Restaurant owners tell Portland mayor not to raise minimum wage for waiters

Portland Mayor Michael Brennan and Anna Eleanor Roosevelt, head of Goodwill Industries of Northern New England, listen Wednesday night as members of the public weigh in on a proposal to raise the minimum wage in Maine's largest city.
Portland Mayor Michael Brennan and Anna Eleanor Roosevelt, head of Goodwill Industries of Northern New England, listen Wednesday night as members of the public weigh in on a proposal to raise the minimum wage in Maine's largest city. Buy Photo
Posted Aug. 20, 2014, at 10:41 p.m.
Last modified Aug. 21, 2014, at 5:36 a.m.

PORTLAND, Maine — Portland restaurant owners told Mayor Michael Brennan on Wednesday night not to meddle with their payment system for tipped servers as part of his plan to increase the citywide minimum wage.

Restaurant owners argued customer tips make waiters and waitresses some of the highest paid people in their industry — despite their lower allowable hourly wages — and having to pay them more would simply hike up payroll expenses for many food service businesses barely making ends meet.

But others in attendance at a public hearing Wednesday night countered that the city should force all employers to offer no less than $15 per hour to their workers, regardless of the line of work.

At one point in the hearing, which attracted a crowd of nearly 90, attendees erupted into a cacophonous argument over wages before Brennan regained control of the setting.

“If the minimum wage had kept pace with worker productivity, the minimum wage would be $22 per hour today,” said Asher Platts, chairman of the Maine Green Independent Party and a state Senate candidate. “So where is all that extra value? … Wall Street holdings are the highest they’ve been in decades. This isn’t a recession; this is a robbery.”

Brennan’s tentative plan, devised over several meetings this year with his minimum wage advisory committee, is to increase the minimum wage to $9.50 per hour by Jan. 1. The mayor then wants to see the baseline wage incrementally raised to $10.68 per hour by Jan. 1, 2017, then tie the wage to annual increases in inflation after that point.

Brennan was joined as co-chair of the panel by Anna Eleanor Roosevelt, head of Goodwill Industries of Northern New England and granddaughter of former President Franklin D. Roosevelt, who proposed the country’s first minimum wage in 1938.

Michael Havlin, a recent University of Southern Maine graduate who worked with the committee, said the panel decided that a minimum wage “around $10 would have a huge upside and a relatively limited downside.”

He said the minimum wage in 1968, adjusted to today’s dollars, was $10.68 per hour, an amount 55 percent of the median wage at the time. Now, after several decades in which inflation dramatically outpaced minimum wage increases, the federal minimum wage stands at $7.25 per hour, or 38 percent of the median wage.

According to the U.S. Bureau of Labor Statistics, the median wage in the U.S. is about $786 per 40-hour work week, or approximately $48,872 per year. A worker making the federal minimum wage would earn $290 over a 40-hour work week.

In Maine, the state minimum wage is set at $7.50 per hour, meaning a worker here would make $300 for 40 hours of work. That compares to a median wage in Cumberland County, where Portland is, of $812 per 40-hour work week.

While several restaurant owners in attendance at Wednesday night’s hearing agreed it’s necessary to raise the minimum wage in general, they urged the mayor to leave an exception in place for employees who earn tips.

Currently, servers and other employees who earn tips can be paid half of the hourly minimum wage, with the expectation that the extra tip money will push those workers’ incomes higher than minimum wage levels.

Local restaurateur Noah Talmatch told Brennan and his committee members on Wednesday night that he does not have any employees making less than $12 per hour, including tips. But he said elevating waiters and waitresses from $3.75 per hour to $9.50 per hour — while they’re still receiving tips — would force most restaurants to add between $100,000 and $200,000 more in payroll expenses per year.

That would mean heavy staff cuts or large increases in meal prices, he said.

Fellow restaurant owner and chef David Turin echoed that sentiment, saying that while he “vehemently” supports raising the minimum wage for other workers, servers at his restaurants already make an average hourly wage of $21.39 with tips included.

“The tipped employees are always the highest earners in the restaurant,” said Steve DiMillo, head of Portland’s landmark DiMillo’s On the Water restaurant.

“The margins at a restaurant are not big. Some are bigger than others, but most are 2 percent or 3 percent,” said Greg Dugal, CEO of the Maine Restaurants Association. “A large increase [in payroll] like this could definitely put these restaurants out of business.”

But another attendee at the Wednesday night hearing, Seth Berner, called restaurant owners’ claims that higher wages would force job cuts or business departures “financial blackmail.”

“Throughout history, whenever there’s been an effort to help everyday people, there have been [threats of] doom,” he said.

Andy Moxley, an organizer with the advocacy group 15 Now, said that Seattle has approved a plan to increase its citywide minimum wage to $15 per hour, a measure that will trigger a “$3 billion injection of wealth” into the city’s working class.

Moxley said the exception for employees who receive tips “creates a subclass of workers.”

“Having worked at a restaurant for four and a half years myself, I can say the landlord doesn’t accept less money in rent because you had a bad night,” he said.

Dianne “dee” Clarke, a representative of the group Homeless Voices for Justice, was one of a handful in attendance to warn Brennan that just a slight raise in the minimum wage could have the unintended consequence of giving workers just enough income to disqualify them from receiving welfare benefits, while still not providing them enough money lift them out of poverty.

Brennan said he and the committee members will consider the comments made at Wednesday’s public hearing before forwarding a minimum wage plan to a subcommittee of the City Council, which will have to approve the proposal before passing it up to the larger council for adoption.

“It was a lively conversation,” Brennan said of the hearing. “There was a lot of incredibly important information [shared].”

CORRECTION:

A previous version of this story incorrectly listed the federal minimum wage at $7.50 an hour. It is currently $7.25 an hour.

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