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Restaurants See Value in Paying Higher Wages Per One Fair Wage Survey Findings

drinks on a table
Photo by Natalia Ostashova on Unsplash

Over the course of the pandemic, the demands of restaurant and food service workers have built up to encompass just about every single issue that has plagued the industry long before the pandemic came about. The realization that the industry has been recklessly sustaining detrimental practices that have, and will continue to, repel prospective workers became all too clear over the past year and a half. Although there is an obvious difficulty in trying to address a multitude of issues, the efforts to reform the industry will take time before creating true, tangible change. One such effort has been focused on raising wages; given the inherently dangerous task of working in “essential” service work during the pandemic, the concept of increasing compensation was one of the most cited ways to effectively recruit and retain workers during the current labor shortage. 

 One Fair Wage – a non-profit, non-governmental organization led by advocates for restaurant workers to end the subminimum wage for tip workers making less than the minimum wage – has dedicated its time to said efforts. Here are what its most recent study found on the progress already being made. 

The study, which was based on both interviews with restaurant owners and job postings, spanned from the end of August to mid-September. Its main finding: over “1,600 restaurants have raised wages to pay the full minimum wage with tips on top, with an average wage of about $13.50 — across 41 states in which the vast majority of restaurants were paying a subminimum wage of $5 or less earlier this year.” 

The study sought to find out just how important raising wages is to workers. The response it found “by May of 2021 [is that] over half (53%) of service workers report that they are considering leaving their jobs and the majority are leaving because their wages and tips are too low.” It added that “nearly 8 in 10 of these workers (78%) report that they would only stay in restaurants or return to work in restaurants if they received a full, livable wage with tips on top.” 

As a result, raising wages has become a necessity for restaurants if they want to remain operational. But how do the operators feel? According to OFW’s findings, based on interviews with owners regarding their willingness to raise wages, most are in support. According to one owner from North Carolina who was interviewed by OFW, Katie Button, “we decided to eliminate sub-minimum wage pay in our restaurants and adopted a model of all employees making above minimum wage with tips shared across all hourly non-management workers. We instantly saw better and more equitable pay across all of our workers. It has literally changed lives.” 

While the One Fair Wage survey is only based on a small percentage of restaurants and job postings, which limits its scope and conclusiveness, several other sources are also reporting similar findings. For example, the Bureau of Labor Statistics’ latest release reported that “the average hourly earnings in Leisure and Hospitality was $16.60 in August 2021, up from $14.72 in August 2020, and that worker hours have stayed about the same.” 

On the other hand, other sources believe that raising the minimum wage will not bring such positive effects to the industry. For example, the National Restaurant Association president Sean Kennedy, opposed the inclusion of the Raise the Wage Act in the Biden-Harris Covid relief bill arguing that “the restaurant industry and our workforce will suffer from a fast-tracked wage increase and elimination of the tip credit.” This side of the argument usually contends that raising wages will lead to raising menu prices which will repel customers and result in a failing economy. What OFW argues in return is that, while menu increases may naturally follow wage increases, more in general needs to be done in order to support the industry so that a living wage becomes the norm – and once a stronger support system is created, the transition will be more seamless. 

Following the release of the survey, One Fair Wage executive director Saru Jayaraman released a statement explaining that “given this shift in the restaurant industry toward full, livable wages with tips on top, it is imperative that policy makers support both workers and employers in the restaurant industry by passing federal and state policy to raise the minimum wage to $15 an hour and end the subminimum wage for tipped workers.” Bolstering this call for legislative action, Jayaraman stated, “after 150 years of tolerating poverty wages since Emancipation, workers are refusing to work for anything less than a full, livable wage with tips on top, and responsive employers need policymakers to support their responsiveness by creating a level playing field and signaling to millions of workers that it is worth returning to work in restaurants.” 

Although One Fair Wage, too, realizes that the survey is not comprehensive, it acknowledges that its survey findings cement the fact that “restaurants are finding that they must transition to one fair wage in order to recruit talent, fully reopen, and survive” – a reality that many have been putting off for the time being. 

Founded by attorneys Andreas Koutsoudakis and Michael Iakovou, KI Legal focuses on guiding companies and businesses throughout the entire legal spectrum as it relates to their business including day-to-day operations and compliance, litigation and transactional matters.

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