If you are wondering about all the restaurant closures lately, consider this: What many people are unaware of is that the last minimum wage increase from $7.25 to $9.65/hr without a tip credit, a 33 percent increase, mandated that full-service restaurants pay only their highest earning employees (servers and bartenders earning well over $20/hr) even more.
This was all over the past three years during a cook shortage, in which natural market forces have pushed cooks’ wages over $15/hr. This put many restaurants on the verge of failure.
The last phase in of that increase was January 1st of this year. July 1st will start the Minneapolis phase-in for $15/hr without a tip credit, representing another 55 percent increase mandated to only the highest earning employees during a cook shortage.
St. Paul is sure to pass their own $15/hr minimum wage without a tip credit this summer. Full service restaurants will choke under these increases without a tip credit. Even very successful restaurants will struggle under these increases if we don’t get a tip credit soon.