Increasing the Minimum Wage

I have to admit I was on the fence on this issue because, like global warming, the issue is so politicized that it's hard to find objective, scholarly studies of the impact on workers and employers.

IMHO with a Democratic Congress and a Republican President it's more important than ever for responsible citizens to get as many objective facts before forming strong opinions.

Well, I finally a good article....although more statistics would have been nice and it's not truly a study:

http://gmj.gallup.com/content/23590/1/A-Minimum-Wage-Hike-The-Real-Impact.aspx

I did find studies by the CEPR and Cato strongly for and against, respectively, a minimum wage hike but both were selectively quoting labor statistics and ignoring certain data points.

All sides seem to be focused on the impact on the restaurant industry, especially the CEPR paper. To this I'd like to add my observations that both sides seem to be missing or intentionally glossing over.

Very few restaurant workers, except for the fast-food joints, make the minimum wage in reality. Even fast-food joints pay most workers above the minimum wage to foster retention. Before someone screams "cite!" just pick up a newspaper and find a McDonalds ad.

On the books, it looks like many non-fast food workers are but that's a distortion of typical restaurant economics.

Here's a realistic scenario: A small suburban neighborhood restaurant has 30 tables. Let's say they're dinner only and menu prices are in the $9 - $15 range.

On a given day they employ 4 servers, a busboy, a dishwasher, a chef/cook, probably a chef's assistant, and a manager.

The chef is a skill position and won't be making minimum wage; probably $9 an hour at the very least. The manager won't be making minimum wage as it's also a skill position. One of the servers will be the head waiter and won't be making minimum wage. This leaves 6 employees, on paper, as minimum wage earners at least as far as the Bureau or Labor Statistics would show.

Now I have to make some assumptions here which seem reasonable to me. Lets say that on an average night the restaurant has 150 customers (a way low number by the way) and order the median menu item then gross receipts will total $1,800. If only 1/2 the customers tipped the customary 15%, there is a tip pool of $135.

If the restaurant is serving 5 hours (6-10PM) and servers have to stay an extra hour for cleanup (6 hours now). Assuming a completely even tip distribution - yes, that won't happen but everyone will get something - you have an additional hourly income per server of (135 / 4 ) / 6 = $5.62 (rounded down).

We are now down to 3 of the 9 employees being true minimum wage workers. However, in many restaurants servers tip out the busboys and, in some cases, all kitchen employees share in a tip pool.

In some states, restaurants are allowed to base pay servers below the Federal or state minimum on the assumption that tips will boost pay to or over the minimum. Which may or may not be true but I'll leave that alone for now.

Also a fact is that very few people stay in dishwasher, cook assistant, or busboy roles. After gaining experience, assistants become chefs/cooks which are, to repeat, a skill position. In my experience, most hard workers are given the opportunity to progress from dishwasher to busboy to server in relatively short order. I went through that progression myself while working through college.

So now, briefly, back to fast-food. A huge issue for fast-food chains is retention and, therefore, almost all of them have programs to fast-track motivated workers up to better paying positions such as assistant manager. Someone who stays at or near minimum wage in that industry for very long is someone who's not very motivated or a minor who is working while in school.

So now it appears that I'm leaning against a minimum wage hike bill so here's the curveball. I'm in favor of it but with the following issues or points:

• Partisan think tanks on both sides are blowing smoke on the whole food industry and how it will be affected.
• I think there is some danger of unmotivated workers remaining unmotivated if they have less incentive for advancement but it's probably minimal.
• I think a true danger is that this will push some thin-margin industries further into "under-the-table" employment for unskilled labor aggravating the problem of hiring illegal immigrants. I would like to see that addressed somehow.
• Please, Congress, NO PORK. Make this a simple wage hike bill. Do not add incentives for the restaurant industry, they don't need 'em.

Omigawd. I'm in agreement with Nancy Pelosi. The world may soon end.