SARATOGA SPRINGS – A Gov. Cuomo directive to explore raising the wages of tipped food service workers to a flat rate is drawing the ire of many of the local workers for whom the idea was supposedly initiated to benefit.
“What the motives are I don’t know, but it’s apparently been presented to Cuomo like he’d be doing us a favor,” says Amanda Broderick, who has worked in the local restaurant industry for 16 years, the past nine at Olde Bryan Inn. “The servers aren’t asking for this (and) it would just devastate the local economy. They’re not doing us a favor.”
In upstate New York, the general hourly minimum wage is $10.40 per hour. Tipped food service employees make $7.50 per hour, before tips. When tips are added, many workers say they are capable of earning much more than the state minimum wage, based on the level of service they provide to customers. Besides wait staff earning more, this also enables restaurants working on slim profit margins to save the $2.90 difference per employee, per hour, as a “tip credit.”
The proposal to raise tipped food service workers to the general hourly minimum wage would eliminate that tip credit - forcing restaurants to pay more while assuming workers will earn less, and set into motion a decline in the labor force as well as restaurant service, and higher prices for dining consumers, the workers say.
“The best part of this industry is the relationships you build,” Broderick says. “And I do try to build those relationships because you get rewarded for the service you provide. I know the harder I work, the more money I can make.”
Broderick and her husband recently bought a house on the Great Sacandaga Lake. The daily commute to Saratoga Springs takes 45 minutes to one hour, but it is a trip that is worth it, she says, because the hours are flexible, the staff is passionate, and the money Broderick is able to earn helps pay the mortgage. One of the workers’ concerns is that if their basic wage is raised to the state minimum, tips would cease to exist.
“Right now, a lot of us make way more than the minimum wage. The tip credit helps restaurants pay a lower wage and keep prices down. What would happen is we’d end up making a lot less, menu prices would go up and eventually the mom and pops that Saratoga has so many of would have to close,” Broderick says. “If (Gov. Cuomo) is trying to find extra tax revenue, think of all the taxable income that would be lost in places like Saratoga. You don’t want to mess with a good thing.”
The Employee Policies Institute, a non-profit research organization that studies public policy issues surrounding employment growth, cites Census Bureau data that indicates tipped restaurant servers self-report earnings of more than $17 per hour on average statewide in New York, and suggests those estimates “are likely conservative.”
Susan Mezera has worked as a server for the past 43 years, from the former Lillian’s Restaurant to her current position at the Olde Bryan Inn. Working in the industry has helped her put her two children through college.
“When the public hears servers get minimum wage, people will have the perception that it won’t be necessary to tip,” Mezera explains. “People have mortgages and car payments. They’ve established their lives on the income they make, and that will drastically change. It’s already been practiced in other places and it didn’t work. Maine instituted this and a year later repealed it because it was such a disaster.”
In November 2016 a referendum to raise both the regular and tipped minimum wages in Maine won with 55 percent of the vote. Soon after, tipped servers began to complain that their earnings were being hurt as a result of customers tipping less. The measure was overturned in June 2017 in 110-37 vote by lawmakers.
Increased Costs for Restaurants
“For the restaurants, it would mean a large increase in labor costs. You’re looking at 30 servers and bus people in just one restaurant who are tipped employees - and restaurants are working on a small margin as it is. They may have to raise menu prices and put service charges on top of the bills to cover that. Servers would be let go and they’d probably do away with bussers and hostesses. The work would be spread real thin,” Mezera says. “With more tables to take care of, the quality of service will go downhill. If this happens and then at some later point they decide, ‘oh, this is not working,’ how many restaurants will have gone out of business? This is a busy town with the City Center, with it being a college town and there are a lot of restaurants. If half of them are gone, how many people will be laid off and out of work?”
A locally initiated online petition at change.org titled “Supporters of the Tip Credit in New York” has secured more than 7,000 signatures, and a collective group of business owners and employees urging Gov. Cuomo to preserve the Tip Credit have formed the Save Ny Tips Coalition, which hosts a web site and numerous social media pages with the hashtag: #savenytips.
“I think the group that’s really pushing it is a minority of people working in the restaurant industry who are Cuomo’s voter demographic in New York City. I think it’s purely political,” says Giuseppe Chiaravalle, who works at Wheatfields Restaurant.
“Look at it this way: when you go to a restaurant, you want to be wined and dined, you want good service. Going to a restaurant is an experience: the food, the ambience, the service. Servers know through their hard work, they can provide a superior experience to a customer and that they can get compensated for it with a tip,” Chiaravalle says. “I am willing to take less pay from the business knowing that through my hard work, I can actually make more and lift myself. I know I can work as hard as possible and see the results. Why would you take that incentive away?”
Workers say while they would earn a few dollars more in the raising of the minimum wage, the public would tip less, if at all. And without the incentive to earn tips, many would seek other opportunities in less challenging fields.
“On a track Saturday, where you’ve got five, six different tables and you’re running around the restaurant with 10 things in your head, why would you do all that if you’re only getting paid minimum wage, when you can make the same amount standing at a cash register,” Chiaravalle says. “The hardest working people will look to find a job that’s easier for the same pay. Service will go down because the best of the best are leaving and prices will go up. It’s not a situation where anyone wins.”
Higher Menu Prices
“It definitely would not be good for tourist places like this,” says Saratoga native Brayden Bosch, who has worked in the industry 11 years. “People come here for the track, but they also come for the nightlife-dinner side of it, and it wouldn’t be what they’re looking for anymore. The owners would have to pay a lot more, the workers who remained would be less enthusiastic and on top of that your food would cost more. So, people might not have to tip - but your $20 meal might cost $30 now. Before you could pay $25 with tip and everybody is happy.”
On the restaurant business side of things, the elimination of the tip credit would cost owners more money to meet the minimum wage gap, and those costs will continue to rise. The general hourly minimum wage in upstate New York is scheduled to increase to $11.10 at the end of this calendar year, up to $11.80 in December 2019, and to $12.50 one year after that.
“It would be disastrous,” says Nicci Miller, general manager at Wheatfields Restaurant, who began working in the industry 25 years ago as a busser at Lillian’s.
“You would have a whole group of working people who would lose everything. You have the restaurant owners who could potentially lose their business. Then you have the consumers who will lose every level of service they’re used to. All across the board, it’s a very bad idea,” Miller says.
“From a management perspective, raising wages by that much would be disastrous. In reality, it would stop being the hospitable town we are – which is part of Saratoga’s charm, that face-to-face interaction with people. There’s that communication as a server: where to stay, what to do, what to eat. You’re the visitor’s booth and you’ll lose all of that. It would change service in the entire state of New York,” she says.
And it’s not just the waiter or waitress you visibly see at the restaurant who would be affected, Miller explains. There is an entire support staff who depend on tips.
“You tip out the server 20 percent. From that, he tips 3 percent of that to the bar, because they’re making his cocktails, 2-1/2 percent to the busser who fills his water and clears his dishes, and another 1-1/2 to 2 percent to your food runner, who’s the person who brings the food to the table. It’s such a big circle, everybody takes a piece of it. And they all earn that money, they really do,” she says. “There’s a perception you have a restaurant owner that makes all this money, but in this business, you’re literally making pennies on the dollar.”
Gov. Cuomo previously raised the tipped workers’ minimum wage from $5 per hour to $7.50 in 2016. “We just took a 50 percent increase, and at $7.50 it’s one of the highest in the country,” says Tim Holmes, who with his wife Colleen owns and operates three restaurants in Saratoga Springs and four restaurants overall in Saratoga County.
“I ran the numbers on my company and if he was to pass this to go in effect in 2019 it’ll cost our company about $300,000. And that’s only the first jump before it goes up again,” Holmes says. With a slim profit margin, that amount would have to be made up potentially by reducing jobs and increasing prices. “But I’m not sure that we even can make all of that up,” Holmes says. “It’s a devastating number.”
Gov. Cuomo directed the Commissioner of Labor in December to schedule public hearings to examine industries and evaluate the possibility of ending minimum wage tip credits in New York State. The Department of Labor will be conducting those public hearings on Long Island on April 20, in Watertown April 25, Syracuse on April 30, Buffalo on May 7, and at the Legislative Office Building in Albany on May 18.
“Through the years you learn that your quality of service - how you take care of your customers – directly relates to the amount of money you can make,” Mezera says. “People go out to dinner for the experience: to be waited on, to interact with the server. You build up relationships through the years. They come in and ask for you. You’re able to share their special family moments, because you’ve established that amount of care with your customers. If they just wanted food they could go to a drive-through, or the places that have iPads on the table – which is what could happen if this goes through,” she says. “People are coming out and it’s our job to make them feel better, to have them enjoy their meal and to go out with a smile on their face.”
Correction: an earlier printed edition and online posting of this story contained a misspelled name of an interviewee. It has been corrected in this online edition.