Restaurateurs claim minimum wage hike would cost jobs, raise prices

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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%.”

Tamm said hiking the mandatory minimum wage of restaurant employees would not only increase menu prices to cover that basic payroll, it could very well result in fewer customers and lower tips to wait staff.

“You’re gonna see potentially more automation. You’re gonna see restaurants that may have table service today go to counter service where you may not even have any table service whatsoever,” said Tamm.  “You may see restaurants put iPads or tablets on their tables and then the customer orders to then do that.”

Chris Clifford of the Huse Culinary Group, parent company of St. Elmo Steakhouse and Harry & Izzy’s, said the higher minimum wage would, “add almost a million dollars in additional wages that we would have to pay per restaurant and that’s not sustainable.

“There have been a few cities around the country that have tried to implement this thing and it has not worked out well.”

Heather Boushey, a member of the White House Council of Economic Advisors, told Fox 59’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.”

Sen. Braun, a multi-millionaire distributing company owner from Jasper, Indiana, who talked about his wife’s small business on the main street of his hometown with the restauranteurs, told Fox 59 News after the meeting, “I come from the county that is typically the lowest unemployment county in the state and that minimum wage….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 fulltime 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 shut down 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.

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