Dave Meinert owns several local businesses including the Comet Tavern and the 5 Point Cafe. Below, he argues in favor of total compensation. Over here, Jess Spear argues against total compensation. They will be responding to each other's arguments Friday, April 4 on Slog.
I've worked in the hospitality industry since 1980 and own several businesses that employ close to 200 people in Seattle.
I support a $15 minimum wage that includes total compensation because it is how we can raise the guaranteed minimum income for the lowest-paid workers without closing low-margin, high-labor-density small businesses, while at the same time ensuring tipped workers are guaranteed a livable base income without lowering the income for those tipped workers currently earning more than $15. Without total compensation, raising the minimum wage will cost many jobs and could close your favorite local business.
"Total compensation" is simple: In many industries, an employee's earnings are only part hourly wage, the rest made up of other forms of compensation—tips, commissions, bonuses, and benefits. This non-hourly-wage compensation can often be the largest part of an employee's income.
In the restaurant industry, every employee is guaranteed the state minimum wage of $9.32 per hour. In addition, servers typically receive significant income from tips.
Average tips in Seattle range from $10 to $35 per hour or more. About 90 percent of tips are paid on credit cards, making them easy to track. These tips show up on employees' W-2 forms and are counted as income by the IRS. As we increase minimum wage and food prices rise to compensate for that, servers will also get an increase in tips.
Total compensation counts verifiable tips as part of guaranteed minimum earnings. The tips must show up on the employee's paycheck every pay period, and that paycheck would show the number of hours worked and what the tips added up to per hour. Benefits could be handled the same way—the value of the benefits would be averaged over the hours worked. Total wages, tips, and benefits would be tallied on the employee's paycheck, which would clearly show what is earned per hour. If it's ever less than $15 per hour, the employer would have to bring it up to $15 by increasing the wage for that pay period.
It is standard around the US for minimum-wage laws to count non-hourly-wage earnings and benefits as wages. San Francisco allows a meal credit and counts bonuses and commissions; Miami-Dade County and Boston have a credit for health care; Albuquerque counts health care and child care; San Jose counts commissions, meals, and bonuses; Santa Fe allows a tip and meal credit and counts health care and child care; DC has a tip credit with a base of $2.77 and counts commissions. All of these laws were backed by labor and the living-wage movement. Obama's $10.10 proposal also counts tips as wages. It would be more than ironic that the same people supporting tips and benefits counted as wages elsewhere would be willing to harm small businesses locally by denying Seattle the same thoughtful regulation.
Enforcement is key. We need harsh punishments for any business that doesn't pay $15. I suggest a fine of two to three times the amount underpaid plus interest for the first offense, and loss of business license or jail for the second offense. Employees must also have a place to take labor complaints, and we should look to San Francisco and form an Office of Labor Standards to ensure this and other local labor laws are enforced.
Don't allow false rhetoric to win this debate. Go out to your favorite local restaurant or retailer and ask the owner what they think about the concept of counting total compensation in a new Seattle wage policy. Ask your server if they are making a living income after tips and what they think about this debate. Engage and educate yourself on how diverse worker income is and how it works in our community. I bet you'll be surprised.