Two bills have been introduced in the Kentucky House of Representatives that could significantly impact the restaurant industry in Kentucky, our employees and the customers we serve. House Bill 1 proposes an increase in the state minimum wage, while House Bill 191 would reduce the tip credit available to Kentucky businesses that employ workers who regularly receive tips. The Kentucky Restaurant Association is opposed to both bills and recognizes their unintended consequences.
Rather than helping workers, HB 1 would undoubtedly reduce employment opportunities, particularly for unskilled individuals and for teenagers seeking their first job. HB 191, meanwhile, would mandate higher wages for employees already making much more than minimum wage. If these individuals get a government-mandated raise, it will likely be their co-workers who will suffer, since there will be less money available for non-tipped employee increases.
Kentucky’s restaurant industry provides fair wages and job opportunities for over 191,000 people who would be affected by these bills. Our industry is an industry of opportunity. Restaurant jobs are a great training ground for all careers, providing workers with the resources and opportunities they need for a variety of fields. These jobs teach critical skills, including personal responsibility, teamwork, discipline and accountability. Many workers advance from their entry-level positions. In fact, 9-out-of-10 salaried restaurant employees began in hourly positions. Part-time, entry-level work is important and fills a critical need in Kentucky’s workforce, providing additional income and flexibility for workers trying to balance their careers with family responsibilities or as a way to remain involved in their communities. Most industry workers are students with irregular schedules, teenagers saving for school, or parents and caregivers who need a job with flexible hours that fit their busy lives.
The majority of restaurant industry employees earn more than minimum wage. The media hourly wage for restaurant workers nationally is $9.10. Only 5 percent of restaurant employees earn minimum wage, and those who do are predominantly teenagers who are working part-time jobs.
Of those who are tipped, our research shows that the average tipped restaurant employee earns $14.55 an hour, far from the $2.13 wage often cited. Federal law requires that tipped employees be paid a “cash wage” of at least $2.13, but allows tips the employee receives and reports to be counted to meet the minimum wage. If for some reason that $7.25 minimum is not met, it is the employer’s obligation to pay additional “cash wages” to ensure that every employee makes at least minimum wage.
Ultimately, it will be our customers that would suffer the most if HB 1 and HB 191 become law. If the cost of labor for restaurants rises dramatically, as proposed in these bills, menu prices would have to increase. Both bills’ provisions would negatively affect Kentucky restaurants and, in turn, Kentucky families that are our customers.
Stacy Roof is president and CEO of the Kentucky Restaurant Association. Chef Josh Moore is KRA chairman and owner of Volare Restaurant, who was named the 2013 Restaurateur of the Year.