Why I got involved with the discussion on Tip Credit & Minimum Wage

It’s funny how such a well-intentioned gesture can turn into something not intended.  Here’s how my current situation unfolded….  Because I’ve owned and operated restaurants in Washington state, specifically the greater Seattle area for more than two decades, I’m often approached by the media for my views on anything from ‘Farmed Salmon’ (which I’m totally against as you know) to ‘Tipped Restaurant Wages’ since we have more than 232 employees that fit the state’s description of ‘Tipped Restaurant Wages’.

So Wednesday I’m approached by KING TV and they want to know where I stand on the issue that pertains to thousands of businesses just likes Duke’s.  Like any business, we watch the bottom line while we deliver an amazing dining experience, second to none and always fun to visit.  That’s our goal, and that’s why Duke’s has the best waiters and waitresses in the country bar none.

Five thirty PM comes along, the story airs, and while it covered what is scheduled for public hearing in the House Committee on Labor & Workforce Development on Tuesday, January 31, 2012 it left out some key background information…the information my opinion was formed from.

This was a good news story because it highlighted something vital to thousands of restaurants,  But what I’ve found out is that people are confusing Minimum Wage with the Minimum Wage for Tipped Restaurant Employees.  It is understandable. Let me explain…

Ever since the Minimum Wage Act was passed in 1998, the minimum has risen from $5.15 an hour to the current amount of $9.04 an hour. Tipped employees at Duke’s make anywhere from $21.00 to $40.00 an hour, including the highest minimum wage in the United States.  Some make as much as $50 per hour.  They are in a different category than True Minimum Wage employees.  I don’t believe the legislature intended to augment the wages of people who already made three or four times the minimum wage in tips.  I don’t believe that the legislators realized or understood that those jobs existed.  Had they considered it, it is my opinion that the tipped employees in this state would not be receiving increases in the minimum wage.

The Minimum Wage Act was intended for entry level people who were having a hard time making ends meet with truly minimal wages.  With every increase, Duke’s has been forced to raise prices which in turn actually increases tips for our tipped employees. We have also reduced our income, cut other expenses, and reduced benefits for management and reduced staff.  We have also held off on increased wages for our kitchen team members who make one-third the amount as our tipped employees.  We don’t have much else we can cut in order to fund the ever increasing minimum wage.

The annual escalation is now threatening the survival of our restaurants.  Profit margins in restaurants are surprisingly small.  Believe me, we are not alone.  Most, if not all, restaurants in this state support some type of adjustment.  There are 43 states that have a tip credit, allowing for a different minimum wage for employees who receive a gratuity.  86% of our country recognizes that tipped employees are in a different category than True Minimum Wage employees. The bill being introduced in the Washington State Legislature calls for a tip credit up to $1.79 an hour just for tipped employees, not True Minimum Wage employees.  We don’t know what that adjustment should be.  It is not our bill. Although they might want to consider including a line to stop future increases.

We just know that something has to be done or we will be out of business someday and that is very concerning to me and my family. We have worked hard for 40 years to build a respected brand and take care of our employees.  We value our team members and recognize they work hard.  We just ask that we be allowed to remain healthy enough to stay open for business.  We also ask that everyone keep an open mind and do some research so they understand that every restaurant is in the same situation.  This is not about Duke’s, it’s about all restaurants in the State of Washington.  And we all need help.  The Minimum Wage Act wasn’t intended to help people making the kind of money they make in restaurants like ours.  I have chosen to speak out and I am taking some heat for it but I have the support of the restaurants in this state.  We are all trying to stay in business and we are of one mind on that.  This isn’t about greed.  This is about survival.

January 27, 2012