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Restaurant owners to fight plan to increase minimum wage for servers

A legislative proposal would double the minimum wage for waiters and waitresses by 2016 after five years with no increase at all. That's an outrage, Mass. Restaurant Association says.


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Raise prices on food 10%-20%, and have customers tip average service at 1% and great service at 3%

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The senate bill raises the untipped minimum wage from $2.63 an hour, which is the the lowest in New England, to $5.26. This makes a big difference for wait staff in dinners and luncheonettes.

The bill also restores the minimum wage to $11 per hour, which in todays's dollars is the same buying power as the minimum wage in 1968. The bill pegs these two rates to inflation so that the buying power of these minimum wages remain constant.

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If restaurant managers didn't habitually steal and skim waiter's tips.

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Totally agree that waitstaff's earnings should go up! Been too many years. Totally disagree with the generalization that restaurant managers routinely steal tips. It's always easy to lay blame as a response to a problem but that isn't helpful and often wrong.

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It's too bad there are so many thumbs' up on this. It's like saying, "every cop is crooked."

The Mass Tips law is one of the strictest and most generous in the country. There aren't that many lawsuits under the law, as compared to the number of restaurants out there.

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The bigger story is increasing the minimum wage for all employers 37 percent, from $8 to $11 over 3 years. That's a huge jump in a short amount of time, particularly given that inflation is currently around 1 percent.

http://www.usinflationcalculator.com/inflation/current-inflation-rates/

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You can't just say inflation is currently 1%. You need to look at the total inflation since the last minimum wage rise. It has been as high as 4% since the last time the min. wage was raised. Looking at the graph you linked, and eyeballing the rates since 2006 (last min wage increase) it looks like we've had about 30% cumulative inflation since then.

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for high school kid landing summer jobs.

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Places with a summer swell in business will still hire teens because it is a labor pool that can work seasonally. Paying them a fair wage won't change that. Ditto for part-time workers in their teens: my son and his friends already make more than this minimum running pee samples around the local hospital.

We heard all these "just so" horror stories when the minimum wage was invented and first implemented ... they DIDN'T HAPPEN.

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CITATIONS NEEDED

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Not by walking in and filling out an application.

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Because all of the summer businesses I know prefer to hire H1B kids from Bulgaria and Poland because they can stay through the whole season and are often more driven and harder-working that Anerican teens. Go anywhere on the Cape and compare the number of US-born teenagers working vs the number of Jamaicans, Bulgarians. Brits etc.

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http://www.dol.gov/whd/state/stateMinWageHis.htm

5 years is a long time for people not to have even cost of living increases.

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and even with that increase, the inflation-adjusted minimum wage will still be lower than it was in the 70s.

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Small businesses only have a finite pool of money to pay people. Raise wages and the headcount is going to go down. You can only raises prices so much to offset the labor costs before customers are lost. If too many places raise their prices to offset the cost of wages then the raised wages themselves are offset by costs exceeding the wage increase.

Stupid politicians which have trouble balancing budgets trying to fix prices and playing with the economy. What could possibly go wrong?

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This is the common argument against minimum wage laws but studies show otherwise. There appears to be either essentially no real impact on employment from a minimum wage increase or a slight uptick in hiring following an increase.

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Minimum wage increases are usually pretty modest and spread over time:

http://www.dol.gov/whd/state/stateMinWageHis.htm

Here we're talking about 100% increase for food service, and 37% increase for all others, in just 3 years. That's a serious increase in costs, that have to be made up somewhere.

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They begin to automate tasks to reduce headcount. Look at the fast food industry 50 years ago and compare it to today. You had people preparing food onsite, like chopping vegetables and making the paddies. This created dishes along with how the food was served, which require dishwashers. They actually cooked the food from scratch onsite, which required trained cooks.

Fast forwards 50 years and now we have food that is being made in a factory and prepared in a microwave and served in papers wrapping all by unskilled workers. The direct result of minimum wage increases.

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This is why there are no restaurants anymore.

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Yeah, and the restaurants that don't exist now are also the ones who are fighting an increase that will still be proportionally less than the wage was in the 70's...when restaurants didn't exist either.

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too bad its full of shit since the minimum wage is lower now that it was in the 1950's when adjusted for inflation.

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Shouldn't the minimum wage be exactly the same as it was in the 1950's when adjusted for inflation?

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If you want to blame the increase in the minimum wage on food production being automated, there has to be at the very least an actual increase in the minimum wage, which there has not been. now you understand?

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Simple economics, not sure if you are the same anon, or if you are even talking to me... Ah never mind

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Not sure what you mean here. Do you feel that any of the following might have had an influence?
- The presence of microwave ovens
- Improvements in preserving food products
- Improvements in shipping efficiency, cost and time

In short, are you saying that fast food restaurants would not be taking advantage of any of these efficiencies/reductions in labor costs were it not for an increase in the minimum wage?

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Poor McDonalds, suffering under the yoke of a minimum wage for its workers. Any evidence for your assertion?

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Management already has a bottom line, and that bottom line means employing as few people as possible to do more work than before at the same wage. I can't speak for food service, but I know retail very well and retailers simply don't employ one more worker than necessary. In fact, they often employ fewer people than necessary, leading to unsafe conditions for clerks/cashiers who work alone at all night convenience stores as just one example. Or take a look at Dunkin Donuts, which has increased its food-prep exponentially over the past few years. They don't hire more people to do that extra work. They just tell the existing number of employees to do more work for the same low pay.

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Whats that, cleaning the plastic draw your food comes out of.

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If you have $1000 a year to eat out say 20 times at $50 a pop - and the price goes to $60 a pop people will eat out 15-16 times. Money doesn't grow on trees and not saying people are sitting down with a piece of paper and figuring this out - but you figure out fast that you have to cut back. While a busy restaurant can only cut back so much - and they probably operate pretty efficiently already, somewhere along the line marginal restaurants will close because people will allocate their dollars to the better places.

So sure - give a few people a raise - but if it goes up that fast there WILL be fewer jobs.

And to the anon above - can you post your plastic draw on Craigslist? I love draws.

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Servers are generally working at least 4 to 8 tables per hour, so that extra $2 an hour is spread out over a large number of patrons.

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First - that was just an illustration. To get an actual number you have to do a lot more analysis on labor costs as percent of overall costs which depends on the type of restaurant, volume etc.

Second - when was the last time you went into a restaurant and there was "only" a waitperson - wouldn't be much of a restaurant (although there is a breakfast place like that in Rozzie Sq where your waitperson is also the manager, cook, dishwasher etc.).

In most restaurants there's the wait person, the bartender, the host/hostess all the kitchen staff, the cleaning people and then their costs go up because a lot of their suppliers would have to raise prices too. Maybe not a 20% increase - but easily in the range of 6-10%.

Bottom line - you may not see a successful restaurant cut back much - but the marginal ones or standalone restaurants that aren't part of chain to absorb overhead (which are often some of the best) - will likely go under. Service will be the same - you'll just lose choice.

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We shouldn't be supporting these workers directly through the cost of wages ... we should all continue to pay taxes at levels that pay for supports for the working poor and subsidize employers.

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Raised wages, might mean higher housing costs.....

On the other hand, raised wages means the waitstaff might be able to go out to eat more and offset some of Stevil's people who go out 1-2 times less a year.

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Waitstaff are paid $2.75/ hr currently, ask any server what their take home pay is at the end of the week from hourly wages. Their checks say "VOID."

Doubling that would not increase their taxable income to over the poverty line. Further Waitstaff only declare 100% of CC tips, because you have to. Cash tips, around 20% of what they actually receive that shift. About 99.9999999999% of tip workers do not declare all of their income. And many will still be eligible for gov assistance after the increase even when in reality they are well above the poverty line.

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In fact, I defy you to find a single livery driver in this city who declares their cash tips, myself included. Then again the base pay for most chauffeurs is $8.00 per hour. When the Teamsters tried to enter the livery business in town a few years back, the owners told the drivers they'd go down to $2.75 an hour if they went union. No more union after that!

Also, most of the doormen in town make between 60-80k a year including mostly cash. You think any of them declare that?

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Wait - actually we know for a fact Liz doesn't send any more to the government than she has to.

How much bonus money do you send to Beacon Hill and Andover each year to support the downtrodden?

I know the rich (top 10%) only pay 70% of the income taxes in this country. Since you think that's obviously too little - how much should they pay. No longwinded answers - just a 2 digit number please?

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CITATIONS NEEDED

You ask for them every time someone argues against you. Time to put up or shut up when making your own arguments

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Because the bartenders are also serving patrons at the bar, so you have to factor in all those patrons too. Hostesses and the kitchen stafff do not get paid minimum wage in any place Ive worked, so that wont factor in by much. As for the busboys, Ill agree that is true. But a dining room with 100 seats is going to have three of them probably. so what are we up to 25 cents per patron?

And if you want to start counting all the people outside of the restaurant who will be getting a pay increase, then you'll also have to figure in the larger amount of income all those people will have now, which will increase their ability to spend money eating out, so that will increase business for places.

No one is going under because of this, its the same cry we hear from greedy people everytime this issue comes up and they are always wrong.

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"And if you want to start counting all the people outside of the restaurant who will be getting a pay increase, then you'll also have to figure in the larger amount of income all those people will have now, which will increase their ability to spend money eating out, so that will increase business for places."

Except when prices go up to pay these people they will wind up at the EXACT SAME LEVEL OF PURCHASING POWER.

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surely you aren't suggesting that a $2 increase in the minimum wage for tipped servers is going to result in an inflation rate of 100%.

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So the person that used to make $8 an hour now makes the same as the cook and the hostess. And then the cook and the hostess say - hey we are worth more than minimum wage so we now want $14 an hour. And the manager says - hey if they are making $14 an hour and got a 20% raise - where's my raise. So eventually the salaries adjust, the purchasing power goes nowhere (as others pointed out).

The minimum wage is a starting point - and after that everything's relative.

The problem is - this isn't just restaurants.

It's retail (HELLLLOOOO New Hampshire - one more reason to shop there).
It's summer jobs (the city's broke and companies willing to foot the bill are hard to find already)
It's landscaping (for those that do follow the rules - and there are a few)

Minimum wage jobs are a starting point - not a career. If you want to move up - get experience, get training and get education - and if you do a good job you can move up the ladder. Raising the minimum wage on a state level just makes a state struggling to compete in low margin businesses even less competitive. If you want to change the federal minimum wage you might have more of an argument. But again - long term it only results in inflation - and perhaps a few other negative side effects. The rest of the world will adjust upward from that baseline and someone in a minimum wage job will gain little or nothing unless they get out of that kind of a job.

If you're such a magnanimous genius -go out and start a business in a "minimum wage" industry and try to pay higher wages - see where that lands you. Hope you have a cushy tuckus.

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Mitt says so!

You have no fucking idea in this world what it is like to climb out of poverty, or the fact that it has gotten harder because people like you don't want competition from the unwashed masses and have been facilitating generational poverty.

Also consider this: your education (and mine) was tremendously enabled by federal government programs.

Of course it is all about OTHER PEOPLE with circumstances that you cannot imagine improving their lives through wishes, unicorns, and magic.

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Load of bullcrap.

Minimum wages vary by state, city and county.

Youll find prices tend to be identical, excluding Manhattan and Hawaii.

Prices are set by what people are willing to pay, not price of input.

A small coffee at starbucks costs $1.50 in Seattle or SF, where minimum wage is $11ish and the same exact price in Memphis where the minimum wage is $7.25

(numbers may not be exact, you get the point).

Because wages vary so much AND the min rises at different time, you literally have thousands of data points to look at. They all say the same thing.

You cant raise prices when the min wage goes up because if your competitor doesnt, you're screwed. So prices are sticky. Places with higher prices (ie, the airport), do so because they have a captive audience, not because their costs are higher.

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Those waitstaff now being paid a higher guaranteed wage can finally afford to eat at their own restaurant occasionally...say 4-5 times.

15-16 + 4-5 = the same 20 times as before.

Of course, that means you might have to share your Back Bay favorites with some slacker from Allston who used to just be the waitstaff, Stevil.

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So a waitress who currently makes $2.75 will be able to afford to eat after making $5.50/ hr. Because the $100-$200 in tips per shift while making only $2.75/hr wasn't enough to buy food. It's about the state collecting more taxes from business owners.

I don't think many of you understand how tip based employees make money, it's not from hourly wages. Hence the reason many placed pay their waiters $0/ hr.

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Nobody pays their waiters $0/hr. That's completely illegal.

Furthermore, I probably know more about this than you do. The reason they pay them an hourly wage below minimum wage stems from the fact that owners argued that they provide everything: the ambiance, the food, the kitchen staff, etc. So they should get all of the money earned from the meal and the waiter should only get the tip which is for the waitstaff's service contribution to the dining experience. However, it was agreed that part of the ambiance requires good waitstaff, so they should get SOMETHING in wages as a result. Thus, tips became a credit against minimum wage (i.e. if their tips plus their wages don't meet the minimum wage, then the owner actually has to pay more than the tipped minimum wage so that the sum reaches the untipped minimum wage). They tossed around lots of different ratios and ended up around 50% of minimum wage as the tipped staff minimum. This was decoupled in a minimum wage bill signed by Clinton. Now, as the minimum wage kept going up since the 90s (small but incrementally), the tipped minimum wage didn't. They've been getting supremely shafted for 20 years now...thus if we're going to boost it up in MA, it's going to seem extreme but it's barely going to get it back to a sane ratio again.

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If a business can't afford to pay their employees a living wage, they shouldn't be in business.

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I am curious, Annika, what business you own/operate..

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Because you can't live off $11/hr with out being on some form of assistance. But at the same time who in their right mind is going to pay someone, say $18/hr to pour coffee.

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Any business in boston that can't afford to pay a burger flipper or grocery bagger $65k/year (the bare minimum to live like a human being, not an animal) shouldn't be in business in the first place. And, since college grad entry level positions should pay at least twice the minimum wage, all companies better start shutting down unless they have at least $130k for every keyboard jockey in the office.

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Amen. At $2.16/hour, a restaurant is paying each of its minimum-wage waitstaff $4,320 a year. I am completely unable to grasp how anyone can seriously argue that a full-time employee shouldn't be valued more highly than that, or that the restauranteurs will be ruined by a mandate that they pay them less than nine thousand dollars a year.

If your business model depends on paying sub-poverty wages to your employees, then you deserve to be driven out of business.

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Amen. At $2.16/hour, a restaurant is paying each of its minimum-wage waitstaff $4,320 a year. I am completely unable to grasp how anyone can seriously argue that a full-time employee shouldn't be valued more highly than that, or that the restauranteurs will be ruined by a mandate that they pay them less than nine thousand dollars a year.

If your business model depends on paying sub-poverty wages to your employees, then you deserve to be driven out of business.

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Small businesses only have a finite pool of money to pay people because the owner is pocketing so much of the profit.

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Ever heard of OVERHEAD?

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the minimum wage is doubled, it will only be between $5 and $6 per hour. When you take into account that all taxes on cash tips are taken out of the hourly wage, most servers and bartenders are use to getting checks for $0 because they owe more in taxes than what their check should be worth. Higher wage means more money going to taxes.

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In California, the waitstaff min is the same as the standard min ($8, to go to $10 over the next 2 years). Tips are extra.

Youll note it has zero effect on prices.

Go to any chain, and the menu is identical. 2 for $20 at a Worcester Applebees? 2 for $20 at a Bakersfield Applebees.

$14.99 for a Fajita platter at Chili's in New Bedford?

$14.99 for a Fajita platter in Stockton.

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You listed examples of chain restaurants that are part of a national corporation. They have resources not available to your independent restraunteur who has to account for all overhead him/herself.

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Of course I listed chains, because its easiest to compare pricing, since we can pull up menus that are 99% identical.

And what extra resources do they need exactly? If having a wage 4x higher means they can still profit at the same price point, thats an important point.

Its not like they cross subsidize. The second a store starts losing money, it gets closed.

But if you want to compare apples to apples, pricing at mom-and-pops are the same.

In fact, I can get better quality tacos for cheaper in California than I can in Boston, even at 4x a higher wage. Im talking $1 a taco for the good stuff, so not exactly high margin stuff.

Pho? Same pricing for the bowls. $5-$10 depending on size/contents. Again, not exactly high margin, and yet they can do it with a wage 4x higher.

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And is not the best example for food prices/wages/quality arguments.

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For fucks sake, the example works with every state.

Min wage for waitstaff wages from $2 to $10 in this country.

PRICES ARE THE SAME.

It doesnt matter if its Phoenix, which requires AC at full blast for 180 days.

It doesnt matter if its Montana, which requires the heater to be lit up like an oil rig to warmt he place for 180 days.

It doesnt matter if its San Diego, which requires no heating or cooling.

It doesnt matter if veggies cost more, gas costs less, insurance is higher, rent is lower.....

PRICES ARE SET BY DEMAND, not the addition of all these inputs which vary enormously.

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Cost structure affects whether a business can open / stay in business. If XYZ's profits are $100,000 and labor costs increase $150,000, then XYZ is going out of business. Or it's trimming its labor force, reducing hours or headcount.

John Doe wants to open a restaurant. He can do so profitably paying $2.63 per hour to his waitstaff, but not at $5.50. So Doe's Restaurant never opens.

These aren't good things.

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Why can John Doe open his restaurant in California, pay 4x as much in wages, pay 3x as much in electricity, and offer the same pricing structure?

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If the average 40 seat restaurant has 4 waitstaff and 2 busboys that are affected by this change, the cost per diner is about $.72..... Now look at the other side. If the waitstaff are properly compensated and properly trained, they could up sell their customers - dessert, wine, appetizers, etc.....don't you think that could, and should, offset this cost increase?
Only poor operators will be afraid of this because they are poor operators, not because of any legitimacy to their argument.

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Can start busing his own tables and mopping his own floors. Alternatively, he can go fuck himself. How about that?

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Well the corporate resources I'm thinking of: Human Resources, Employee Benefits volume purchasing power, legal department, purchasing department, marketing department, a department that just deals with health inspectors and permitting.. the list goes on...

These are some of the resources a corporate chain restaurant as advantage of over your local independant restaurant. Corporate restaurants are able to absorb a less performing sites into their P&L along with unexpected costs.

All this is moot because why would anyone want to eat at a chain restaurant when a local indie is probably much fresher/better?

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I try to tip very decently, especially based on how the server is. And if you feel that all staff are underpaid, pay higher tips all the time. I mean, it's really that simple. You yourself have the ability to make the difference -- do you actually do it?

Also, how many restaurants actually pay the restaurant minimum wage? How many are already paying $5, $6? Any? Alot? And if we set a minimum wage, are we sending the message, "hey, this is where you set your wages. This isn't really a minimum anymore, it's going to be an unspoken, agreed-upon wage all the time." If there was no minimum wages, would we see much more variance in starting wait-staff wages? Perhaps even higher starting wages?

Just some things to ponder and think about, that is all. You can have your opinions, but I think we should always look at everything from every angle.

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I missed this, but since I work in this business, I decided to put in my 263 cents.

Raising the minimum wage for tipped employees will have two big effects. One, while "paychecks" will still be continue to say "VOID," it means that staff have more of their taxes covered by their hourly wage. You will not have to pay as much when filing your tax return. Second, it will make managers think twice about over-staffing. Piling on bartenders and servers doesn't cost much of anything at the current rate, and if it lowers the amount of tips each employee makes, they don't really care. It probably will not make a difference in all the "side work" that is expected, which often includes some kinds of food preparation and janitorial work - taking care of the trash, cleaning floors, windows and even bathrooms.

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Why not raise the minimum wage for people who work as restaurant servers? Aren't they human beings who are entitled to a living wage?

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I have been a server for over 30 years. Is a low paying job? That all depends on you. And if you are a server concerned about how much you are getting in your paycheck. You are in the wrong line of work. I do not want the mandatory increase for servers to happen. You must think I'm crazy . Let me explain. I make my money working on the floor ( waiting tables), not worrying about my paycheck. I do very well, and yes I do claim my tips. Otherwise I would not have been able to get a mortgage, car loan and so forth. Also my vacation pay is based on dividing 6 months of my gross pay. If my employer which is a very large company nation wide is forced to increase our pay of 2.93 an hour what will that mean? Well for starters certain specs we have with the company will be downgraded ( can't really say what they are without giving my workplace away). And the main concern will be cutting hours losing time on the floor where my real money comes from. This raise for any successful server will be another cut your nose to spite your face. Kind of like................UMMMMMMMM OBAMA CARE!!!!! Had to go from a deductible of $250 to $5000. no fault of my work place since they have to comply with the new healthcare laws starting Jan. 1st!! So if you are not making money being a server either chose a new profession, or find another place to serve. This increase in hourly pay will screw you in the end unless you are not making money on the floor because you are working this (non degree) job that you are not qualified for in the first place

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If your employer is going to cut hours to somehow avoid the minimum wage hike, then the only way that makes sense is if they make you each work more tables or close the restaurant at earlier hours. You can't cut hours unless you hire more people (doesn't change per hour wages), staff at lower levels (could do that now to save more money...but don't for a reason), or close earlier (could do that now to save more money...but don't for a reason). So, even if they somehow figured out that they should staff at lower levels (the only change that makes any sense at all), then each of you will have more tables for the time you're in there. This means more tips, meaning you'd likely make more money even with the cut hours since it's tips not wages that you claim makes you the most money.

Also, a higher deductible means a lower premium which means unless you get sick you're saving extra money. Also, Obamacare had little effect on MA since we already had Romneycare. In fact, most of the changes that did occur were to your benefit, since it increased the threshold for which you could get premium discounts based on your taxable income.

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