The Minimum Wage Debate

    This morning I checked my email to see if there were any type of job prospects. Nope. So I signed out, and was met with NBC News’ article “Minimum-wage foes say they’ll stop tipping,” and naturally had to read it. I will fully admit that I usually skip anything available on the mainstream news, be it on television, radio, or on the internet. However, being unemployed and looking for work, the title was successful at drawing me in to peruse the article.

     The main argument here is that there is a brewing battle over customers tipping workers such as servers and waiters, and presumably carhops, bellboys, and other service industry related employees in addition to the minimum wage being raised. As it currently stands, the federal minimum wage for these service-related positions is $2.13 an hour, which is supposed to reflect the difference between what an employee makes in wages and in tips. It would seem that those who have never been in the position to work as a waiter or waitress would view that $2.13 minimum wage as adequate because they assume that the tips being made are “gratuitous.”

     In the article, we are given some excerpts from the “flooded Facebook wall” of a local news station, where it clearly shows that those employees working as forklift operators, truck drivers, and presumably an EMT worker were selfishly validating that they would never tip a food service employee that made a $15 an hour minimum wage, because they would make more than they do. The majority of the standing argument is biased in jealousy — MY job is better than YOUR job, so why should I tip you?

     How about we flip the script a little. How about, pretending I am a professional, I say that because you didn’t go to post secondary school and get a college degree, your forklift driving skills are menial and only deserve the minimum wage, currently $7.78 here in Colorado? Or that since anyone can drive a car, and they can drive a truck just by paying $2,500 in training or simply being hired by a company, we should only pay you minimum wage and NO extra per mile. I’ll have to go with the high road on the EMT being that they are semi-professional, so they deserve higher than minimum wage. This really doesn’t prove anything except biased viewpoints on who’s job is more important.
     I happen to have personal experience in the service industry, in several different food service venues. I believe that tipping is absolutely essential to surviving in this embattled economy as long as the minimum wage for these employees is set at $2.13 an hour. Even so, because the economy is so thin and customers’ budgets are so spread out, the average tip is no more than 10%. When the average diner charges about $23.00 per table, that amounts to a whopping $2.30 in tips. Let’s continue our exercise:
     Base gross wages for an 8 hour day:
(8 x 2.13) $17.04
     Assuming a super fast average; a table takes 45 minutes to order, get their meal, eat, pay, and get the table cleaned for the next customers, that’s roughly 10 and a half tables in an 8 hour day. (Let’s round up)
     Base gross 10% tips for 11 tables, all $23.00:
(11 x 2.30) $25.30
     Now, we have to deduct about 20% of that total because waitresses have to share tips with the busboy and the hostess.
     Total base gross tips minus 20%:
(25.30 x 0.2 = 5.06, 25.30 – 5.06) $20.24
     Now we are getting somewhere. And yet, nowhere at all if you’re that waitress.
     Base gross wages plus net tips:
(17.04 + 20.24) $37.28
     How DARE you forget taxes!
     Base gross wages and net tips minus 15% for federal and $2.00 CO state tax:
(37.28 x 0.15 = 5.59, 37.28 – 5.59 = 31.69, 31.69 – 2.00) $29.69

     So, we have established an average daily earnings of $29.69 after taxes, which is $148.45 a week, $593.80 a month — $7125.60 net earnings a year. Pretty much, they just made enough money to pay for their Affordable Healthcare and nothing else.     Now, for the sake of argument, lets redo these numbers to reflect a shit-hot waitress who delivers excellent service, manages to somehow get a new table every 30 minutes, has a pleasing attitude, fills your cups 5 times, and works at a high end restaurant:

Base gross wages for an 8 hour day: (8 x 2.13) $17.04

Base gross 15% tips for 16 tables, all $75: (16 x 11.25) $180.00

Total base gross tips minus 20%: (180.00 x 0.2 = 36.00, 180.00 – 36.00) $144.00

Base gross wages plus net tips: (17.04 + 144.00) $161.04

Base gross wages and net tips minus 15% for federal and $7.00 CO state tax: (161.04 x 0.15 = 24.16, 161.04 – 24.16 = 136.88, 136.88 – 7) $129.88

    In this example, and remember this is assuming EVERY table eats the same amount and tips the same — that never happens — we have established an average daily earnings of $129.88 after taxes, which is $649.40 a week, $2597.60 a month — $31,171.20 net earnings a year.

     Basically, what we are comparing here is a waitress at Denny’s versus a waitress at The Capital Grille in Denver. I have included imperfect numbers which assume the BEST of conditions based on my own actual experience. This is just cramming the hard numbers together not factoring in that at least two of the tables won’t tip at all regardless of service because they have budgeted so tight so as to not be able to tip, four tables who only tip 10%, nor is it factoring in that once in a while awesome tip of $20.00 or more.

     I hope these numbers have been a little more enlightening since you can drive a forklift for $14.75 an hour in a warehouse where you have redundant work that never really changes, on a schedule you know exactly how much you’re making — a gross total of $118.00 a day or $590.00 a week, $2360.00 a month, $28320.00 a year. Keep in mind that most forklift operators work overtime as well, while those in the service industry aren’t granted overtime. Every hour worked over 40 is the same as the rest. That forklift operator could average 5 hours or more of overtime a week at $22.13 per hour. Still don’t feel like tipping? Oh, and yes, I also have experience as a forklift driver so i know that I am speaking realistically and not figuratively.

     So, let’s not make it a battle of who is poorer and deserves more money, or which job is more important and deserving of more pay or less tips. Let us remember that it is the business that determines what we are worth to them based on what they are able to pay and their bottom line. The biggest issue with raising the minimum wage is that the cost of all inputs will increase — Fuel for the forklift, wood for the pallets, plastic for the bindings, fuel for the over the road driver, fuel for the server to get to the restaurant, food shipping costs, food costs in itself, taxes, electricity, water, rent — everything has to increase in order to pay a higher minimum wage.

     It is hard to see all the hidden costs, but in the long run, it would be better for our government to implement tax incentives and/or tariffs on those companies that make over $1,000,000.00 a year in profits unless they lowered the cost of inputs so that they were more affordable to industries along down the line. What do I mean?

     Suppose Arnold Laver, with an annual profit turnover of $87 million were to be given tax incentives to reduce the cost of their lumber products to specific industries. If a total cost of lumber in Business B’s building project were $100,000.00 to build something  that was for an industry critical to our economy, and incentives were offered to reduce that cost to even $90,000.00, and the resulting $10,000.00 were required to be put back into employee pockets in order to secure that savings for the building company, it would seem to me that there would be more money for everyone involved to spend. Of course, I am not an economist and I am sure there are finer points to articulate, problems that arise that I have no idea about, and other issues.

     Let us also fine or tariff those companies that do a majority of profit gain in the United States yet have offshore headquarters where the dollar is hemorrhaging out to other countries. If you want to save money by not employing American workers, you’re going to have to pay for it. If you’re headquartered on United States soil, yet to save money you outsource your jobs to India, pay the fine. There are ways we can still encourage industry growth across the board in the United States while frowning upon taking money out of our country leaving the rest of us destitute.

     I’ll leave you guys to think on that note. I do apologize for the formatting of my wage tables, but I have not figured out how to use WordPress yet! Bear with me…

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