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March 28, 2014 at 6:25 AM

The ‘theoretical’ and ‘practical’ of a Seattle $15 minimum wage law on tipping

Washington is one of just seven states that does not allow a lower wage for tipped workers; if you give a tip, it’s on top of a wage that is at least $9.32 an hour. It’s a settled issue. The federal minimum tip wage is an appalling $2.13 an hour, meaning that waitress in Idaho who calls you “hon” really needs that 20 percent tip.

File photo from a March 5 public hearing before Mayor Ed Murray's minimum wage committee at Town Hall. (Dean Rutz/The Seattle Times)

File photo from a March 5 public hearing before Mayor Ed Murray’s minimum wage committee at Town Hall. (Dean Rutz/The Seattle Times)

But the $15 minimum wage issue is re-stirring debate over whether it should come with a lower tip wage, or some acknowledgement that “total compensation” of workers includes tips. A state food service industry wage survey shows only chefs and managers made more than $15 an hour (including tips), but my bartender friends say that ridiculously low-balls tips.

The last panel of Mayor Ed Murray’s Income Inequality Symposium Thursday at Seattle University offered an entertaining exchange on the pros and cons of a tip law.  Eric Pravitz, an earnest nail salon co-owner who supports a minimum wage which counts tips, sat next to Saru Jayaman, a charismatic restaurant industry advocate who denounces tip wage laws as a “draconian, sexist system.” It was very Seattle: they clearly thought each other nuts, but in a friendly way.

Pravitz makes a compelling case. He and his wife opened two Hoa nail salons after working in a nonprofit and seeing “black market” practices of paying a largely immigrant work force in cash, and poorly. “The norm was workers were paid $60 to 80 day and worked 10 to 11 hours,” with no Social Security or unemployment insurance, he said.

Pravitz said he starts workers at $9.75 an hour, with raises. But they also make at least $12,000 a year in tips (and that doesn’t count tips paid in cash), raising the annual pay to $32,280, or $15.50, for the lowest-paid worker. All others are higher, he said.

A flat $15 wage, without tip credit, would raise costs 30 percent, Pravitz told an unsympathetic audience. Raising prices to compensate would drive customers to Shoreline or Renton, he fears.

His counterpoint was Jayaman, co-founder of the advocacy group Restaurant Opportunities Center United (ROCUnited), with rhetoric making her sound like socialist Seattle City Councilmember Kshama Sawant’s twin sister. Jayaman described tips as institutionalized sexism: 60 percent of tipped workers are women, they are disproportionately poor and will suffer sexual harassment for tips.

When Pravitz suggested his total pay equaled $15 an hour, Jayaman jumped. “You don’t actually pay your workers tips. Consumers pay your workers tips,” she said. If tips should count as wages, Jayaman suggested a CEO who earns a stipend for serving on another corporate board should have that credited toward his salary. The best option, she suggests, is to eliminate tips, not accommodate them in a $15 (or higher) minimum wage.

Pravitz shook his head. Tips are part of the culture. People like giving them, and tipped workers like getting them. Then he delivered a line that sums up for me too much of the debate about a higher minimum wage: “There’s the theoretical and there’s the practical.”

I’m all for exploring a higher minimum wage. Another member of the panel, the respected economic forecaster Dick Conway, presented a complicated formula — including inflation, local cost of living, tax structure and overall wage inflation — that led to a number: $13.48 an hour. Maybe that’s the number. Maybe another.

But small business owners like Pravitz (and others who’ve come out with concerns) seem to be tossed aside in favor of radical rhetoric favoring an immediate tack in economic policy. Pravitz suggested he’d probably lose his business with a flat $15 wage. When another panelist, Allen Rickert, owner of Top Ten Toys, a locally owned, fair trade shop beloved by parents, suggested he’d lose half his annual profit with a $15 wage, a man behind me sneered, “Crack the whip harder!”

 

Comments | Topics: minimum wage, Seattle

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