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Paul Giorgio: Raise the Min. Wage, But Leave Restaurants Out of It

Wednesday, February 26, 2014

 

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

Prev Next

#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

Prev Next

#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

Prev Next

#51 (Tie)

Sutton

Unemployment rate, August 2013: 6.3%

Unemployed: 302

Employed: 4,500

Total workforce: 4,802

Prev Next

#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

Prev Next

#48 (Tie)

Shirley

Unemployment rate, August 2013: 6.4%

Unemployed: 223

Employed: 3,269

Total workforce: 3,492

Prev Next

#46 (Tie)

Ayer

Unemployment rate, August 2013: 6.5%

Unemployed: 283

Employed: 4,100

Total workforce: 4,383

Prev Next

#46 (Tie)

Hardwick

Unemployment rate, August 2013: 6.5%

Unemployed: 94

Employed: 1,359

Total workforce: 1,453

Prev Next

#45

Grafton

Unemployment rate, August 2013: 6.6%

Unemployed: 635

Employed: 9,043

Total workforce: 9,678

Prev Next

#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

Prev Next

#38 (Tie)

Charlton

Unemployment rate, August 2013: 7.0%

Unemployed: 491

Employed: 6,483

Total workforce: 6,974

Prev Next

#38 (Tie)

Dudley

Unemployment rate, August 2013: 7.0%

Unemployed: 431

Employed: 5,696

Total workforce: 6,127

Prev Next

#33 (Tie)

Auburn

Unemployment rate, August 2013: 7.1%

Unemployed: 613

Employed: 8,024

Total workforce: 8,637

Prev Next

#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

Prev Next

#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

Prev Next

#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

Prev Next

#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

Prev Next

#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

Prev Next

#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

Prev Next

#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

Prev Next

#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

Prev Next

#3 (Tie)

Southbridge

Unemployment rate, August 2013: 9.9%

Unemployed: 787

Employed: 7,127

Total workforce: 7,914

Prev Next

#3 (Tie)

Gardner

Unemployment rate, August 2013: 9.9%

Unemployed: 934

Employed: 8,514

Total workforce: 9,448

Prev Next

#2

Fitchburg

Unemployment rate, August 2013: 10.0%

Unemployed: 1,829

Employed: 16,435

Total workforce: 7,914

Prev Next

#1

Athol

Unemployment rate, August 2013: 10.5%

Unemployed: 543

Employed: 4,647

Total workforce: 5,190

 
 

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Comments:

Iron Mike Farquhar

Another brilliant piece of “Social Micro-Engineering” from The Democratic Party's resident expert on how Government will make us all live happily ever after....




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