Minimum Wage Hikes in New York City Cause Restaurants to Eliminate Jobs, Cut Hours, Raise Prices

Screen Shot 2019-01-25 at 2.05.48 PM.png

“New York is known for its incredible food scene, but legislators in the Big Apple may have bitten off more than they can chew with the newest minimum wage hike.

The city’s mandated increase, which took effect on December 31, requires businesses that employ 11 or more people to boost wages from $13 to $15 per hour. But most restaurants operate with the tipped wage, offering servers and bartenders a lower hourly base pay and the opportunity to rake in the rest in tips, which often yields better pay overall. If workers don’t earn enough this way, employers are required to make up the difference.

That tipped minimum just rose from $8.65 to $10 an hour. A 16 percent jump is fairly punishing, considering the industry operates on razor-thin profit margins.

A new study conducted by the New York City Hospitality Alliance lends credence to the idea that substantial increases made to the tipped wage are far costlier than they are beneficial. After surveying 574 restaurants, they found that 2019 looks bleak: 75 percent of full-service establishments plan to cut employee hours, and 47 percent will eliminate jobs entirely in response to the forced minimum wage hikes. That follows closely on the heels of a dreary 2018, when 77 percent of full-service restaurants reduced employee hours and 36 percent cut jobs, both of which were also in response to the mandated wage increases.”

See more here.

Impact of Min Wage Increase / NYCHA Survey & Results

Screen Shot 2019-01-14 at 3.10.33 PM.png

See here NYCHA Survey and Results on Minimum Wage Increase

Court Clears The Way For Servers To Sue For Full Minimum Wage

“The ruling by the U.S. Court of Appeals for the Ninth District overturned a lower court’s decision that servers, bartenders and other tipped employees in essence do not perform two jobs. The lower court’s ruling allowed restaurants to pay tipped employees on a single scale, a lower direct wage, provided gratuities made up the rest of the minimum compensation they were due under law on a weekly basis.  In its opinion, restaurants weren’t required under federal law and stated Department of Justice guidelines to pay employees a different wage for pre-shift work like cleaning restrooms, slicing fruit for the bar, or cleaning the heads of soft-drink dispensers.”

View more here.

New York Approves $15 Minimum Wage

New York Governor Andrew Cuomo followed closely on the heels of California yesterday, announcing an agreement with Albany lawmakers to raise the NY State minimum wage to $15 per hour over the next few years. The increase will begin with for workers in New York City employed by large businesses (those with at least 11 employees), who will have a minimum wage of $11 at the end of 2016, and an additional $2 each year after, reaching $15 on 12/31/2018.

The national labor rights movement has been fighting for $15 since 2012, and roughly half of the 50 states have increased their minimums somewhat (although the Federal minimum is still set at $7.25 due to congressional opposition). The final legislation in NY has not been approved, so it’s unclear how it will affect tipped workers. The tipped minimum in New York increased recently to $7.50, precipitating some of the gratuity-free movement. Additional increases would almost certainly prompt more NYC restaurants to raise prices and eliminate tipping altogether.

To read more, click here.

Slow Food NYC’s Food Almanac 2016

Slow Food NYC (SFNYC) will be hosting their 6th annual “Food Almanac” on February 9th at the Brooklyn Winery. The event is inspired by the original Farmer’s Almanac, which was used by farmers to predict the weather and plan plantings for the year to come. SFNYC’s version allows industry experts and food activists to discuss what’s in store for our local food system. This year’s theme focuses on food wages: the Fight for $15, the no-tipping movement, and what they mean for both restaurant workers and farmers.

The Food Almanac will also feature treats and eats from Brooklyn Winery, including beer, wine, and seasonal snacks. Proceeds benefit SFNYC’s Urban Harvest program, a nonprofit food educational program for children in NYC public schools.

To learn more and register, click here.

Move to End Tipping Gains More Momentum

yI1Ya0x8QbiTi7potxLc_022.jpgDanny Meyer’s decision to end tipping at all his restaurants has already become the sort of high profile case that’s likely to spark conversation and debate in circles reaching far beyond the industry. As two more restaurateurs move to join him, it now seems like his announcement represents a major tipping point (pun intended) in what is considered standard.

This week both Gabriel Stulman and Andrew Tarlow announced that they would eliminate tipping at some or all of their restaurants. Stulman is the owner of six casual restaurants in downtown Manhattan, including Fedora on West 4th where he plans to eliminate gratuities in January. Stulman calls this a test drive of the new system, but ultimately he hopes to implement it at more of his restaurants as well. Tarlow, who is responsible for Diner and Marlow & Sons, said he plans to completely eliminate gratuities at all of his restaurants in 2016.

Although Meyer seems to have set off a domino effect, the trend is likely also due to the $2.50 increase in New York’s tipped minimum wage, which will go into effect in January. For many restaurants, it makes more sense to eliminate tipping altogether and hope that they can communicate the change effectively and avoid sticker-shock at higher prices.

Although the anti-tipping movement cites fairness as a major motivator, with higher wages for back of house workers as well as well as front of house, some employees may balk at the change, which puts more money in the employer’s pockets (at least until it reaches the workers paychecks). Stulman in particular is preparing for this backlash by offering “guaranteed wages for the members of our dining room team to be consistent with what they were averaging before the change.” To meet this requirement he’ll be increasing prices around 25% across the board.

To read more, click here.