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Here's a Tip: Let the Market Decide

Written by Sheila Kihne.

The amount of hoopla over GOP gubernatorial candidate Tom Emmer's comment that Minnesota employers should be allowed to count tips into minimum wage calculations is astounding.

First- there are 43 other states who have the same law.  Why?  Because the government shouldn't dictate to private business what they should pay employees.  They especially shouldn't dictate it beyond the current federal minimum wage laws.

I've worked in the restaurant industry doing finance.  I also worked as a hostess when I was younger.  Here's a secret:  the more tables seated, the higher the turnover in tables, the more money you make.  (Assuming you're a hard worker.)

If somebody believes that they'll only make $2.13 an hour as waitstaff, it's highly improbable that they'd take the job.  If they don't take the job, the restaurant has no waitstaff.

Now- let's look at a basic scenario.  Waitstaff gets paid $6.00 per hour by the employer- employer is given the OPTION to pay them $2.50 an hour and the employee has to make up that $3.50 per hour in tips.  That equates to one table per hour with a Republican customer and a $18 tab (or with a Democrat a $24 tab.)

Employer saves $3.50 per hour, $140 per week, $560 per month, $6,720 per year multiplied by an entire waitstaff this is a TON of money.  Money that would most likely be spent on expanding or improving the business.  (Newflash to those who have never been in the restaurant business:  there is not a lot of extra cash and most cash gets thrown right back into growing the business or saving money to handle the downturns.)  

Perhaps a restaurant owner chooses to hire a better chef at a higher salary, word gets out that the food is excellent and business grows.  Perhaps they decide to take out some new advertising to bring in new business.   Perhaps they open a new patio or buy some nicer tables and chairs.  Maybe they save up to open a second location.  All of these things could give them the competitive edge they need to survive in this crappy economy.  And if they're able to survive they don't have to layoff employees, if they're somehow able to thrive maybe they can even hire more employees.  Have you been to a restaurant lately?  Unless it's McDonalds, they're all struggling.  How much in commercial property taxes does the government lose when one closes?  How much in sales tax, income tax? 

Just as most waitstaff isn't getting rich, neither are most restaurant owners in Minnesota.  Perhaps MPR, and the Strib and all the other media outlets might survey business owners (an institution like W.A. Frost just minutes from the pols in St. Paul doesn't count.) Survey them on how much they make and what they think about the government dictating their wages.  Or what they think about taxes in this state and business regulations.  No.  The easier thing-- the simplistic thing-- is to write dozens of articles about a candidate's remark made at a campaign stop leading their readers to conclude that he's somehow after the poor.  How absurd.  Forty-three other states are doing exactly what Tom Emmer proposes.  Right-wing extemist states like Massachusetts and New York.  At least one candidate is leading a debate about these issues...issues that will mean either the prosperity or future indebtedness of our state.

Here's a law I'd like to see:  Every person running for political office, or writing for a major news outlet, should be required to run a business before opening their big mouths about wages.