Missouri might cap minimum wage for tipped employees

JEFFERSON CITY – In 2006, Missourians overwhelmingly approved an increase in the state's minimum wage and ensured that it would be tied to increases in the state's cost of living. If a bill that has already passed the state House of Representatives becomes law, tipped employees would see their minimum wage capped following a final hike in July.

The bill's sponsor, Rep. Timothy Jones, R-Eureka, said that citizens of the state did not realize in 2006 that they were also increasing the minimum wage for tipped employees, which will rise in July from $3.52 to $3.63 per hour. Under Proposition B, which passed with 76 percent of a statewide vote, tipped workers' minimum wage is half of the non-tipped wage, which will increase to $7.25. Currently the state minimum wage is $7.05, 50 cents more than the current federal rate of $6.55 per hour.

When the U.S. Congress raised the federal wage last year for the first time since 1997, they did not increase the wage for tipped employees. That rate on the federal level is $2.13 an hour, the same as in 1994. Jones said that because Missouri employers have to pay around $1.30 an hour more to tipped workers than in some other states, job growth is stunted and the state is less attractive to restaurateurs.

"With the rise in costs across the board, restaurants are being forced to cut back on hours," Jones said Tuesday at a Senate Small Business Committee hearing on the bill. "The higher we make the wage, the fewer jobs we can have for people who are struggling to get by."

Jones told the committee that the bill would not change the non-tipped minimum wage, which would still increase twice per year. He added that if a tipped employee didn't make the non-tipped wage when factoring in both wages and tips, the employer would still be required to fill that gap.

Multiple restaurant owners spoke on behalf of Jones' bill, saying they have had to cut hours and jobs as a result of Proposition B's passing. Victor Allred, a Missouri resident who owns seven restaurants including Jazz Louisiana Kitchen in Columbia and Kansas City, said voters didn't know they were supporting an increase in tipped workers. He said he would be surprised to hear of waiters who weren't making at least the minimum hourly wage when combining tips and wages.

"The people of this state thought they were voting just for a minimum wage increase, they didn't know tipped employees were a part of it," Allred said. "Also, I don't know many restaurants where someone can't get $4 an hour in tips anyway."

Allred added that he recently opened restaurants in Nebraska and Nevada but that he won't open any more in Missouri because of increased labor costs.

Others disputed the claim that all servers are making good wages. Lara Granich, the director of Missouri Jobs with Justice, said the median hourly income of a tipped worker was $7.19.

"Not all owners are as generous as the ones who spoke today — not by a long shot," Granich said. "A large amount of the servers in this state work at chains or cheaper places, and they are making a lot fewer tips in a bad economy."

One restaurant owner who opposed Jones' bill traveled to speak against it. Mike McLauglin, who owns The Bleeding Deacon Public House in south St. Louis, said there is a moral imperative to pay tipped employees fairly and that other owners aren't being creative in cutting costs in ways that don't hurt jobs.

"We were getting away with murder forever on these wages," he said, referring to the 13 years that the tipped minimum wage remained stagnant. "I think for a lot of the guys supporting the bill there has been a cookie cutter mentality when it comes to slashing costs."

McLauglin called Allred's argument that Missourians didn't know that tipped employees were also going to get a raise when they passed Proposition B "insulting."

"They don't think that people knew what they were voting for," he said of the bill's supporters. "This whole thing is a red herring to me, because there are so many other ways to cut expenditures without hurting your employees."

Granich added that if the minimum wage is capped at $3.63 per hour, political history has shown that it won't be lifted until it is far below a fair wage for tipped workers. She pointed to the fact that the federal minimum wage remained at $5.15 an hour from 1997 to 2007 — even as inflation and costs of living increased — and that it took a referendum, not the will of the legislature, to raise the wage in Missouri.

While McLauglin said he has been able to survive and even grow his relatively new restaurant even in a poor economy, other owners said Proposition B was just another detriment to business. Greg Hunsucker, who owns V's Italiano Ristorante in Independence, said capping the tipped minimum wage would allow him to at least avoid cutting more jobs.

Hunsucker, who said he has operated V's for 37 years, told the committee he has had to cut non-tipped jobs as a result. For him, that has led to fewer busboys and cooks, because Hunsucker is having to pay servers more.

"This is the toughest economic time I have ever faced," he said. "And at $2.13 an hour or even the rate it's at now, you can flood your restaurant with servers. As the wage keeps growing, it gets harder and harder to do that."