But tipped workers say subminimum wage in the state is too low
by JoANNE YOUNG – Lincoln Journal Star
Samantha Downs has been a bartender more than 17 years, and she’s proud of the carer the service industry has provided.
She told a legislative committee Monday that contrary to what many opponents to raising the minimum wage for tipped workers say, restaurant workers are not mostly entry-level and low-skilled, but rather highly creative and skilled people.
Downs, testifying on a bill (LB400) heard by the Business and Labor Committee, said it’s not the case that tips supplement the subminimum wage well for restaurant workers.
As a front house manager, she clocks in at 6 a.m. and spends an hour setting up the restaurant with no patrons there to tip.
“During my shift I am responsible for hosting, cashier, reception, all janitorial work, food prep and the daily needs of full service,” she said. “After service, we spend two hours cleaning, breaking down the space and preparing for the next day’s service.”
That’s three hours of work out of 10 with no tipping customers, no breaks or meals, she said.
Employees are required to pay one another out of earned and taxed tips, including support staff such as bussers, she said. It feels like double taxation, as all must claim tips for tax purposes, and wage theft, she said.
“Employees are left with little or no protection while business practices are ineffectively regulated,” she said.
Other servers made the point that Nebraska pays more than federal minimum wage but not to restaurant workers.
Omaha Sen. Megan Hunt, who introduced the bill, told the committee the creation of the two-tiered wage system fundamentally changed the practice of tipping, shifting the responsibility of compensating servers from business owners to customers.
“Today, that responsibility has continued to shift, moving from patrons and business owners to the taxpayers,” Hunt said.
Restaurant servers are three times more likely to live in poverty than the general work force, and two times more likely to be on food stamps or Medicaid, Hunt said.
It’s been 28 years since the state raised the subminimum wage – $2.13 an hour – for tipped workers, the same as under federal law. That figure hasn’t changed since the lower rate was created by Congress.
Hunt’s bill would raise pay to 40 percent of the Nebraska minimum wage of $9 after Jan. 1, 2020, and before Jan.1, 2021, and 50 percent of the minimum wage rate for wages paid on or after Jan. 1, 2021.
Employers are required to make sure workers’ tips plus base pay add up to the established minimum wage, but restaurant workers questioned owners’ compliance with that.
Other states around Nebraska pay more to tipped workers, supporters said, and the state will continue to see workers leaving Nebraska to those states to work.
Opponents of the bill said many tipped workers are well-compensated.
Jim Partington, representing the Nebraska Restaurant Association, the Nebraska Retail Federation and the Nebraska Grocery Industry Association, said servers generally like tipping as part of their compensation because it allows them to earn more based on the quality of their service.
Restaurant owners like it because it ensures excellent service and a good customer experience, he said.
The average verifiable credit card tip for wait staff is 21 percent, he said. That represents about 90 percent of sales in a typical full-service restaurant. Wait staff average $12.67 per hour statewide, according to a report by the Nebraska Department of Labor.
“LB400 would increase hourly pay for tipped employees by $2.37 an hour, resulting in a 10 to 15 percent hourly raise for some of the most highly compensated employees,” he said.
Tip income has kept pace with inflation, he said.
The committee also heard a bill (LB383) introduced by Sen. Dan Quick of Grand Island that would raise the general minimum wage beginning in 2020 and using the consumer price index.
His bill would enshrine into law the importance of a living wage to all Nebraskans, he said. The wage would be adjusted each year to reflect the average annual percentage change to the consumer price index for the most recent five-year period.
the index is already used to adjust Social Security payments and provide cost-of-living wage adjustments to retired workers.
“I think it’s the best way to keep up with the cost of living,” Quick said.
The minimum wag now of $9 per hour is still an inefficient wage, he said.
Opponents said many businesses already operate on thin profit margins. Minimum wages represent entry-level pay, for the most part, for unskilled workers. Tying the wage to the consumer price index could make it difficult for businesses to keep up with yearly raises and could lead to layoffs, they said.