The House of Representatives passed a bill to raise the federal minimum wage to $15 an hour, and already far-left members are demanding more. Michigan Rep. Rashida Tlaib now says that we need a $20 minimum wage. Yet, even $15 would put over a million people out work. Imagine what $20 would do. The march for higher minimum wages will never end, and neither will the pain for American workers — especially women.
Speaking at an event for restaurant servers organized by labor rights group One Fair Wage and an advocacy group Restaurant Opportunities Center (ROC) of Michigan, Tlaib criticized the federal minimum wage for tipped workers as too low. She said “tipped employees make $2.13 per hour, federally. Think about that for one minute. People cannot live on those kind of wages, and I can’t allow people to be living off tips, you know, relying on tips for wages. It’s just not enough to support our families.”
Tlaib then added “when we started it, it should have been $15. Now I think it should be $20.”
As Rep. Tlaib’s comments indicate, the campaign for $15 an hour nationwide will not cease once every state and the federal government adopts this pay floor. Advocates are chasing a “living wage” or one that keeps rising to whatever arbitrary level gets low-wage workers excited.
The result will be that some minimum wage workers will see their wages rise, but many others will entirely lose out on jobs and opportunity.
The Congressional Budget Office found that a $15 minimum wage would leave 1.3 million workers out of work, even as 17 million workers would receive bigger paychecks. Tlaib touts concern for families, but the CBO also concluded that a $15 federal minimum wage would reduce family income by $9 billion by 2025. That loss of income is a burden that American families do not need.
Tlaib and labor rights groups pretend to represent the interest of minimum wage workers such as restaurant servers. However, there are thousands of servers who don’t agree with the effort to turn them into $15 minimum wage earners like everyone else. They argue that they already earn good livings from tips which reward good service.
The Restaurant Workers of America, for example, is a grassroots national organization of servers, which opposes the elimination of tipped wages. As they explain, servers earn well above minimum wage and even above $15 an hour because of tips. According to the National Restaurant Association, the median hourly earnings for servers range from $16 to $22 an hour, depending on experience level. Anecdotally, servers say they earn $20 to $50 an hour. This runs contrary to Tlaib’s poverty-pay claims.
The tipped credit (the difference between the tipped wage and the full minimum wage paid by employers to ensure that workers earn at least the minimum wage) is critical to their employers’ survival because it keeps labor costs down.
When lawmakers increase the minimum wage or eliminate the tipped minimum wage, it is a cost to employers that is borne by workers and consumers. Employers will control costs by reducing hours, laying off staff and eliminating positions such as bussers and servers, raising prices for customers, and eventually replacing servers with automation. According to a survey of New York City restaurants, the city’s minimum wage increase to $15 an hour led to a 1.6 percent job loss at full-service restaurants, the first recorded annual loss in two decades. Over three-quarters (76.5 percent) of full-service restaurants indicated that they reduced employee hours, and 36 percent eliminated jobs in 2018.
Even presidential candidate Vermont Sen. Bernie Sanders had to cut his staff’s hours to afford to pay a $15 minimum wage, the very minimum wage he has bashed employers like Wal-Mart for not providing.
Some restaurants cannot raise prices enough or cut labor costs. They close their doors. A Harvard University Study of minimum wage increases in the San Francisco Bay Area found that for every dollar that the minimum wage increases, the chance of a moderately-ranked restaurant closing rose by 14 percent.
There’s a reason many restaurant waitstaff are career-servers. They can earn a good living or supplement other income. It’s also very flexible employment — a big attraction for women who dominate the food service industry. They appreciate the ability to set their own schedules, perhaps around family and caregiving duties.
With fewer hours and fewer jobs, women will suffer.
Minimum wage jobs aren’t careers, but a starting point for workers. Over half of minimum wage workers are young people between the ages of 16 and 24 and nearly two out of three of them are working part-time. They gain skills and experience that they can level to move up into better-paying positions. Two-thirds of minimum wage workers earn a raise within their first 12 months on the job.
The more lawmakers push for increasing minimum wages to $15 and beyond, the more harm they will inflict on low-wage workers who want opportunity.