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Raquel Herriott, Section 2 SP 15, Spring 2015

San Diego minimum wage increase debate: restaurant owners hesitate to increase their tipped server’s salary

Waitress counts her tip money after ending her morning shift.

A waitress counts her tip money after ending a morning shift. She relies on her tips to make ends meet.

 

When Nicole Rivera finishes coaching at a local high school, she drives home to see her 2-year-old daughter. Rivera helps her daughter get ready for bed, kisses her goodbye, and then heads across town for her second job as a waitress.

“Thankfully I get to live with my parents,” she said. “I don’t have to pay rent every month.”

As a server, Rivera earns minimum wage and relies on tips to fill in the rest of her budget. She says that her tips are dependent on the section of the restaurant she is serving, the day of the week and the season.

California pays tipped workers the state minimum wage of $9 per hour instead of the federal minimum of $2.13 to $5.00 range. Service workers collect and their tips.

Like many San Diego residents, Rivera benefited from the $1 statewide rise in minimum wages last July. As a 22-year-old single mother, every dollar counts.  However, an increase from $8 to $9 per hour is still not enough to support her daughter on her own, even if she were to work full time.

Increasing salaries in San Diego

Cost of living in San Diego

According to the Bureau of Labor Statistics, San Diego is the fourth most expensive city for housing in the United States. City residents spend around 33 percent of their yearly income on rent expenses.

MIT’s Living Wage Calculator projects that Rivera must earn $22.83 per hour in order to support herself and her daughter. An annual income below $55,002 before taxes would place her in poverty.

The American Chamber of Commerce Research Association’s cost-of-living index shows that San Diego County’s cost of living is 29.2 percent higher than the nation’s. However, the median income is only 12.3 percent above the nation’s.This leaves a large gap between income and costs.

VIDEO: A single mother describes her experience as a part time waitress for a San Diego restaurant.

San Diegans fight for a raise

Last July, the City Council voted unanimously to gradually increase minimum wage from $9 to $11.50 by 2017. Shortly after, Mayor Faulconer vetoed the measure. Also, about 55,000 signatures were submitted to the City to petition the increase, although experts were concerned about the signature gathering process.

By last October, the City Council agreed to grant the public the opportunity to decide whether minimum wage should increase. Voters will have this opportunity next June.

Although the rise in wages is not occurring at the pace that the City Council has anticipated, minimum wage workers can expect a statewide raise from $9 to $10 per hour by next January.

Effective Date New Minimum Wage Old Minimum Wage Amount of Increase Percentage of Increase over previous wage
January 1, 2016 $10.00 $9.00 $1.00 11.1%
July 1, 2014 $9.00 $8.00 $1.00 12.55
January 1, 2008 $8.00 $7.50 $0.50 6.7%
January 1, 2007 $7.50 $6.75 $0.75 11.1%
January 1, 2002 $6.75 $6.25 $0.50 8%
January 1, 2001 $6.25 $5.75 $0.50 8.7%

CHART: A history of California minimum wage since 2001, according to data from the California Department of Industrial Relations

Salaries for tipped servers

San Diego Council members have faced a backlash from their efforts to increase the minimum wage. The majority of the critique stems from business owners who say that they would not have sufficient funds to compensate workers for higher salaries. Some San Diego restaurant owners say that the salary boost should not apply to waiters and waitresses who earn well above minimum wage through tips.

Chris Duggan, director of local affairs for the California Restaurant Association, an organization that represents restaurant owners, says that a tipped employee can earn upwards of $26 to $40 per hour.

In response to last year’s increase, restaurant owners made adjustments to their businesses that ultimately impacted customers.

“Restaurants absorbed the entire labor cost increase by increasing menu prices, reducing hours and benefits or in some cases eliminating positions,” Duggan said.

He says that the restaurant community would like to see servers paid well, but the City’s expectations are unrealistic.

“Legislatively driving up labor cost at such an accelerated rate when small business already operate on small margins can be detrimental to a small business and thus ultimately the employee,” Duggan said.

Duggan says that San Diegans are are split on this issue because of the possible impact on small businesses. Big cities like Seattle, that recently raised minimum wage, are beginning to see serious impacts to small business, especially restaurants.

SLIDESHOW: A San Diego restaurant owner provides perspective on the City’s attempt to increase minimum wage for all workers, including tipped employees.

Capping tipped workers

One way the CRA is counteracting the increase for tipped workers is by sponsoring California Assemblyman Tom Daly’s bill, AB 669, which would cap the minimum wage for California’s tipped workers at $9.

If passed, tipped workers will not earn the increased $10 rate in 2016. This applies to servers who earn $15 hourly with tips included.

The bill would supersede local minimum wage laws. For servers like Mario Castillo, this bill would be unfair.

“Our tips our taxed already and most of us in this industry work four to five hour shifts,” he said.

The $9 cap would impact all tipped employees who earn above minimum wage as well.

Restaurant chef prepares meal for guest at sushi bar while server grabs plates for his table.

A restaurant chef and waiter work together to serve guests. A rise in menu prices can equate to higher tips, but may lead to less customers.

Castillo says that if he were to earn $11.50 per hour and $4 from from tips, his hourly pay would then decrease to $9 per hour including the $4 tip .

“When people are working more than 40 hours a week, they should never struggle to keep a roof over their heads or feed their family,” said Bryan Kim who represents the S.D. Socialist Campaign, an advocacy group supporting increased wages.

The most common opposition  to raising the minimum wage is  that raising the minimum wage will cause cost-push inflation. As a city raises the salaries of workers, residents will see higher prices for the city’s goods and services.

According to the United States Department of Labor, President Obama has called for the gradual increase in minimum wage to automatically adjust with inflation, which would better help low-income families afford rising prices.

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About Raquel Herriott

My name is Raquel but I also go by Rocky. I was born in San Diego, California and have one older brother. I have a passion for learning and love to eat all types of foods.

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