Durham eatery owners react to defeat of minimum wage proposal

Apr. 30, 2014 @ 06:47 PM

It was rough, Tom Ferguson said, starting out as a cook in 1988 and earning what he remembers to be a wage of $4.10 per hour.

“It was really hard on me,” Ferguson said, although it was above the federal minimum at the time. Now as a business owner, he pays his employees more than the federal minimum wage of $7.25 an hour, and said he’s done so for the 15 years that he’s owned Durham Catering Co. Since February, he said he’s paid employees at the catering company and at his eatery Rise Biscuits and Donuts a minimum of $10.10 an hour. He said that was in response to a push by President Obama and congressional Democrats for an increase in the federal minimum wage.
And although he said he started paying his own employees that much, he also doesn’t think it’s something every business can do. He said he thinks it would be hard on businesses if they were required to increase their wages to that amount across the country, regardless of the difference in costs of living in different regions.
“How can you do one flat across the United States?” he asked. “I think it’s a state-to-state issue.”
A proposal to increase the federal minimum wage was blocked by Republicans in the U.S. Senate on Wednesday. The federal minimum wage, which is now at $7.25, applies to both full- and part-time employees of businesses that have gross sales of at least $500,000 per year, and to smaller firms if the employees are involved in interstate commerce, according to U.S. Department of Labor information.
Called the “Minimum Wage Fairness Act,” the proposal defeated in the Senate on Wednesday was to increase the minimum wage to $8.20 an hour six months after the law’s enactment, to $9.15 a year after, and then to $10.10 two years later. Starting three years after that first day, it would increase annually to account for inflation.
Also, for employees who earn tips such as waiters or waitresses, it would increase the minimum to $3 six months after the law’s enactment, and it included provisions for annual increases up to a certain percentage of the minimum for non-tip earners. In North Carolina, the minimum wage for tipped earners right now is $2.13.
On Wednesday, the National Restaurant Association’s Executive Vice President for Policy and Government Affairs Scott DeFife said in a statement that “dramatic increases” to the wage like the proposed legislation defeated Wednesday would “significantly hurt restaurant owners’ ability to create jobs and limit the opportunities restaurants can provide to current and future employees.”
“The (Congressional Budget Office) estimates a wage increase to $10.10 an hour could put half a million Americans – and potentially 1 million – out of work,” he said. “Policy makers should focus on pro-growth policies and other necessary reforms — such as increased access to education and job training opportunities -- in order to help restaurants continue to provide opportunity to millions of American workers.”
Glen Gordon, the owner of the Tomato Jake’s pizza restaurant in Durham, said he pays employees $7.25 an hour, in addition to tips. He said he has a problem with a proposal to increase the minimum age for all non-tip earners to $10.10, since some employees who are part time may be in high school and may not have the same expenses as others who are providing for families.
“I know I don’t have an answer for the problem, but for a person who’s supporting themselves and their family, I don’t have a problem with $10.10 an hour,” he said. “Morally, I really don’t have a problem with it and for me personally as a business owner, I would try to make it work…” he added.
However, Gordon had concerns that raising the minimum wage would increase the payroll taxes he pays in addition to wage costs. And while he believes a larger chain might be able to pass the increased costs along to customers because of brand recognition, he said customers react more strongly to price increases at independent restaurants like his.
“If we have to raise the prices to meet the minimum wage, it’s going to hurt guys like me more,” he said.
For the owner of the downtown independent doughnut and sandwich shop Monuts Donuts, the proposal was just a step in the right direction.
Lindsay Moriarty, who co-owns the business with her husband Rob Gillespie, said they believe in paying their employees a living wage, not just a minimum wage. The difference is, Moriarty said, that the living wage takes into account an area’s housing, transportation, food, health care, and other costs.
At Monuts, Moriarty said they pay their employees such as counter staff a little more than $9 per hour if they earn tips. With tips, she said those employees can take in between $16 and $17 per hour.
And for employees who don’t earn tips, she said the lowest wage that they pay is $11 per hour.
They based their wage off of an online living wage calculator tool developed as part of a project by a Massachusetts Institute of Technology faculty member.
Gillespie said that paying a living wage was part of what they wanted to do when they opened the shop, and he said they included it in their calculations for what they needed to sell and charge in order to sustain the business, and it’s also part of their definition of success. Moriarty said they’re successful in that so far, what they pay their employees has not affected the company’s bottom line. And she said it’s helped in some ways, such as in employee retention.
“I think you’re showing them you’re taking them seriously,” she said of the business’s employees. There are “a lot of people” doing this as a career, and she said the work takes skill, such as to staff the shop’s counter on a busy Saturday with a smile.
“I do think we should value them appropriately,” she said.
They also give their employees two weeks of paid time off if they are sick or for vacation, and also health insurance. Gillespie said he also believes that customers are willing to pay a marginally higher price for their food so that the business can provide the living wage.
Moriarty said that when they were starting out, others in the industry told them they were crazy and they wouldn’t succeed.
“It’s been so engrained in the industry,” she said.