Essential Pittsburgh
6:18 pm
Tue May 6, 2014

With a Raise in the Minimum Wage, Where Would Businesses Find the Money?

What approaches can be taken to improve wages for restaurant employees and keep customers?
What approaches can be taken to improve wages for restaurant employees and keep customers?
Credit LetsGoDine.com

Last Wednesday, the US Senate voted down a proposal by President Obama to raise the federal minimum wage from $7.25 to $10.10 per hour.

Many contend that such a steep raise would cripple job growth and small businesses. Others say more money and spending power for workers would be a boost for the economy overall. 

Art Helms, a Wendy’s employee and member of One Pittsburgh has been organizing for fair pay and a union for fast food workers in Pittsburgh.

He said he makes less than $10 per hour and has worked for Wendy’s for 27 years. 

“Wendy’s gave me an opportunity back in the early 90’s to get some employment, and to be able to get out on my own, which back then was somewhat close to affordable. Now, I’ve stayed to show them gratitude for giving me a start. But the way minimum wage is today, you just can’t do it,” Helms explained that he hasn’t gotten a raise in 17 years.

“They were saying on the news the other day, it’s going to cost you a little more to cook out this summer because everything is going up, as far as beef, rent, gas; you can’t go buy 2 gallons worth of gas for 5 bucks, you can’t buy 2 stamps with a dollar. All in all, there’s no research backing the claim that higher wages are bad for communities and small businesses.”

But Alex Halper, Director of Government Relations for the Pennsylvania Chamber of Business & Industry said a raise in the minimum wage would only contribute to the nation’s high unemployment.

“Our view is that lawmakers should be pursuing public policy that encourages job retention, encourages job growth, and certainly does not act as an impediment to economic growth. When you consider the prospect of a mandatory wage hike, it’s simply inconsistent with those key principles. We think that lawmakers should be at the forefront of what policy makers are doing in Harrisburg as well as in Washington.”

Pittsburgh restaurant owners balancing employee wages with consumer needs 

For Chris Dilla, owner of Bocktown Beer & Grill, employs 80 people. For her, raising the minimum wage to $10.10 an hour would be a real hardship.

She said with that raise comes more obligations than most people would think.

“The extra burden that I see on [business owners] is nobody realizes that when you increase that gross wage you also increase the tax matching, your 401k matching, your increases in the ACA costs, because the 9.5% ceiling will be higher,” said Dilla.

Dilla said she’s not opposed to a raise in the minimum wage, she just doesn’t know how she could carry the burden and where the money could come from.

Sonja Finn on the other hand is chef and owner of Dinette restaurant and bar in East Liberty. Based on her past experience as an underpaid restaurant worker, she started her restaurant with a living wage in mind.

And Finn admits this approach is not easy for businesses that haven’t started with her model, because it requires owners to put employees before customers in some cases. “For instance we are not open for lunch,” Finn said.

This is an inconvenience for customers but by limiting hours of operation, Dinette can guarantee enough revenue to cover all employee shifts.

“My back of the house employees, which include the dishwasher and cooks, are receiving between $13 and $16 an hour, in addition to that they receive health insurance after 6 months, they also receive 2 weeks paid vacation after their first year,” she explained, along with a yearly bonus for the entire staff based on net earnings.

"I think that this industry, the restaurant industry has historically been based on low wage workers and in order for this to change, everyone is going to have to make some changes." Finn said "The customers will be accountable too, this can't just be the burden of the restaurant owner."