Role of servers' tips fires up Minneapolis debate over $15-an-hour minimum wage

A coalition of Minneapolis eateries this past week proposed gradually hiking the minimum wage to $15 an hour for all workers with an important exception: tipped employees. Tips should count toward their minimum wage, they said, leaving the base wage for servers and bartenders at $9.50 an hour.

The idea has no public backers at City Hall, and a prominent opponent, Mayor Betsy Hodges. In an essay published last week, Hodges said tipping is a legacy of slavery, and counting tips toward the minimum wage for servers would be a "penalty that will leave tipped workers falling behind and subject to sexual harassment."

The essay raced across social media, striking fear into restaurant owners and many servers and bartenders as City Hall leaders explore raising the minimum wage citywide. And the controversy isn't expected to die down any time soon in a municipal election year when many mayoral and City Council candidates are vying for endorsements from organized labor.

"It scares the living daylights out of me," said Kathryn Hayes, one of the owners of the Anchor Fish & Chips in northeast Minneapolis, who says a $15 minimum wage without a carve out for tips would cost her business about $170,000 per year. "I hope that they think it through very seriously, because it will have massive consequences."

While City Council members have expressed interest in raising the minimum wage, they have not yet settled on a number and have directed staff to study the issue. This spring, the city is hosting dozens of listening sessions to gather public opinion.

Servers and bartenders are split on the topic, though many already making more than $15 an hour including tips say their business model won't survive a $15 minimum wage that does not recognize tips.

Callie Daniels, a bartender and manager at the Howe Daily Kitchen & Bar on Minnehaha Avenue, said she feels empowered behind the bar, not vulnerable to harassment. She makes closer to $30 an hour when she tends bar twice a week, and said she worries if her wage rises to $15 an hour before tips, her restaurant will take drastic measures.

"What's going to happen is everything is going to turn into you come in and you order at a counter, and then you sit down," Daniels said.

A solid independent restaurant doing $1 million in sales per year turns a $50,000 profit for the owners — a 5 percent margin, according to restaurateurs who gathered for a minimum wage listening session Monday in Northeast.

Many establishments aren't flexible in how they could respond to a higher minimum wage. Pooling tips is prohibited by Minnesota law. Introducing a service fee would allow restaurants to keep prices down but would cause pay to drop for many servers. Some establishments are trying to do away with tipping, but full-service restaurants haven't had much luck.

The Minnesota Restaurant Industry on Tuesday launched a campaign called "Pathway to $15" in which the minimum wage would rise to $15 for employers with fewer than 250 workers, including cooks and dishwashers, by 2024. Tips would be counted toward wages for servers, and if someone doesn't earn $15 per hour over a pay period, the business must make up the difference.

"We do want $15 an hour to pass. But we want our wages to stay at $9.50," said Bryan Campbell, a bartender at Northbound Smokehouse and Brewpub who is organizing a listening session at the bar on Monday. "If we don't make that $5.50 in tips, we want the employer to be on the hook for that, but realistically, you can work at a Perkins in Albertville and make $5.50 an hour in tips."

According to the Department of Labor's statistics, waiters in the Twin Cities earn a median wage, including tips, of $9.07 per hour. The estimated wage for bartenders is $9.36 per hour. Hodges cited similar figures in her essay, and the data are a strong argument for those opposed to recognizing tips as wages.

But Campbell calls the number "alternative facts," adding, "I was making $20 an hour serving at a bar in Inver Grove Heights when I was 18 years old in 1998."

To the extent the figures are wrong, however, restaurants have themselves to blame. Managers are instructed to include tips as wages on the 13-page survey sent to them by the Department of Labor, but a certain number probably don't, according to officials at both the state of Minnesota and the U.S. Department of Labor.

Still, some waiters are not earning $15 an hour.

"If you are an overnighter, Sunday through Wednesday, they're slow shifts," said Jessica Bean, who waits tables and manages the Denny's on East Lake Street.

"I see both sides of it," Bean said. "I've been that server who struggles. I'm a single mom."

One of her co-workers, Arianna Barnes, had been cut from the floor at 2 p.m. on a slow Friday, and had to roll silverware and stock condiments for the next hour. Barnes said she probably earns $15 an hour when she's waiting tables, but she's not always waiting tables, and she would welcome a $15 minimum wage.

"You're going to want me to come to work and treat your restaurant like my restaurant, but yet you want your customers to pay me?" she said.

Council Member Jacob Frey, who is among those challenging Hodges in the mayor's race, floated the idea of counting tips toward a $15 pay floor among his colleagues, but he never made a public proposal.

Frey said he "weighed all options to find passable proposals that would uplift all workers" at a time when the mayor opposed a city minimum wage increase. Hodges, who had previously advocated a regional approach, said in December that she would push for a citywide increase.

Organized labor insists that Minneapolis mayor and council candidates who want a union endorsement must oppose a minimum wage carve out for tipped workers.

"That is our top issue," said Chelsie Glaubitz Gabiou, president of the Minneapolis Regional Labor Federation, an umbrella group for all unions in the city. "We really believe in building power for all workers, and creating a structural way for workers to be left out creates a long-term unequal balance."

Council Member Kevin Reich sat in on Monday night's listening session that was full of restaurant owners. He said he's going to wait for a staff recommendation in May before taking a stance.

"Politics has definitely taken hold of this topic, and politics has one effect if nothing else, it sucks the life out of nuance," Reich said. "What I'm trying to do is stay in that place of contemplation, listening, analysis."

Council President Barb Johnson said the council is giving restaurants "a fair hearing," but she also is waiting to take a position.

"I support raising the minimum wage," she said. "But I want to respect our process that we've got going."

Adam Belz • 612-673-4405

Twitter: @adambelz