Getting Rich on Tips

IT'S BEGINNING TO look plausible that Minnesota minimum-wage workers will have a raise to look forward to sometime later this year. On Thursday, the state House of Representatives is scheduled to vote on a bill that would raise the minimum wage to $5 an hour starting in July, and to $5.50 next year. The measure, sponsored by Rep. Tom Rukavina (DFL-Virginia) even has a provision under which the wage would keep rising each year thereafter along with the state's average personal income growth.

There is, however, one set of minimum-wage workers who may not end up getting a raise because--well, because they make too much money. Business representatives have long argued that employees who make tips should not be covered by the minimum wage; until 1989, Minnesota--like many other states--had a "tip credit" that allowed waiters, bellhops, and the like to be paid less than the minimum. Now, hospitality-industry lobbyists are working hard to bring the idea back, and to exempt tipped employees from any minimum-wage increase.

Politically, this is creating some interesting bedfellows. Among those lobbying for a new tip credit are the people who run some of the Twin Cities' fancier restaurants and hotels--the New French Cafés, Radissons, and Green Mills of the world. They're arguing that the only employees in their businesses paid minimum wage are waiters and waitresses--and that they make such good tips it would be unfair to require a pay raise for them.

"It's a hard argument to get into," admits state Rep. Phyllis Kahn (DFL-Mpls.), an advocate of higher minimum wages who nevertheless says she may author an amendment to deny the minimum-wage raise to tipped workers making more than $15,000. Because very few waiters make that kind of money, such an amendment would almost exclusively benefit the aforementioned trendy restaurants--whose owners, it's worth noting, are frequent and welcome guests at DFL fundraisers. New French co-owner Sylvia Kaplan, for one, has been lobbying for the tip credit; her husband, Sam Kaplan, is a close adviser to U.S. Sen. Paul Wellstone.

Labor advocates, not surprisingly, oppose the tip-credit proposal; as this issue went to press there was some discussion of a picket outside a restaurant or maybe even Kahn's house. But in the mushy environment of this year's Legislature, nothing is for sure, and Kahn herself says she wouldn't offer the amendment unless the Minnesota Restaurant Association asks her to. With or without the tip credit, the minimum-wage raise has at least an even chance of passing the House Thursday; then it's on to the Senate, where a companion measure is sponsored by state Sen. Randy Kelly (DFL-St. Paul), and then to the governor's desk. Gov. Arne Carlson has vetoed minimum-wage legislation before, but the word is now that he may support a small increase.

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