Restaurant servers depend largely on tips. They don’t get a full minimum wage. A bill in Springfield would change that.
During a mealtime rush, the tables are full. The kitchen is busy. Servers move rapidly around the room. It’s a complicated dance. Gidget Schifeling has worked at many Twin City restaurants. Currently, she works at two in Bloomington, one very old and one very new.
“It's not just us running around remembering which table needs extra ranch and refills. It's also support from back of house. It's support from your manager. It's support from your co-workers. And working together making it look simple and easy, is a big deal," said Schifeling.
Serving is a lot more than just knowing the menu.
"They know ingredients. They know allergens. They have a good table presence. They're socially intelligent. They work well under pressure. Their teamwork is phenomenal. Resilience. Being friendly. It's not a simple job," said Abby Strader-Boesenberg, owner of Fort Jesse Cafe in Normal.
Yet, servers earn variable pay — 60% of the minimum wage plus tips. This year that’s $8.40 an hour. There’s a bill in the state legislature to bring that minimum up to what the rest of the workforce gets, currently $14 an hour.
If it passes, workers would still get tips. The City of Chicago has already passed such a measure.
Fair wage history
The national organization One Fair Wage is one of the groups pushing for the change. The Illinois Restaurant Association is opposed. One Fair Wage wants to end all sub-minimum wages in the U.S. The organization's president, Saru Jayaraman, said the tipping system in the U.S. has its roots in the years following the Civil War.
"Sub-minimum wage for tipped workers comes from devaluing Black lives directly after emancipation," said Jayaraman.
Before emancipation, restaurant servers were white men and tipping was not part of the American restaurant culture. In 1853, restaurant workers struck for better wages and the restaurants started hiring white women for lower pay. After emancipation, Jayaraman said, the industry changed again when African Americans began moving north.
"The Pullman Train Company started hiring Black men. Restaurants started hiring Black women. And both industries told these workers you are not going to get a wage at all. You are going to have the privilege of obtaining this new thing that's just come from Europe from white customers called tips," said Jayaraman, adding restaurant tips in Europe were on top of wages.
Eventually, the Brotherhood of Pullman Car workers unionized and struck for a wage plus tips in 1937. A year later, she said the National Restaurant Association opposed fully including tipped workers in the first minimum wage law under the New Deal.
Jayaraman said restaurant workers have been behind ever since and the system still puts people of color at a disadvantage. The restaurant industry still has disproportionately more women and more Black women than other occupations.
"Women of color earn anywhere from $5-$8 less per hour than white men because of implicit bias in tipping. So much less! It's about $6,500 a year less than white men," said Jayaraman.
Black women and other women of color also tend to be segregated into more casual restaurants where tips are less, she added.
Effect on restaurants
Raising wages would increase costs for restaurant owners and operators.
Bob Dobski, owns Rob Dob’s in Bloomington, said restaurant owners like to get wage costs at about 20-22% of total volume. He estimated raising the minimum wage for servers would increase that percentage three or four points.
"Being in business, restaurant owners are going to have to reflect that in the menu prices and the consumer is probably going to wind up paying for it if we have to go to this in Illinois. I don't think it's a good idea," said Dobski.
What if the restaurants chose to eat the increase?
"If we did not adjust prices, we would not be able to make any money. Those are such tight margins as it is," said Strader-Boesenberg.
She said the initiative comes at a precarious time for restaurant operators. First, there was a pandemic shutdown, then carry-out only, then they could be partly open. There was a return to full service, then inflation hit, and some new government mandates. She said it's has been one thing after another.
"Okay, well now minimum wage is going to go up a dollar every year until 2025. Okay, well, we're doing that now and we're going to throw in paid time off for all employees. Sounds good. Probably how it should be. We're doing that now. And so, we're just...it's just been, chaos," sighed Strader-Boesenberg.
And Dobski said the increased cost will not affect every restaurant to the same degree, which could tilt the playing field.
"The bigger restaurants that have more volume will absorb some of that, but the ones that have only one or two servers, that's quite a big jump and it's going to hurt them. It's going to hurt the small businessperson," he said.
Smaller restaurants may be lower-priced establishments. Dobski said their prices may have to rise disproportionately more to cover increased wage costs. That could give a further advantage to chain outlets that have economies of scale. And he said it's not like inflation has subsided.
"It's not only this wage that's going to hurt a restaurant. In our case, our shortening has just gone up about 4%. Our garbage pickup just raised their prices for picking up our trash. The utilities, of course, everybody knows they're paying more. It's an ongoing thing of what's going up," said Dobski.
One Fair Wage said business groups that represent smaller restaurants have generally backed the proposal, saying it would place chains and independents on a level playing field for wages and the ability to find people to hire.
And at some point, increased prices will change consumer behavior. They will go out to eat less often. Abby Strader Boesenberg said she has already seen changes in dining patterns.
"I think that you would see businesses shift to the fast casual, the Chipotle — go up to the counter, order your food, go sit down because what's the point in paying all these people. If I have to raise my prices, people aren't going to come out as much," she said.
One Fair Wage said seven states have a uniform minimum wage for tipped and non-tipped workers: Minnesota, California, Alaska, Nevada, Montana, Washington, and Oregon. The organization studied restaurant prices in states with and without the policy, and they are the same.
Jayaraman said the Denny's menus in Fresno, California and Springfield, Illinois have the same prices.
"The CFO of Denny's in 2021 was caught red-handed telling shareholders on an analysts’ call Denny's is growing faster in California than in any other state in the U.S. Why? He said because we pay our people $15 plus tips and therefore, guess what? They bring their families to eat at Denny's. They are able to eat at Denny's, so our guest receipts are higher," said Jayaraman.
Restaurant owners said they do want workers to be compensated fairly for their work.
“We spend more time with them than we do with our own families. I love our team and I love being with them and looking out for them and making sure they are happy," said Strader-Boesenberg, adding she sees both sides of the issue.
"Tips are unreliable. You have slow days. You have busy days. But your rent is still the same amount of money. So, that can be kind of stressful," she said.
Raising the minimum would seemingly be a more stable wage. Servers though, worry people will stop tipping.
"My concern for my own bottom line would be, it would shift to 'well, you're getting 15 dollars an hour, why do I have to tip you at all?' I feel like the people that are already a little bit stingy with that,..." said Gidget Schifeling.
And if tipping goes out of the culture, Schifeling said that would be bad.
"And if I'm only making $15 an hour, I really have no motivation to continue in the job. It's physically taxing," she said.
One Fair Wage said that wouldn’t happen.
“The states that have already done this have the same or higher tipping averages as Illinois. In fact, the most recent data from the last quarter shows that California has the highest tipping average of any state in the U.S. California has had the same wage for tipped and non-tipped workers for 50 years," said Jayaraman.
Strader Boesenberg of Fort Jesse Café sounded skeptical.
"Then we should all be servers, because they are going to make sooo much money," she said.
Schifeling has a different take. A bump in the minimum wage would be nice, but perhaps not as significant as all that.
"Calling that a living wage is a joke. That's not some magical number. If we want to talk about a living wage, it's going to be a lot higher than that. And not just for service industry folks. In every industry and every job," said Schifeling.
Working conditions
One Fair Wage and other groups said an across-the-board minimum wage also would improve working conditions. Saru Jayaraman said the restaurant industry is rife with sexual harassment. The base wage often goes entirely for taxes which means workers live solely off tips.
"Which means you have to put up with whatever the customer does to you, however they touch you or treat you or talk to you, because the customer is paying your bills not your employer. Which is why we see the absolute highest rates of sexual harassment of any industry including the military, in the tipped workforce," said Jayaraman.
Gidget Schifeling acknowledged sexual harassment is an issue, patrons standing too close, grabbing shoulders, and such.
"It happens. That is one of the ugly underbelly things of the service industry that happens a lot,” she said, though she doubts harassment is a sufficient reason to pass the bill.
"Because there's no guarantee. I think stopping that sort of thing comes with more education of management in places that do not back up their staff," said Schifeling.
One Fair Wage said workers in states that have an across-the-board minimum wage report one half the rate of sexual harassment of states that have the sub-minimum wage system. The argument goes, if a worker is not completely dependent on tips, she can tell a harasser to buzz off.
Equity arises in a different way as well.
Jayaraman said the law requires that tips have to bring restaurant workers up to minimum wage, or the employer has to make up the difference. But a survey of 2,000 workers shows half of them, and 60% of Black women, regularly experience a gap between tips and the minimum wage that employers do not fill. In 2014, the Obama administration did a compliance sweep of 9,000 restaurants and data showed an 84% violation rate of the minimum wage rule.
“The Solicitor General of the U.S. Department of Labor under Obama declared the issue unenforceable. So, it's an issue of what we call wage theft," said Jayaraman.
She said in 2016, the Trump administration Labor Department tried to get rules changed to make tips the property of owners not workers. The resulting uproar caused a federal law declaring tips the property of workers.
"We ended up in a very weird moment working with both Mitch McConnell and Sen. [Chuck] Schumer on a congressional bill to make tips the property of a worker," said Jayaraman.
System inertia
It’s natural for people to worry about change, even if the claims of improvement could come true. The Illinois Restaurant Association polled tipped workers in Illinois — 87% said they are happy with the way the system works right now; 77% said they can maximize tips through good service now.
Count server Gidget Schifeling in that camp.
"I like how it is and if we start messing with it, I just feel like the fallout is going to hurt us in the end," she said. "If we want to raise base wages, let's start with teachers. We make up for it with our tips and stuff. We're okay. Get to us at some point. Maybe just tip better."
One Fair Wage said including tipped workers in a standard minimum wage is an idea to right historical and current wrongs whose time has come. The group said it also could lock in wage gains begun as part of a post-pandemic labor shortage, gains that show signs of being rolled back.
In Illinois, the Service Employees International Union and State Federation of Labor have endorsed the bill. The Illinois Restaurant Association opposes it.
Ohio and Michigan have put proposals on the fall ballot for voters to decide.
Editor's note: This story has been changed to make a clearer distinction of the National Restaurant Association position on the creation of the first minimum wage in 1938. It also clarifies the origin of a failed 2016 push to allow restaurant owners to take a portion of worker tips.
