INDIANAPOLIS — U.S. Senator Mike Braun joined a handful of restauranteurs in downtown Indianapolis to chew the fat over a proposed hike in the national minimum wage and what it would mean for the places where you like to eat.
A proposal to raise the minimum wage to $15 an hour for all employees might also be coupled with the elimination of the tip wage credit for employers.
Wait staff in Indiana currently make a base wage of $2.13 an hour, more than five dollars an hour below the standard minimum wage, but their pay is augmented by tips.
If an employee doesn’t make enough in tips to reach the standard minimum wage of $7.25 an hour, the employer must make up the difference.
Restaurant owners told Braun during a meeting at Tavern on South that forcing them to pay all employees a minimum wage of $15 an hour would result in layoffs, closures, more automation and virtual ordering and less pay for workers.
“We have a lot of employees making in excess of $15 an hour,” said Patrick Tamm, president and CEO of the Indiana Restaurant and Lodging Association. “If you eliminate that tipped wage, those servers that make $25, $20, $35, suddenly make $15 an hour. Suddenly, their job may not even be available because restaurants will have to react to elimination of the tip credit or tip wage by raising prices 30-40%.”
Heather Boushey, a member of the White House Council of Economic Advisors, told FOX59’s IN Focus host Dan Spehler that a higher minimum wage under President Biden’s American Rescue Plan would enhance the buying power of all workers at the bottom of the nation’s pay scale.
“When you raise the minimum wage, it increases the amount of money that those folks have and can spend in their community, it improves family common earnings, earning income, and at the same time we have not seen large effects on employment.
“And that might come as a surprise because if you raise the wage, then obviously firms are gonna hire fewer people, but in fact, what businesses do is, because this is happening to every business across the economy, it’s not just happening to one restaurant, it’s happening to every single one, they can all raise their prices a little bit to be consistent with their competitors, but then, what you see a lot of businesses doing is using the workers they have a little bit more efficiently and what you don’t see is these large negative employment effects.”
Boushey said the bill would have far-reaching benefits for the economy at the local, state and national level, while also helping with other aspects of the pandemic, including the vaccine distribution process. Talks are ongoing in Congress over the president’s proposed $1.9 trillion stimulus plan, with Braun and others suggesting the minimum wage proposal might be a non-starter.
“I come from the county that is typically the lowest unemployment county in the state and that minimum wage,” said Braun, a multi-millionaire distributing company owner from Jasper, Indiana. “Most places in my hometown, you have to pay above it to get people, and there’s a shortage of labor, and that’s how the market should work.”
Many of the warehouse jobs posted for hiring on the website for Meyer Distributing, Braun’s company, list at a full-time starting wage of $15 an hour.
“The tipped wage, which is the method used by restaurants specifically, restaurants have been hardest hit by this whole challenge with COVID, is working,” said Braun. “It’s actually paying, in most instances, above this new required minimum wage. This would force probably the loss of over a million jobs, many of them in the restaurant industry already hard hit. It doesn’t reflect the marketplace.”
Before the pandemic hit late last winter, downtown Indianapolis was home to approximately 250 restaurants, bars, coffee shops and food stalls where a meal or a drink could be had.
Now, nearly a year later, almost one in five of those businesses have closed their doors, some temporarily, some permanently.
Approximately 80,000 people are employed in the Indianapolis hospitality industry, many of them laid off or working fewer hours due to the impact of the pandemic economic shutdown and the effects of rioting that occurred over two nights in downtown last spring.
Braun told the restaurant owners that even if a new minimum wage should emerge from the House of Representatives, he expects it fail in the Senate, where he claims even some Democrats have expressed reservations.
President Biden reportedly acknowledged this past week that the minimum wage provision might be difficult to get through the Senate, as it might not be possible to carry the minimum wage proposal through the budget reconciliation process that Democrats are looking to use to pass the president’s stimulus plan through Congress.
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