According to the state's Department of Employment and Economic Development, jobs in the hospitality industry did fall off starting in late 2007, about the time the recession began to gain steam. Before that, jobs, number of establishments, total wages and average wages grew steadily.
Industry codes changed in 2000, so it's difficult to compare earlier data, but I found a study that showed steady growth in personal income from Minnesota eating & drinking establishments from 1969-1999 [Download].
If the lack of a tip credit has been killing jobs, it apparently didn't make a difference until the whole economy took a dive.
Economist and GOP legislative candidate King Banaian finds there's scant evidence to support the idea that higher tipped minimum wages do much to boost server pay. So who benefits?
To put this all another way, as a group, proportionately more workers who receive tips are already paid relatively lower wages than hourly workers in other industries and occupations. The claim that restaurant owners are hurt because they can't lower their wages even more doesn't seem supported by the data.
And they aren't going to bring in more business by hiring more servers at even lower wages. At least, the past growth didn't occur that way.
This brings us back to Mitch:
So here’s the question: are the “workers at the bottom of the pay ladder” better off hustling for tips (which can be volatile and low, and can also be really really good money), or out of work entirely?
Because in this economy, that’s pretty much the choice.
Unless you look at the facts.