Quite a few electrons have been flying in recent days about Tom Emmer’s advocacy for forcing down the wages of “tipped” workers — waitstaff at restaurants like the Eagle Street Grille, where he made the pronouncement.
According to Emmer, establishments like the Eagle Street Grille have some waitstaff making $100,000/year, and this money could be used to pay other employees more. Let’s leave questions like “which employees?”, “why?”, and “shouldn’t you be advocating giving these employees a tax break so they can spend that extra money on creating jobs, Mr. Republican gubernatorial nominee?” aside for a moment, and examine if Emmer’s claim is even possible, and if so, whether it’s a net negative for the Eagle Street Grille and establishments like it.
Let’s assume, for the sake of discussion, that the Eagle Street Grille is paying its waitstaff the federal minimum wage of $7.25/hour. This makes sense — if the business is doing more than a half-million in business per year, that’s the minimum wage they must pay their workers. It also gives us a more conservative (if you’ll excuse the use of the term) estimate of the business’s expenses.
Let us also assume (again, to produce as conservative an estimate as possible) that the Eagle Street Grille pays its workers a premium because they value their employees so well. Let’s assume an average hourly wage of $9.25, just for the sake of discussion. These are good employees, and experienced too.
Let’s also assume that the average tipped worker gets an average of 35 hours/week assigned. This allows for some flexibility — maybe the worker gets a couple of extra shifts every couple of weeks, or doesn’t pick some up the next week, or maybe gets a couple of choice picks on Friday and Saturday nights one month but not the next. Since Tom Emmer’s claim is built on averages and generalized statements, that’s all we have to go on, so let’s pick a round number that, again, probably gets close to the maximum hours an individual worker gets on a weekly basis. At 35 hours per week and 50 weeks per year, that works out to 1,750 hours per year.
At $9.25/hour, 1,750 hours worked means an annual salary of $16,187.50 before taxes.
Back to Republican gubernatorial endorsee Tom Emmer’s claim that some of these waitstaff are making a hundred large. Assuming the Eagle Street Grille values their employees so well and gives them enough hours to get up to the lofty salary of sixteen grand per year, that means those welfare queen waitresses are making $84,812.50 (or thereabouts) in tips each year. Let’s round down to $80,000 to give Emmer the benefit of the doubt here. Spread out over those 1,750 hours, that means each of these employees is making more than $45/hour in tips ($45.71, to be precise). Not bad, if you don’t mind being on your feet the whole time. Of course, whether it’s possible or not remains an open question. Having never worked in restaurant service myself, I don’t know what the average number of tables served per hour is, but based on the current menu, if every table had four patrons, and each of them ordered $15 in food and drink, that’s a tab of $60, indicating a generous tip (at 20%) of $12.
So each waiter would need to be moving four full tables per hour through to get up to that level of tip income. During every hour, on every shift. With customers who tip generously every time. Possible? Sure. Likely? I doubt it.
But what do those numbers mean for establishments like the Eagle Street Grille? As Mark My Words noted, the fact that these servers are making so much in tips means that the Eagle Street Grille is making at least five times that much in gross revenue. So if one waiter is making $80,000 in tips over the course of the year, that means the Grille is making $400,000/year up front on that server’s hours.
How many servers do we think the Eagle Street Grille employs at that average hourly rate and shift load? Eight? Ten? Let’s lowball the number (the servers are good, but overworked) at eight. That works out to a gross annual revenue of $3.2 million.
Remember back when we estimated what each of those servers made in actual wages? $16,187.50. For those eight great-but-overworked servers, the restaurant’s total salary commitment is $129,500 — or just 4% of its gross annual revenue. If you reduced those workers’ minimum wages (as Emmer is advocating) by, say, 20%, you’re saving the Eagle Street Grille around $26,000 — enough, perhaps, to hire one more server (so the other eight aren’t quite so overworked) or maybe just take a little more profit off the top.
Which brings us, ultimately, to the question of why Republican gubernatorial endorsee Tom Emmer is advocating so strenuously for something that wouldn’t be a panacea for the state’s budget shortfall, wouldn’t bring in any extra revenue without raising taxes, and probably wouldn’t create a ton of new good-paying jobs to drive our state’s economic recovery in the 21st century. Is it truly all about letting corporations reap all the profits at the expense of their employees and of the community from which they draw their income?
Only Republican gubernatorial endorsee Tom Emmer can answer that question fully. Of course, courtesy of an eagle-eyed St. Paul resident, we do have the Web Archive, which shows that the Eagle Street Grille once had an item on its menu called “The Thune” after St. Paul City Councilman Dave Thune:
All the leftover scraps from the grille thrown on a bun $0.00
(We won’t actually serve it to you because who wants a mouth full of crap)
Clearly the minds behind the Eagle Street Grille have no love for Thune. Just as clearly they are entitled to their opinions and to be as public as they like about them.
But the rest of the state is entitled to know about the context in which candidates for high elected office make remarks about things like how much they think waitstaff should be making. Making broad economic pronouncements loses some of its luster when it’s both politically boneheaded and is a less-than-subtle outreach to potential political allies in the business community — allies whose ultimate goal is not the advancement of all citizens and workers in Minnesota, but rather the simple and time-honored goal of profit.
Emmer has made it startlingly clear that he and his campaign are on the side of the profit-takers and not of the wage-earners in Minnesota. If this is the kind of political patronage we can expect from an Emmer Administration, I think Minnesota can safely back away from the table and say “No thanks.”
We’ll make sure we leave a decent tip, though.