Restaurant Horror Show: How Servers Are Abused

The excuses for not leaving a tip, including Mr. Pink’s memorable stem-winder, proceed from the misguided belief that servers make federal minimum wage, which is $7.25 per hour. Leaving aside the question of whether the minimum wage is sufficient for anyone to live on, federal law allows states to deduct up to $5.12 per hour from the minimum wage for workers who earn more than $30 in tips per month.

Twelve states let employers pay tipped workers like servers and bartenders the lowest wage permitted under federal law — $2.13 per hour. That figure hasn’t changed since 1991.

For a single adult with no children, the living wage in a medium-size Midwestern city is around $8.28 an hour,  according to MIT’s living wage calculator.

“People think a tip is extra, to show gratitude for really good service, but it’s really not,” Chung said. “Consumers should really know that they’re subsidizing workers’ wages, it’s not on top of it. You’re making up the difference for the fact that someone doesn’t make minimum wage.”

Politicians don’t seem to know this. Following President Obama’s call for raising the minimum wage in his State of the Union speech, Senate Minority Leader Mitch McConnell of Kentucky said, somewhat cryptically,  in a floor speech, “He spoke of workers’ minimum wages, instead of their maximum potential.”

To what degree and by what mechanism the raising of workers’ wages would inhibit their maximum potential went unexplained, although the justice of denying some of the economy’s most marginal workers a raise for 22 years appears to be a conservative article of faith as resistant to empirical dispute as the non-anthropogenic causes of climate change.

Power and its obligations

According to Dorothy Sue Cobble, professor of history and labor studies at Rutgers, traditional unionization like that provided by Unite Here has been on the wane in the restaurant industry for decades. “Probably 1 percent of private sector restaurants are organized now,” Cobble said. “The law has made that more and more difficult.”

Instead, tipped employees are left to rely on the good will of their customers. Cooks and dishwashers, many of whom don’t speak English and may not have legal status, are at the mercy of their bosses.

“As in any industry, you have unscrupulous people and people with consciences. It’s about 50-50,” said Roger Fields, a partner in a San Francisco accounting firm who specializes in restaurants and the author of “Restaurant Success by the Numbers.”

Restaurant owners seek to keep their labor costs at about 40 percent of gross sales, according to Fields, although by focusing on higher-margin breakfast and lunch service or foods that require less-skilled workers, they can squeeze that percentage lower.

“Some of our better clients, their cost of labor is 27 percent,” Fields said. “That’s pretty damn good.”

Even from the owners’ perspective, however, harsh labor practices can end up hurting profits. “The abusive owners, they run up a lot of costs in training,” Fields said. “If you treat people well, they’ll stay with you and do good work.”

A ROC campaign called High Road attempts to persuade restaurant owners of the value of good labor practices, in part by emphasizing the high costs of turnover.

“We definitely acknowledge that it’s tough to be in this business, especially in New York City,” Chung said. “But I think, a lot of time, people don’t prioritize labor.”

“We want to show employers that running a restaurant ethically is possible and still profitable.”

In this, according to Cobble, ROC harks back to an older model of unionism, from before the Great Depression — one that emphasized training standards, professionalism and providing employers with skilled and reliable workers.