Minimum Wage Battles And California's Restaurant Workers

CALIFORNIA — A push to increase the federal minimum wage to $15 per hour was iced this week, and that may relieve some pandemic-ravaged California restaurant owners. But their employees might grumble because as the Golden State leads the way in increasing its minimum wage, annual salaries of restaurant workers are losing ground compared to their colleagues in several other states.

Minimum Wage Debate

Even in a non-COVID era, “restaurants’ slim profit margin makes them particularly vulnerable” to increases in minimum wage, according to the California Restaurant Association, which argues that tipped employees garner the greatest financial gains when there’s a minimum wage increase.

“Minimum wage increases often have a perverse effect on the restaurant industry, as the wage increase typically benefits those who are already the top-paid individuals in the restaurant: the tipped servers,” according to CRA.

Currently, California’s minimum wage is $13/hour for employers with 25 or fewer employees, and $14/hour for businesses with more employees. The rates are well above the current federal minimum wage of $7.25, which has been stuck at that level since 2009. Despite a push by many Democrats and President Joe Biden, the U.S. Senate on Thursday approved a measure prohibiting an increase of the federal minimum wage during the COVID-19 pandemic.

As the national pay debate continues, California is still on track to increase its minimum wage to $15/hour by 2023 for all employees; the rate will rise to $15/hour next year for employers with more than 25 employees.

Annual Salaries For Restaurant Workers

Even though California may seem like a minimum-wage frontrunner — it has one of the highest in the nation — a report from Business.org finds Golden State restaurant employees are poorly compensated compared to other occupations.

The average annual salary for California restaurant workers is $29,533 compared to the state’s overall average yearly salary of $61,290 for all occupations, according to Business.org, a Utah-based company offering data tools for businesses.

The spread between average restaurant salary and the median pay of all other occupations puts California as the 20th “best-paying state” for restaurant workers, according to Business.org, yet the Golden State's cost of living can be significantly higher than the national average.

Hawaii tops Business.org’s best-paying list with an average annual salary of $41,502 for restaurant workers compared to $54,930 for all occupations in the state. Restaurant workers in other states such as Arizona, Vermont, Washington and New York not only earn a higher annual salary than their California counterparts, the pay gap between all other occupations in those states is not as wide, according to the Business.org findings.

The May 2019 State Occupational Employment and Wage Estimates for California from the U.S. Bureau of Labor Statistics showed that workers in "food preparation and serving-related occupations" earned a median hourly wage of $13.08 per hour, which was above the then-minimum wage.

What's The Path Forward?

It’s unclear how a federal minimum wage bump might help California restaurant workers — or hurt restaurant owners.

Arindrajit Dube, an economics professor at the University of Massachusetts, Amherst, told NPR this week that in states like California — where the minimum wage is rising — employers have found ways of adjusting, including passing on costs to consumers.

But a Colorado cafe owner disagreed with Dube. She told NPR that every year she grapples with whether to raise prices or reduce the quality of her goods.

"It leaves you in the tough place — to ask customers to pick up the bill. Or do I take the hit?" she said.

The pandemic has only added to concerns facing restaurants — many of which closed temporarily or permanently in 2020.

"I have had to really take a look at our staff, and go, 'Do we have to bring someone down to part time?' and that's heartbreaking,” the cafe owner told NPR. “I don't want to do that. …”