As a restaurant owner here in Maine, I feel it is important to set the record straight as to the compensation of tipped workers in our business, as well as at many other Maine restaurants. Michael Landgarten and Alex Nevens’ June 14 column, “Support the referendum to increase Maine’s minimum wage,” missed the point.
Almost everyone in our industry agrees that the minimum wage needs to be increased – but that increase should go to the hardworking back-of-the-house staff, including cooks and dishwashers, not the hardworking front-of-the-house staff, who receive tips.
There is a reason why tipped workers are required to report their earnings to the Internal Revenue Service: It’s that most of them earn a lot of money. In our restaurant, DiMillo’s, a fine dining seafood restaurant, they make $25 to $30 per hour.
Why do you need to know this? Because based on those averages and the small margins that my restaurant and most others operate under – 3 percent to 5 percent – I get what is called the tip credit from the state of Maine. This allows me to pay my tipped employees half of the prevailing minimum wage, based on the fact that rewards are great and our margins are small.
Most small restaurants do not even make the margins that I do, so the provision in the referendum that would eliminate this credit would forever change the restaurant industry in Maine and the way I do business.
Maine is known for its “foodie” culture, which caters to both residents and visitors alike. Maine would be the only state east of the Mississippi without the tip credit, which will make it difficult, if not impossible, for small restaurant owners to make a living.
In more cases than not, tipped employees make more money than anyone else in the restaurant – and more often than not, that includes the owner. The only way to adapt to these changes would be to raise prices drastically, which would be devastating for individuals on fixed and lower incomes.
Or it could change the business model to use fewer tipped employees, resulting in customers having to order or pick up their food at a counter, when they always have enjoyed the camaraderie of engaging their server for information on the menu or just to exchange pleasantries.
Restaurants could establish “no tipping” policies, which would create a lack of incentive for the employee to provide great service and would affect customs that everyone alive today has grown up with and supports.
It could result in cutting back on employees, potentially hurting the very people this referendum is supposedly designed to help – or in some instances, just closing the business down, when the margins disappear during the third year of the ramp-up of the elimination of the tip credit for most restaurants. These options would hurt both the employee and the consumer.
I am truly not sure how this referendum question will help tipped employees if passed Nov. 8. Servers in our restaurant work hard and feel blessed to make the money that they do.
This change may make the disparity in wages for those people making tips serving food and those preparing it for them even greater than exists today – as well as making it impossible for Maine’s entrepreneurial restaurateurs to make a go of it. I support the defeat of this referendum, and I urge the Legislature returning to Augusta in 2017 to do what they should have done the last couple of sessions and raise the state’s minimum wage.
It is not too late to get it right, but it could be too late for Maine’s restaurant industry if we adopt wage increases that would mirror those of California, the fifth largest economy in the world. Maine has the fifth largest economy in New England and this will definitely make us an outlier in our region. There are more people in the city of San Diego than in the whole state of Maine. We are not able to support the same economic policies as they do in California with our small, struggling rural economy.
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