With the state Legislature looking to thrust Minnesota's minimum wage up to $9.25 an hour, The Minnesota Restaurant Association (MRA) is throwing its hat into the debate, suggesting that the increase could throw the hospitality industry into financial difficulties. The group is seeking exemptions for tipped employees to help offset the increase in expenditures.
According to the MRA, tipped employees are making on average more than $12 an hour when tips are factored in. Their proposed plan adds a second tier to the minimum wage of $7.25 if employees' wages and tips combined exceed $12 an hour. Currently minimum wage in Minnesota is the same for both tipped and untipped employees.
The MRA is asserting that because restaurants already operate on extremely slim profit margins, the increase in wages for tipped employees will force them to have to pass the costs on to guests through increased prices on menu items and cut back staffing.
The MRA claims that "full service restaurants face increased competition from concepts where guests order and pay for their food and beverages at a counter. These fast-casual businesses don't offer the opportunity for tip income, which would result in higher individual earnings."
The association goes on to clarify that tips are already considered to be income when it comes to things like income, payroll, unemployment taxes, Medicare, and social security. It argues that the only place tips are not factored in as income is when it comes to the minimum wage.
The idea of the tiered system is to give restaurant owners a little breathing room when it comes to the added labor costs because most nontipped restaurant employees already make more than $9.25, so it won't affect that portion of the business.