Paul Giorgio: Raise the Min. Wage, But Leave Restaurants Out of It
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Wednesday, February 26, 2014
Paul Giorgio, GoLocalWorcester MINDSETTER
We do not need to saddle a precarious business with unneeded costs. Raise the minimum wage but leave the restaurant staff out of it, believes Paul Giorgio.
There is a movement in our state and in our country to raise the minimum wage. And I support it for most workers. The rationale behind a low minimum wage in the past has been that it is a training wage for first time job seekers. Who wants to pay some sixteen-year-old more than minimum wage to flip burgers at McDonalds? First time job seekers do need a great deal of training and quite frankly babysitting. Most kids today are not ready for the workforce.
However, in these tough economic times, it is not the sixteen-year-old first time job seeker who is at your local fast food place. It could be a dad or a mom, who is struggling to make ends meet. So for them, we need to raise the minimum wage from its current $7.75 per hour or $310 per week.
The one group that doesn’t need a wage hike
But, there is one group of employees that we do not need to raise the minimum wage for and that is bartenders and wait staff. This part of the Massachusetts bill makes no sense.
Currently, according to the Massachusetts Restaurant Association the average tipped employee makes $13.13 per hour, almost double the minimum and making Massachusetts number one in the country. Today, the average tipped employee gets $2.63 per hour from the restaurant or bar owner, they then supplement that with tips that the customer pays. The standard tip used to be 15%, but in recent years that has moved closer to 20%. So that wait staff in a decent restaurant are pulling in $300 or $400 a night on a good night. Even if it is a low or moderately priced place, where you bring your family, you are still spending $60 on dinner for 4. So the tip is $12.
Most wait staff can and do handle 3 to 5 tables or more at the same time. For a good server, the money can add up quickly. What brings the average down to $13.13 per hour is the breakfast and lunch business, where bill totals tend to be lower.
A solution looking for a problem
It appears that this piece of the minimum wage law falls into a solution looking for a problem category. Tipped employees, according to studies, make up about 2/3 of a restaurants staff in a full service restaurant. The tipped staff also includes, bartenders, busboys and bar backs. The latter two get tipped out by the wait staff. So even though they are paid minimum wage, they still get tips.
Although, most restaurants customers pay with credit cards, there are still some cash customers. Do most people think the wait staff report 100 percent of their cash tips? This under reporting also drops the average wage down to the $13.13. So in actuality it is likely higher.
In addition to the tip wage, the restaurant owner must pay all FICA, FUTA and SUTA on the claimed tips. There is no other business I know off that must do this. In effect, the restaurant owner is paying taxes on a third party transaction. For example, the local newspaper does not pay FICA or other taxes on what you tip your delivery person. The salon owner does not pay the FICA on whatever tip you give the person who cuts your hair.
An unnecessary burden
Opening a restaurant is one of the most precarious businesses I know. For every restaurant that opens one closes. States and cities load up restaurants with expenses, even before they open their doors.
Profit margins are small and restaurant owners are ever mindful of raising prices. Yet in spite of this the restaurant industry has expanded. In the last 15 years the food industry has added 50,000 more jobs or a 20 % increase. Today, according to the Massachusetts Restaurant Association there are 80,000 tipped employees in the Commonwealth.
We do not need to saddle a precarious business with unneeded costs. Raise the minimum wage but leave the restaurant staff out of it.
Paul Giorgio is a longtime Democratic Party Activist who has worked on numerous campaigns. He was a Lead Advance Person for President Clinton & Vice President Gore. He was Deputy Director of Special Events for President Clinton’s first Inauguration. He has been elected a delegate to numerous Democratic National Conventions and recently served as one of President Obama’s representatives on the Platform Committee. In 2013 he was chosen as a Presidential Elector. He is the President of Pagio, Inc., publishers of Pulse Magazine, Vitality Magazine and Worcester Medicine.
Related Slideshow: Central MA Unemployment Rates #72 - #1
Here are the unemployment statistics for each town in Central Mass, ranked from least to most-
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#72
Harvard
Unemployment rate, August 2013: 4.4%
Unemployed: 140
Employed: 3,059
Total workforce: 3,199
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#71
Hopkinton
Unemployment rate, August 2013: 4.7%
Unemployed: 369
Employed: 7,523
Total workforce: 7,892
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#69 (Tie)
Berlin
Unemployment rate, August 2013: 4.9%
Unemployed: 79
Employed: 1,520
Total workforce: 1,599
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#69 (Tie)
Hopedale
Unemployment rate, August 2013: 4.9%
Unemployed: 159
Employed: 3,074
Total workforce: 3,233
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#67 (Tie)
Bolton
Unemployment rate, August 2013: 5.1%
Unemployed: 147
Employed: 2,733
Total workforce: 2,880
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#67 (Tie)
Southborough
Unemployment rate, August 2013: 5.1%
Unemployed: 257
Employed: 4,813
Total workforce: 5,070
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#66
Marlborough
Unemployment rate, August 2013: 5.5%
Unemployed: 1,283
Employed: 21,909
Total workforce: 23,192
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#65
Northborough
Unemployment rate, August 2013: 5.6%
Unemployed: 432
Employed: 7,259
Total workforce: 7,691
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#62 (Tie)
Mendon
Unemployment rate, August 2013: 5.7%
Unemployed: 196
Employed: 3,218
Total workforce: 3,414
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#62 (Tie)
Princeton
Unemployment rate, August 2013: 5.7%
Unemployed: 107
Employed: 1,764
Total workforce: 1,871
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#62 (Tie)
Topsfield
Unemployment rate, August 2013: 5.7%
Unemployed: 176
Employed: 2,910
Total workforce: 3,086
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#61
Boylston
Unemployment rate, August 2013: 5.8%
Unemployed: 134
Employed: 2,167
Total workforce: 2,301
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#58 (Tie)
Shrewsbury
Unemployment rate, August 2013: 5.9%
Unemployed: 1,084
Employed: 17,152
Total workforce: 18,236
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#58 (Tie)
Sterling
Unemployment rate, August 2013: 5.9%
Unemployed: 256
Employed: 4,112
Total workforce: 4,368
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#58 (Tie)
Westborough
Unemployment rate, August 2013: 5.9%
Unemployed: 525
Employed: 8,415
Total workforce: 8,940
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#56 (Tie)
Sturbridge
Unemployment rate, August 2013: 6.0%
Unemployed: 306
Employed: 4,763
Total workforce: 5,069
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#56 (Tie)
Upton
Unemployment rate, August 2013: 6.0%
Unemployed: 241
Employed: 3,752
Total workforce: 3,993
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#53 (Tie)
Douglas
Unemployment rate, August 2013: 6.1%
Unemployed: 290
Employed: 4,469
Total workforce: 4,759
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#53 (Tie)
Hudson
Unemployment rate, August 2013: 6.1%
Unemployed: 696
Employed: 10,740
Total workforce: 11,436
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#53 (Tie)
Milford
Unemployment rate, August 2013: 6.1%
Unemployed: 954
Employed: 14,670
Total workforce: 15,624
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#51 (Tie)
Oakham
Unemployment rate, August 2013: 6.3%
Unemployed: 65
Employed: 973
Total workforce: 1,038
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#51 (Tie)
Sutton
Unemployment rate, August 2013: 6.3%
Unemployed: 302
Employed: 4,500
Total workforce: 4,802
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#48 (Tie)
Holden
Unemployment rate, August 2013: 6.4%
Unemployed: 576
Employed: 8,430
Total workforce: 9,006
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#48 (Tie)
Paxton
Unemployment rate, August 2013: 6.4%
Unemployed: 158
Employed: 2,327
Total workforce: 2,485
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#48 (Tie)
Shirley
Unemployment rate, August 2013: 6.4%
Unemployed: 223
Employed: 3,269
Total workforce: 3,492
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#46 (Tie)
Ayer
Unemployment rate, August 2013: 6.5%
Unemployed: 283
Employed: 4,100
Total workforce: 4,383
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#46 (Tie)
Hardwick
Unemployment rate, August 2013: 6.5%
Unemployed: 94
Employed: 1,359
Total workforce: 1,453
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#45
Grafton
Unemployment rate, August 2013: 6.6%
Unemployed: 635
Employed: 9,043
Total workforce: 9,678
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#42 (Tie)
Hubbardston
Unemployment rate, August 2013: 6.7%
Unemployed: 163
Employed: 2,255
Total workforce: 2,418
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#42 (Tie)
Millbury
Unemployment rate, August 2013: 6.7%
Unemployed: 489
Employed: 6,787
Total workforce: 7,276
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#42 (Tie)
Petersham
Unemployment rate, August 2013: 6.7%
Unemployed: 43
Employed: 596
Total workforce: 639
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#40 (Tie)
Lancaster
Unemployment rate, August 2013: 6.8%
Unemployed: 240
Employed: 3,281
Total workforce: 3,521
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#40 (Tie)
Townsend
Unemployment rate, August 2013: 6.8%
Unemployed: 346
Employed: 4,738
Total workforce: 5,084
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#38 (Tie)
Charlton
Unemployment rate, August 2013: 7.0%
Unemployed: 491
Employed: 6,483
Total workforce: 6,974
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#38 (Tie)
Dudley
Unemployment rate, August 2013: 7.0%
Unemployed: 431
Employed: 5,696
Total workforce: 6,127
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#33 (Tie)
Auburn
Unemployment rate, August 2013: 7.1%
Unemployed: 613
Employed: 8,024
Total workforce: 8,637
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#33 (Tie)
East Brookfield
Unemployment rate, August 2013: 7.1%
Unemployed: 86
Employed: 1,129
Total workforce: 1,215
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#33 (Tie)
Holland
Unemployment rate, August 2013: 7.1%
Unemployed: 99
Employed: 1,291
Total workforce: 1,390
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#33 (Tie)
New Braintree
Unemployment rate, August 2013: 7.1%
Unemployed: 40
Employed: 524
Total workforce: 564
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#33 (Tie)
Rutland
Unemployment rate, August 2013: 7.1%
Unemployed: 313
Employed: 4,081
Total workforce: 4,394
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#32
Oxford
Unemployment rate, August 2013: 7.2%
Unemployed: 548
Employed: 7,032
Total workforce: 7,580
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#31
Uxbridge
Unemployment rate, August 2013: 7.3%
Unemployed: 536
Employed: 6,784
Total workforce: 7,320
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#30
Leicester
Unemployment rate, August 2013: 7.5%
Unemployed: 450
Employed: 5,565
Total workforce: 6,015
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#27 (Tie)
Ashburnham
Unemployment rate, August 2013: 7.6%
Unemployed: 236
Employed: 2,865
Total workforce: 3,101
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#27 (Tie)
Lunenburg
Unemployment rate, August 2013: 7.6%
Unemployed: 398
Employed: 4,850
Total workforce: 5,248
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#27 (Tie)
Northbridge
Unemployment rate, August 2013: 7.6%
Unemployed: 608
Employed: 7,383
Total workforce: 7,991
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#26
Spencer
Unemployment rate, August 2013: 7.7%
Unemployed: 492
Employed: 5,935
Total workforce: 6,427
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#24 (Tie)
Ware
Unemployment rate, August 2013: 7.9%
Unemployed: 394
Employed: 4,611
Total workforce: 5,005
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#24 (Tie)
West Boylston
Unemployment rate, August 2013: 7.9%
Unemployed: 259
Employed: 3,035
Total workforce: 3,294
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#21 (Tie)
Brimfield
Unemployment rate, August 2013: 8.0%
Unemployed: 152
Employed: 1,745
Total workforce: 1,897
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#21 (Tie)
Templeton
Unemployment rate, August 2013: 8.0%
Unemployed: 305
Employed: 3,520
Total workforce: 3,825
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#21 (Tie)
Westminster
Unemployment rate, August 2013: 8.0%
Unemployed: 297
Employed: 3,417
Total workforce: 3,714
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#19 (Tie)
North Brookfield
Unemployment rate, August 2013: 8.1%
Unemployed: 195
Employed: 2,224
Total workforce: 2,419
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#19 (Tie)
Palmer
Unemployment rate, August 2013: 8.1%
Unemployed: 508
Employed: 5,772
Total workforce: 6,280
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#18
Warren
Unemployment rate, August 2013: 8.4%
Unemployed: 209
Employed: 2,271
Total workforce: 2,480
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#17
West Brookfield
Unemployment rate, August 2013: 8.6%
Unemployed: 155
Employed: 1,652
Total workforce: 1,807
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#15 (Tie)
Royalston
Unemployment rate, August 2013: 8.7%
Unemployed: 52
Employed: 547
Total workforce: 599
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#15 (Tie)
Webster
Unemployment rate, August 2013: 8.7%
Unemployed: 723
Employed: 7,569
Total workforce: 8,292
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#13 (Tie)
Brookfield
Unemployment rate, August 2013: 8.8%
Unemployed: 163
Employed: 1,695
Total workforce: 1,858
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#13 (Tie)
Millville
Unemployment rate, August 2013: 8.8%
Unemployed: 158
Employed: 1,642
Total workforce: 1,800
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#11 (Tie)
Barre
Unemployment rate, August 2013: 8.9%
Unemployed: 244
Employed: 2,510
Total workforce: 2,754
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#11 (Tie)
Worcester
Unemployment rate, August 2013: 8.9%
Unemployed: 7,562
Employed: 77,653
Total workforce: 85,215
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#9 (Tie)
Ashby
Unemployment rate, August 2013: 9.0%
Unemployed: 149
Employed: 1,503
Total workforce: 1,652
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#9 (Tie)
Orange
Unemployment rate, August 2013: 9.0%
Unemployed: 332
Employed: 3,356
Total workforce: 3,688
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#7 (Tie)
Blackstone
Unemployment rate, August 2013: 9.2%
Unemployed: 488
Employed: 4,824
Total workforce: 5,312
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#7 (Tie)
Clinton
Unemployment rate, August 2013: 9.2%
Unemployed: 676
Employed: 6,652
Total workforce: 7,328
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#6
Winchendon
Unemployment rate, August 2013: 9.3%
Unemployed: 453
Employed: 4,407
Total workforce: 4,860
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#5
Leominster
Unemployment rate, August 2013: 9.6%
Unemployed: 1,937
Employed: 18,141
Total workforce: 20,078
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#3 (Tie)
Southbridge
Unemployment rate, August 2013: 9.9%
Unemployed: 787
Employed: 7,127
Total workforce: 7,914
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#3 (Tie)
Gardner
Unemployment rate, August 2013: 9.9%
Unemployed: 934
Employed: 8,514
Total workforce: 9,448
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Fitchburg
Unemployment rate, August 2013: 10.0%
Unemployed: 1,829
Employed: 16,435
Total workforce: 7,914
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#1
Athol
Unemployment rate, August 2013: 10.5%
Unemployed: 543
Employed: 4,647
Total workforce: 5,190
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