Restaurant Workers' Community Foundation

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We Have More Questions Than Answers – And That’s a Good Thing

By Michael Hamill Remaley, RWCF Board Treasurer

 

At Restaurant Workers’ Community Foundation, our starting point on policy concerns related to our core issues – wages and career ladders; gender equity and sexual abuse; racial equity and immigrant fair treatment; and mental health and substance abuse – is always that we don’t have THE definitive answers, but we are determined to listen to everyone working in the hospitality industry and pursue solutions that improve conditions for all workers.  So we were very interested to read some new survey data released by NYC Hospitality Alliance in January that sought to produce some hard numbers on the effects of increasing labor costs on overall employment rates in the industry.  

The topline data – which was uncritically reported in Crain’s NY, U.S. News, Eater and a variety of other media outlets – presented a frightening prediction of restaurant industry job loss as a direct result of New York State’s mandate to bring wages up to a $15 per hour “living wage.” The Alliance’s survey of “restaurants” (more on this below) paints a picture of an industry already in decline because of increasing wages, and at threat even more if New York State eliminates the tip credit:

“76.50% of full-service restaurant respondents reduced employee hours, and 36.30% eliminated jobs in 2018, in response to mandated wage increases. 75% of limited-service restaurant respondents report that they will reduce employee hours, and 53.10% will eliminate jobs in 2019 as a result of mandated wage increases that took effect on December 31, 2018...There’s also a concerning trend found in restaurant employment data. When the tip wage increased 50% in 2015, and since doubled, annual employment growth dropped from 6.67% to less than 1% as of November 2018. The State Department of Labor's data for employment at limited service restaurants show a similar downtrend. Both decreases in growth, the results of this survey, and other industry trends signal that a once growing industry; responsible for hundreds of thousands of jobs, and billions of dollars in economic impact, has become stagnant.”

Full disclosure: I am a recovering public opinion researcher, having served as Vice President of Communications for many years at the public engagement and survey organization Public Agenda. So the first thing I wondered about The Alliance’s report was: Who was surveyed? 

Whose opinion does this report represent?  The Alliance does not provide a methodology section in its report, but says “the operators of 574 establishments responded to the survey, which represents 324 full service restaurants and 250 limited service restaurants.”  Those “operators” are, presumably, the owners or executive leaders within NYC Hospitality Alliance member companies who pay anywhere from $1K-$25K to be members. So let’s start with the fact that the opinions of those surveyed do matter, but, given their position, that they are a tiny subset of the industry who may be motivated to make certain predictions about the future of the restaurant industry that may or may not be based on actual hiring practices and market trends. The survey sample is highly biased and doesn’t even represent the entirety of bar and restaurant owners across New York State, and it certainly isn’t a representative sample of hiring managers who might be able to provide more detailed numbers regarding their current employment numbers and future hiring projections. 

The next question I asked was: Is the data being constructed well-suited to opinion research? I am always suspicious when a survey asks its subjects to predict the future. Any public opinion researcher will tell you that what respondents saythey will do has little real predictive value. And even when people are asked about the recent past, they don’t always provide accurate information or information that can be generalized to the wider sample.  The Alliance reported that just over one-third of restaurants said they had eliminated jobs in the past year “because of mandated wage increases.” But that’s pretty much an even distribution if, in ANY year, one third of restaurants could be expected to be eliminating jobs, one third keeping steady and one third increasing hiring. And, as the following lines of The Alliance’s report make clear, jobs in the restaurant industry continued to grow in 2018, albeit at a rate of 1% rather than 6.67% growth of the previous year – but this couldbe explained by the overall slowing of the economy rather than on wage increases. According to the New York Department of Labor, all private sector jobs in New York City rose only 1.8 percent in 2018.  So 1% growth for the restaurant industry for the year doesn’t sound as devastating as The Alliance’s report implies. We really should be paying much more attention to actual labor statistics than the opinion of a questionable subset of restaurant owners regarding what they may or may not do as a reaction to increasing wages.  

Whereas actual labor statistics from the states that have eliminated the tip credit is very encouraging. According to Restaurant Opportunities Centers United (ROC), seven states have adopted equal treatment for tipped workers ensuring all workers receive one fair wage, independent of tips. In these “One Fair Wage” states: 

• Restaurant employment rates in One Fair Wage states are equal or higher than states that continue to have the tip-credit.From 2011-2016, full-service restaurant employment (FSRE), where tipping is concentrated, grew by 20.4 percent in OFW states. States with a $2.13 subminimum wage did not fare as well; FSRE grew by 16.37 percent during the same time period. FSRE grew by 20.13 percent in New York and 13 percent in Michigan.

• Restaurant establishment growth in One Fair Wage States is equal or higher than other states.The number of full-service restaurants (FSR) has steadily increased over the last five years. From 2011-2016, FSRs in OFW states grew by 9.44 percent, compared to 8.8 percent in $2.13 states, 4.88% in New York, 8.7 percent in Michigan, and 13 percent in D.C.

And ROC United’s numbers are based on state employment data rather than the opinions of restaurant owners. While NYC Hospitality Alliance members may say they will have to lay off people if labor laws change to mandate a single living wage for tipped workers, the evidence from other states that have already gone this route does not substantiate their predictions.  

That’s not to say that The Alliance’s research doesn’t have value. Hearing from owners is important.  And we absolutely want to hear from a wide range of tipped workers – those who are in favor of maintaining the tip credit (mostly those who work in high-end restaurants) and those who desperately want one fair and reliable wage rate.  We don’t have all the answers, and that is why Restaurant Workers Community Foundation is developing a listening campaign over the course of 2019.  

Wage issues are extraordinarily complicated. RWCF is committed to sharing as much information with our community as possible, asking thoughtful questions and hearing from people working in every capacity – back of the house, front of the house, and owners. We’re all working hard to make a decent living and we all want the industry to make money and provide good jobs. 

RWCF’s 2019 listening campaign will start with social media (#RestaurantsCould) and in-person events in which we talk with all sorts of people in the industry about all of our programmatic areas. You can help by telling us what you think about the tip credit issue. 

We have friends who make a lot of money off of tips and are afraid they will lose out if the tip-credit is eliminated (Factual Note:If the law changes and owners are no longer allowed to take a tip credit on your wages, it doesn’t mean customers can’t tip you, it just means owners have to build a living wage into the cost of doing business and into the price of the service experience). We also have friends who are passionate advocates for One Fair Wage legislation who say that the sub-minimum wage and over-reliance on tips are terrible for workers, especially for women and people of color, but really anyone who works in the vast majority of restaurants that are not “high end.” We have heard from a lot of workers at all levels of the industry since we launched RWCF last fall and opinions are all over the place. 

Our mission is to dive deep into the data that is available, ask as many questions as we can, and hear from everyone in the industry so that we can advocate for policies and practices that improve working conditions for all restaurant workers, especially for those who are most vulnerable and likely to be earning wages that keep them in, or close to, poverty.  

Tell us what you think. You can email us at info@restaurantworkerscf.orgor talk to us on social media @RWCFNYC using #RestaurantsCould

We know there are lots of things restaurants coulddo in daily practice and in the organizational culture they foster – in addition to the policies they advocate – to make life better for workers.  Tell us what you think #RestaurantsCould do. 

John deBary