Shake Shack Founder Danny Meyer Joins Call to Raise Restaurant Wages to $15
(Bloomberg) -- As New York’s eateries struggle with staffing challenges, restaurateur Danny Meyer called on New York Governor Kathy Hochul to “pay people the right amount of money” and raise restaurant workers minimum pay to $15.
“I don’t know that I’ve seen anything that is more in our self interest as a business,” said Meyer, who started the Shake Shack burger chain and is the founder and chief executive of Union Square Hospitality Group, a closely held company that owns some of New York City’s most prestigious dining rooms. “We can solve this and in the end, it is in our self interest to do the right thing. And I believe Governor Hochul sees this.”
On Tuesday morning, Meyer gathered with politicians and activists advocating for boosting wages for tipped restaurant workers as part of a larger event promoting the launch of Saru Jayaraman’s book One Fair Wage. Jayaraman, who is also the president of One Fair Wage, an organization fighting to end subminimum wage, said that hundreds of New York restaurants have brought their starting wages up to at least $15 an hour with tips to better recruit workers in the midst of a massive staffing crisis.
Since 2009, the federal minimum wage has been locked at $7.25 an hour, though Congress debated lifting it to $15 an hour as part of it $1.9 trillion pandemic relief bill passed earlier this year. Restaurant workers typically make even smaller hourly wages, with the federal minimum for tipped workers at $2.13 an hour in most states.
Across the U.S., thousands more restaurants have also lifted wages to combat the problem. She and Meyer called on New York to enact legislation following on those restaurants’ leads, arguing it would also help the city’s food industry.
The plight of U.S. hospitality workers came under the spotlight when the Covid-19 pandemic began, with millions being laid off from work. Prior to the pandemic, the restaurant industry was one of the largest and fastest growing sectors in the nation’s economy, employing more than 13 million workers, according to the U.S. Bureau of Labor Statistics.
But many of those workers are reluctant to return even as staffing demands skyrocket in reopening cities. A restaurant worker speaking at Tuesday’s event described enduring increasingly aggressive behavior from customers. Those patrons are also tipping less: More than 80% of restaurant servers have reported their tips have declined by at least 50% since the pandemic began, according to a July survey by One Fair Wage.
By May 2021, 53% of remaining restaurant workers surveyed by One Fair Wage reported that they are considering leaving the industry, 76% of whom said they were leaving due to low wages and tips. More than 75% reported they would only stay if their job provided a full, stable, livable wage with tips on top.
Restaurants aren’t the only ones lifting employee wages in recent months. Large employers like Walmart Inc., Target Corp., Best Buy Co., and Chipotle Mexican Grill Inc. have been bumping up starting or average hourly pay to $15 or more. Amazon.com Inc. announced it was boosting average starting wages for open logistics jobs to $18 an hour.
The tight labor market has made those raises possible, empowering workers to demand better pay. Job vacancies exceeded new hires by 4.3 million in July, the most in data going back to 2000, and workers’ average hourly earnings climbed 0.6% in August, twice as much as forecast.
The National Restaurant Association has advocated against raising wages to $15 an hour for tipped workers, arguing in a statement published earlier this year that a nationwide increase “will create insurmountable costs for many operators” in states where restaurant jobs “are most needed for recovery.”
New York State Comptroller Thomas DiNapoli, who participated in the One Fair Wage event on Tuesday, also called for publicly traded companies that run restaurants, such as the Cheesecake Factory Inc., Walt Disney Co. and Darden Restaurants Inc., to follow the lead of the independent restaurant owners in raising their wages. In a formal letter on Sept. 23, he asked those businesses whether they’ve taken a public stance on potential increases to the federal minimum wage for their employees, whether they’ve considered paying a full minimum wage to tipped employees in all the states where they operate and how they are assessing potential costs and opportunities related to such wage increases.
In that Sept. 23 letter, which was also sent to Dine Brands Global Inc. and Brinker International Inc., DiNapoli asked the companies whether they have reviewed the industry groups they are members of and whether those groups have lobbied against higher minimum wages.
“Poor human capital management practices can create substantial risks for investors, including reputational and legal risks that can jeopardize long-term shareholder value,” DiNapoli said in the letter. He referred to research showing links between effective human capital management practices and higher shareholder returns and profitability.
The retirement fund had $268 billion in assets as of the end of June.
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