Randy Wadleigh
Despite the arrival of vaccines, and a light at the end of the COVID-19 tunnel, we’re still dealing with the pandemic that’s defined the past year. No industry has been more impacted than the restaurant industry.
In 2020, one in six restaurants permanently closed, and 2.5 million restaurant jobs were lost across the nation. It’s probably the biggest hit our industry has ever taken, and I’ve seen a lot since my parents founded Governor’s back in 1959.
Take-out and delivery are keeping many of us afloat, but there’s no mistaking the fact that restaurants are down and, to paraphrase the old saying, you don’t hit somebody when they are down.
That’s why I’m glad Sens. Susan Collins and Angus King voted against including the Raise the Wage Act in the latest COVID-19 relief package. Both senators are open to the idea of a federal wage increase, but The Raise the Wage Act — which the Senate wisely rejected in the relief bill — would go much further and eliminate what’s known as the tip credit. This would devastate the restaurant industry and its workers.
I understand the impact gratuities have on servers’ bottom lines. They don’t do the job for the hourly wage, they do it for the tips, much like a salesman whose motivation is a commission. When the tip credit was under threat to be eliminated in 2017, hundreds of servers went to our state capital to make their voices heard — the biggest turnout for any public hearing ever in Maine. Our state legislators listened, and the tip credit was saved.
While eliminating the tip credit and paying servers the standard minimum wage might sound like a good idea, the situation is more complex than people realize. Workers in tipped professions, like waitstaff, are paid less than the standard hourly minimum wage because the bulk of their income comes from gratuities. If a tipped employee’s tips plus hourly wage is less than the standard minimum wage (which has happened only once in 35 years for us), the tip credit means their employer is legally obligated to make up the difference. It’s a safety net that’s almost never needed.
If the tip credit were to be eliminated, waitstaff would earn the standard minimum wage, but for most this will mean a drastic pay cut, because the median hourly earnings of waiters and waitresses in Maine can range from $21-$30 per hour. It would mean a triple-digit increase in tipped labor costs, and because restaurants operate on very tight margins that would be crippling, even under normal circumstances.
The impact would go beyond raising prices, which many of my elderly and limited income customers cannot afford. It would also go beyond eliminating staff and reducing hours. In reality, we would have to rethink our entire business model.
Both of Maine’s senators understood that the Raise the Wage Act was too flawed. The Congressional Budget Office, which acts as Congress’ official scorekeeper, forecasted as many as 2.7 million lost jobs nationally. Any attempt to increase the minimum wage should be a standalone bill that’s properly debated, not tacked on to a massive economic relief bill.
My staff is like family. I don’t want to lose a single one. That’s why when that time comes, I hope Sens. Collins and King continue good leadership, and consider the impact on Maine’s restaurants and employees.
Randy Wadleigh is the owner of Governor’s Restaurant, operating six locations throughout Maine, including Lewiston.
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