Foon Rhee

The Numbers Crunch: Will food fight kill minimum wage hike for everyone else?

Waiter Hang Gao prepares for lunch last December at Izakaya Daikoku restaurant in Sacramento.
Waiter Hang Gao prepares for lunch last December at Izakaya Daikoku restaurant in Sacramento. Sacramento Bee file

The findings may be a tad obvious, but an analysis out this week could add more fuel to Sacramento’s big fight over a higher minimum wage – specifically whether workers who get tips should be included or not.

Waiters, waitresses and bartenders are far less likely to be living in poverty if they are paid the regular minimum wage, according to the Economic Policy Institute’s study.

Under federal law, restaurants can pay base wages as low as $2.13 an hour so long as the worker’s total weekly income with tips reaches the minimum wage in their state. In the 18 states – mostly in the South and Midwest but also including New Jersey and Texas – that allow restaurants to pay that appallingly low salary, the poverty rate among these workers is 18 percent, compared to 7 percent for non-tipped employees.

In the 25 states where eateries must pay above $2.13, but can pay below the overall state minimum wage, 14 percent of those workers are below the poverty line, compared to 6 percent of non-tipped workers, the institute found. And in the seven Western states – including California – where restaurant employees get the same minimum wage as other workers, their poverty rate is 10 percent, compared to 7 percent for other workers.

Under a proposal before the City Council on Tuesday, Sacramento would become the first California city to have a lower minimum wage for restaurant workers and others who receive tips or commissions.

While the overall wage would gradually rise to $12.50 on Jan. 1, 2020, employers would not have to pay it to employees who make at least $15 an hour when tips and commissions are counted.

At $15 an hour, Sacramento restaurant workers would be above the poverty line unless they have a large family.

Still, “total compensation” is by far the most contentious part of the plan. In fact, because of that battle, support for the entire package seems to be falling apart.

A business coalition led by the Metro Chamber of Commerce says it will fight any wage hike if it doesn’t include “total compensation.” But labor unions say if it does, they will sue the city. The City Council is in a tough spot.

Even some members of the mayor’s task force who crafted this compromise have bailed, never a good sign.

The plan was designed to be a better fit for Sacramento than the blanket $15 minimum wages scheduled in Los Angeles and San Francisco, but the fact remains that the lower wage would leave more workers in poverty.

When the statewide minimum wage hits $10 an hour on Jan. 1, that will be enough to lift a full-time worker making the minimum above California’s official poverty line if they’re single, a couple or have only one child.

But it would take a wage of $11.66 an hour – which wouldn’t happen in Sacramento until 2019 for non-restaurant workers, even if the proposal is approved – to reach the poverty level for a family of four, $24,250 a year. Under measures that account for cost of living and other needs, the poverty rate is much higher – and so is the minimum wage needed to stay above the poverty line.

Too many in Sacramento are part of the vast American army known as the working poor. It would be a shame if the war over total compensation deep-sixed the minimum wage hike for everyone else.

By the numbers

The hourly wage needed for a full-time worker to get above the poverty line in California, by family size, compared to key benchmarks:

  • Single, $5.66
  • Couple, $7.66
  • 3, $9.66
  • State minimum wage on Jan. 1, $10
  • 4, $11.66
  • Proposed Sacramento minimum wage in 2020, $12.50
  • 5, $13.66
  • Proposed exemption for restaurant workers, $15
  • 6, $15.66

Source: California Health and Human Services Agency