21 States (and Dozens of Cities) Affected by 2017 Minimum Wage Increases: What Restaurants Can Do Now

Who is Impacted?

There is no doubt that the two industries with the most at risk over the impending minimum wage increases are retail and hospitality.  Especially, in hospitality, the increases are set to affect over 14 million Americans in the hospitality/ food & beverage industries - that's nearly 10 percent of the entire United States workforce.  Of course, the attempt to close the wage gap amongst restaurant employees is very important.  However, with these changes coming, restaurant owners and operators must prepare their staff.  Below are the 21 states, along with their cities/ counties where the new minimum wage increases are taking place:

States Affected:

• Alaska - $9.80

• Arizona - $10.00

• Arkansas - $8.50

• California - $10.00 for small employers; 10.50 for large employers

• Colorado - $9.30

• Connecticut - $10.10

• Florida - $8.10

• New York - Varies across state from $9.70 to $11 (as of 12/31/16)*

• Ohio - $8.15

• Oregon - $10.25 (as of July)

• South Dakota - $8.65

• Vermont - $10.00

• Washington - $11.00

• *The basic minimum wage is $9.70 in most of the state. But it's higher for the fast food industry; Long Island; Westchester County; and large and small employers in New York City.

Cities & Counties:

• California:

  • Cupertino - $12.00

  • El Cerrito - $12.25

  • Los Altos - $12.00

  • Mountain View - $13.00

  • Oakland - $12.86

  • Palo Alto - $12.00

  • Richmond - $12.30

  • Sacramento - $10.50 (large employers)

  • San Diego - $11.50

  • San Mateo - $12.00

  •  San Jose - $10.50

  • Santa Clara - $11.10

  • Sunnyvale - $13.00

• Hawaii - $9.25

• Maine - $9.00

• Maryland - $9.25 (as of July)

• Massachusetts - $11.00

• Michigan - $8.90

• Missouri - $7.70

• Montana - $8.15

• New Jersey - $8.44

• District of Columbia:

  • Washington, D.C. - $12.50 (as of July)

• Iowa:

  • Johnson County - $10.10

  • Linn Country - $8.25

  • Wapello County - $8.20

• Maine:

  • Portland - $10.68

• New Mexico:

  • Albuquerque - $8.80

  • Bernalillo - $8.70

  • Las Cruces - $9.20

• New York:

  • New York City - $11.00 (as of 12/31/16)

  • Long Island and Westchester, NY - $10.00 (as of 12/31/16)

• Washington:

  • Seattle - $15.00

  • SeaTac - $15.35

  • Tacoma - $11.15

What Restaurants Can Do NOW …

Begin to Strategically Schedule Staff:  Get your schedules down to a science by analyzing your most crucial shifts and recognizing the strongest members of your staff.  If you’re short on time, the TeamLive tool on Harri is a great help to managers and operators, who need to align their schedules with real-time sales, better streamline their labor costs and control their overall staffing budget.

Take Your Restaurant/ Store Hours Into Consideration:  Making this work means, keeping track of your stores’ sales patterns   For example, if Monday - Friday @ 11:30 AM - 2:00 PM are very busy lunch-pops for you, yet there is a sharp dip between the hours of 5:00 PM - 10:00 PM, you may want to consider closing earlier during the week and drive all of your marketing efforts towards weekday lunch.  Your POS weekly and monthly reports should be a great indicator of these trends. If you have never done this before, contact your POS company rep for help.  

Think About Raising Menu Item Prices:  This is the last resort, so, be sure that every change made is absolutely necessary.  Go into this knowing that you may lose some guests at the expense of your menu changes. With the help of your culinary team analyze each menu item and break it down by cost.

Compare vendors on the pricing of specific ingredients (ie. if carrots cost more at Baldor than AFI than switching vendors could be effective in this case).  Do your best to communicate to your guests that your business has slightly increased menu prices to stay open, pay your employees fair wages, and most significantly to continue to have the great privilege of serving them.  

The Tipless Restaurant Movement

Alyssa Arian has worked in San Francisco restaurants for a decade and, like most servers, she got into it for the tips.

“Some nights you leave with $80 or $90,” she says. “$100 is kind of the average mark for what you want as a server, sort of anywhere in this city I think as a minimum.”

Since February, though, Arian hasn’t earned any tips. She’s working at Sous Beurre Kitchen, a new French spot in the Mission where tipping’s not allowed.

At a full-service restaurant you know the drill. You eat your food, you get your bill, and then you calculate the tip. But not at Sous Beurre Kitchen, Berkeley’s Comal, or Oakland’s Camino.

Instead, these and other Bay Area restaurants are ditching the tableside math and going for a more transparent approach to pricing: where the amount you see on the menu is the amount you pay. Advocates say this means more and fairer wages for everyone.

No tips, but more stability

Before she interviewed, Sous Beurre management asked Arian if going tipless would work for her. Other people had turned down the policy. Arian wasn’t sure, but decided to give it a try. Today, she can’t hide her enthusiasm.

In general, Sous Beurre servers make less than they would with tips, on average $25 per hour. But if they work 40 hours a week, they get benefits, sick days and vacation time -- in short, stability. That goes for the cooks and dishwashers, too.

“The reality of the back of the house making far less than the front of the house has just always been something that we've had to not think about and deal with internally,” says Lauren Giunta, a cook at Camino restaurant in Oakland.

Camino went tipless in January and cooks now start at $16 an hour. Since Giunta’s been there for two years already, she’s earning even more.

“One job is enough for me, I don't have a lot of financial needs, I don't support a family, I don't have a bunch of obligations other than my student loans,” she says. “So for me, it is a living wage.”

Cooks and dishwashers typically don’t earn tips directly. They get a small share of whatever the servers earn. A tipless restaurant makes sure that everyone earns money every night, and that the house can afford to pay them -- even give them benefits.

That’s why Sous Beurre Kitchen went tipless from the start, says Michael Mauschbaugh, the restaurant’s chef and owner.

“When I decided I wanted to go out on my own I wanted to make sure my employees felt like I had their best interests in mind,” he says. “And that's why I decided to reapproach the entire business model.”

Mauschbaugh built a 20 percent service charge into the menu price of every item he serves. He says it’s already making a difference for his workers. Dishwashers and line cooks are earning above minimum wage. Their hourly rates are between $13 and $15, and $16 and $18, respectively.

Bigger changes

Minimum wage is the bigger force at work here. Right now, San Francisco’s minimum wage is $11.05 per hour. In May, it will rise to $12.25, and it will keep rising to $15 by 2018.

Oakland’s minimum wage already increased this month from $9 to $12.25 an hour. Today, that’s the highest minimum wage in the country. So for restaurant owners, the cost of doing business is going up no matter what.

In Oakland, Camino owner Allison Hopelain says tipless is the wave of the future.

“We've always kind of wanted to find a way to address the inequities between the kitchen staff and floor staff,” Hopelain says. “And then with the minimum wage being raised, with Measure FF being passed, it sort of gave us this moment to do it.”

A tipless future?

UC Berkeley labor economist Sylvia Allegretto is paying close attention to the tipless trend, because it affects a lot of people. Restaurant jobs are growing much faster than jobs overall, and her research shows close to one in 10 workers in the US are in the restaurant industry. But the industry is still really unstable.

“You go to work, you might think you're going to work seven or eight or nine hours but if it's slow they'll send you home,” Allegretto says. “It's very hard to count on some kind of ongoing consistent pay from a lot of these jobs.”

Allegretto thinks the no-tip trend is interesting, but it’s too soon to see if it can scale.

“This is getting a lot of press but right now very few restaurants are doing this, and they mostly seem to be higher-end restaurants where they're just getting rid of tips,” she says.

California restaurant workers are a little better off than their peers around the country. California’s one of just seven states where tipped employees earn minimum wage as base pay, as opposed to a “subminimum” wage that tips are supposed to supplement.

Federally, that’s $2.13 an hour and has been so since 1991. Whereas California’s restaurant workers make $9 an hour, at least. So in this state, the conversation can get a little more philosophical. Allegretto says it raises questions about whether tipping should exist at all and what it means.

Fred Sassen co-owns Homestead, a casual but higher-end neighborhood restaurant in North Oakland that went tipless this month. A big part of his reason was that he didn’t see the point in tipping when there’s a more equitable way to compensate people.

“In the United States we are one of the very few industries that puts its employees and its livelihood in the hands of a patron to be generous,” Sassen says.

So he and other owners are putting that responsibility on themselves. To them, tipless really means asking patrons to pay more up front so you can pay your staff more fairly.

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