Oregon’s 59,000 “back of the house” restaurant workers impacted by forced wage increases

[Wilsonville] Restaurant owners and managers across Oregon are facing a decision that impacts their customers and those employees who don’t earn tips in their establishments: What adjustments do we make to deal with another increase in minimum wage? It’s a tough question.

The labor-intensive restaurant business is significantly impacted by increases in minimum wage, with a large percentage of employees at entry-level. Further, restaurants in Oregon are not allowed to consider tips as wages, so restaurateurs have no ability to adjust payroll expenses for tipped employees who average well above minimum wage—in excess of $17 per hour. Increasing minimum wage, without having a tip wage, forces restaurant employers to increase wages for the highest paid employees at the expense of “back of the house” employees, such as cooks, dishwashers, and food prep workers who make far less.

“The tragedy of consistently increasing the minimum wage is that it requires businesses to give raises to employees who make $15 - $17 per hour, while struggling to pay a fair wage to non-tipped employees,” said Bill Perry, Director of Government Relations for the Oregon Restaurant Association.

Oregon is one of only 7 states that do not have a wage provision for operators with tipped employees. The Oregon Restaurant Association (ORA) has proposed instituting a tip wage in Oregon that would maintain the current employee wage levels and allow future wage increases to be offset by reported tip income. With a tip wage, employers can spend more dollars on staff support, such as prep cooks and bussers. The additional support brings the food out faster, lines are shorter, and servers receive more money in tips.

Based on feedback from members, the ORA has found that many restaurateurs have reduced the number of employee hours due to the increase on January 1 of last year. This coming year, restaurants are likely to absorb the impact through a combination of adjustments to their operation, including increasing menu prices and reducing staff hours.

"Studies show us that increasing the minimum wage without some provision for tipped employees hurts the people the law intends to help: Our workers." said Oregon Restaurant Association Director of Government Affairs Director, Bill Perry.

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The Oregon Restaurant Association is the leading business association for the restaurant industry in Oregon, which is comprised of over 9,000 restaurant and foodservice outlets, a work force of 110,000 employees, and a total economic impact of $9.7 billion. The Association works to represent, educate, and promote the rapidly growing industry. For more information, visit our Web site at www.ora.org