Waitstaff Raises Decades Overdue - but You Can Help

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Samuel Schimek founder of I HEART Denver store in Denver at the restaurant Jelly and the Kirkland Museum on Tuesday, March 20, 2012. Waitress Christina Smith pours coffee at Jelly. Cyrus McCrimmon, The Denver Post
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Has it been a few years since you got a raise at work? Or did you get a raise this year, but one that was less than you expected or needed?

Well, imagine not getting a raise for 22 years.

That's been the fate of many of America's tipped restaurant workers -- that is, servers who receive tips as part of their pay -- whose last minimum-wage rate increase occurred in 1991, bringing the hourly rate up to a mere $2.13.

The assumption is that these workers will receive enough in tips to bring their pay up to at least the overall federal minimum-wage level, which is currently at $7.25. If and when tips don't do the job, the employer is to make up the difference.

But that doesn't always happen. And there's a movement afoot to do something about it.

Working for Poverty-Level Pay

So what does a 22-year span with no raise really mean?

Employing a handy inflation calculator, we see that something worth $2.13 in 1991 was worth $3.54 last year. Those might both look like low numbers -- and they are -- but the latter is 66 percent higher than the former. That's how much costs have risen, and these workers' incomes haven't kept pace.

What's more, there are more than 2 million restaurant servers affected by these pay levels, as well as many other service workers who rely on tips, such as hotel bellhops.

Former waitress Gina Deluca has asserted on her WiserWaitress.com blog that more than 19 percent of waitstaff who have a $2.13 minimum wage live below the poverty level.

Plans to Raise Rates

There's reason to be hopeful, though. For one thing, only 13 states rely on the $2.13 minimum. Most states have set higher minimums for tipped workers, though many would argue that those rates aren't high enough, either.

Legislation has also been proposed, by the Obama administration as well as others, to raise the rate.

The Obama plan is to hike the federal minimum wage to $9 an hour, and also raise the tipped minimum wage, to an unspecified level. Sen. Tom Harkin, D-Iowa, and Rep. George Miller, D-Calif., have proposed setting the federal minimum wage at $10.10 an hour by 2015 and gradually boosting the tipped minimum wage -- first to $3 an hour and then by an additional 95 cents an hour until it reaches 70 percent of the full federal minimum. Not surprisingly, the National Restaurant Association is not a fan of these plans, suggesting that pinched profit margins will lead to lost jobs.

What Diners Can Do to Help

Diners aren't powerless in this situation. Restaurant Opportunities Centers United has been organizing restaurant workers, pushing for an increase in the minimum wage, and has published the Diners' Guide to Ethical Eating, highlighting those restaurants and restaurant chains that are doing right.

Restaurants are awarded points for achievements such as paying their tipped workers a minimum wage of at least $5 an hour and their non-tipped workers at least $9, as well as offering paid sick days and promoting workers to higher-level jobs.

In the 2013 Diners' Guide, the restaurants or chains that received gold or silver stars were mostly small outfits. But there were some relatively bigger ones, such as Shake Shack.

However, the big, well-known restaurant chains generally fell quite short of the mark:
  • Not meeting any of the five possible criteria for points were companies such as Bob Evans (BOBE); Buffalo Wild Wings (BWLD); California Pizza Kitchen; Outback Steakhouse and Carrabba's Italian Grill -- both owned by Bloomin' Brands (BLMN); Chick-fil-A; Denny's (DENN); Ruby Tuesday (RT); and Applebee's, owned by DineEquity (DIN), which also operates IHOP outlets.
  • Declining to provide information on four of the five criteria, and not meeting a fifth, were companies such as Krispy Kreme Doughnuts (KKD); Panera Bread (PNRA); Wendy's (WEN); Waffle House; Texas Roadhouse (TXRH); and Yum Brands' (YUM) KFC and Pizza Hut units. Even Chipotle Mexican Grill (CMG) falls in this category, despite having a reputation for progressiveness on some counts, such as providing "Food With Integrity."
  • Several companies were highlighted for facing or having recently faced lawsuits or legal charges tied to discrimination or wage theft. (Remember that employers are expected to make up the difference between the prevailing overall minimum wage and the total of the tipped minimum wage and actual tips received.) These companies included Darden Restaurants (DRI), which runs Olive Garden, Red Lobster and Longhorn Steakhouse.
  • Among publicly traded big outfits, Cracker Barrel (CBRL) earned a point, for promoting at least 50 percent of its workers to higher positions.

Next time you eat out and are calculating your server's tip in your head, keep in mind that he or she has very likely not received a raise in 22 years. And perhaps consider favoring eateries that are doing right by their employees. Consider sharing your views with your elected representatives, as well.

Motley Fool contributor Selena Maranjian owns shares of Chipotle Mexican Grill. The Motley Fool recommends Buffalo Wild Wings, Chipotle Mexican Grill, Cracker Barrel Old Country Store and Panera Bread. The Motley Fool owns shares of Buffalo Wild Wings, Chipotle Mexican Grill, Darden Restaurants and Panera Bread.

9 Numbers That'll Tell You How the Economy's Really Doing
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Waitstaff Raises Decades Overdue - but You Can Help
The gross domestic product measures the level of economic activity within a country. To figure the number, the Bureau of Economic Analysis combines the total consumption of goods and services by private individuals and businesses; the total investment in capital for producing goods and services; the total amount spent and consumed by federal, state, and local government entities; and total net exports. It's important, because it serves as the primary gauge of whether the economy is growing or not. Most economists define a recession as two or more consecutive quarters of shrinking GDP.
The CPI measures current price levels for the goods and services that Americans buy. The Bureau of Labor Statistics collects price data on a basket of different items, ranging from necessities like food, clothing and housing to more discretionary expenses like eating out and entertainment. The resulting figure is then compared to those of previous months to determine the inflation rate, which is used in a variety of ways, including cost-of-living increases for Social Security and other government benefits.
The unemployment rate measures the percentage of workers within the total labor force who don't have a job, but who have looked for work in the past four weeks, and who are available to work. Those temporarily laid off from their jobs are also included as unemployed. Yet as critical as the figure is as a measure of how many people are out of work and therefore suffering financial hardship from a lack of a paycheck, one key item to note about the unemployment rate is that the number does not reflect workers who have stopped looking for work entirely. It's therefore important to look beyond the headline numbers to see whether the overall workforce is growing or shrinking.
The trade deficit measures the difference between the value of a nation's imported and exported goods. When exports exceed imports, a country runs a trade surplus. But in the U.S., imports have exceeded exports consistently for decades. The figure is important as a measure of U.S. competitiveness in the global market, as well as the nation's dependence on foreign countries.
Each month, the Bureau of Economic Analysis measures changes in the total amount of income that the U.S. population earns, as well as the total amount they spend on goods and services. But there's a reason we've combined them on one slide: In addition to being useful statistics separately for gauging Americans' earning power and spending activity, looking at those numbers in combination gives you a sense of how much people are saving for their future.
Consumers play a vital role in powering the overall economy, and so measures of how confident they are about the economy's prospects are important in predicting its future health. The Conference Board does a survey asking consumers to give their assessment of both current and future economic conditions, with questions about business and employment conditions as well as expected future family income.
The health of the housing market is closely tied to the overall direction of the broader economy. The S&P/Case-Shiller Home Price Index, named for economists Karl Case and Robert Shiller, provides a way to measure home prices, allowing comparisons not just across time but also among different markets in cities and regions of the nation. The number is important not just to home builders and home buyers, but to the millions of people with jobs related to housing and construction.
Most economic data provides a backward-looking view of what has already happened to the economy. But the Conference Board's Leading Economic Index attempts to gauge the future. To do so, the index looks at data on employment, manufacturing, home construction, consumer sentiment, and the stock and bond markets to put together a complete picture of expected economic conditions ahead.
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