Monday, December 23, 2013

Behind the Kitchen Door

Saru Jayaraman, Behind the Kitchen Door, (Ithaca, NY: Cornell University Press, 2012), 175 pages, $21.95

When I was a teenager at restaurants with my dad he usually paid with cash and waited for change before figuring a tip, which he would put down as we got up to leave or sometimes hand to the waitress.

I watched this process many times before I got curious enough to ask how much a tip should be. I was told in somber tones that the proper tip was 15 percent of the bill before taxes. Further instructions included several warnings. If you tip less you will be thought of as cheap or chintzy; if you tip more you might get laughed at as someone wanting to be a big shot.

I thought about that advice a number of times reading Behind the Kitchen Door, a short book of 175 pages and seven chapters entirely devoted to the trials and troubles of earning a living in today’s restaurant industry. Discussion includes as much about work in the dining room as work behind the kitchen door.

The author founded the Restaurant Opportunities Centers United in April 2002 and continues today as national director. The Centers advocate for restaurant workers organized within local affiliates in cities around the U.S. As a labor organizer she could be part Mother Jones and part Frances Perkins; the center sounds like a union by another name.

The book starts with the 250 people who lost their jobs in the restaurant at the top of the World Trade Center after 9/11. We meet some of the displaced and learn about their lives, their hopes and their struggles. Along the way we meet other people; I counted at least sixteen. Jayaraman tells their stories while filling in with some industry facts, figures and discussion until readers understand the restaurant industry and how it works by the end of the book, but also where it fails patrons and restaurant staff.

In Chapter two readers meet Diep, a Vietnamese immigrant, whose varied experiences gardening, working in restaurants and owning her own restaurant help introduce many of the issues and problems in the restaurant industry. Diep’s restaurant offers stark contrast to franchise restaurants, fast and slow. She worries about organic, locally grown produce and paying a living wage.

Remaining chapters cover specific topics like sick leave, income and discrimination. Most restaurant workers work when they are sick because few get sick leave and the National Restaurant Association lobbies against requiring it. Apparently Typhoid Mary from folklore tales worked at a restaurant so we get the picture here. In Chapter four, $2.13 – the Tipping Point, readers not familiar with the economics of restaurants learn about wages, the sub-minimum wages of tipped employees, and some of the abuses many have to cope with working in restaurants.

In 1996 and again in 2007 the restaurant industry lobbied Congress to leave the tipped minimum wage at $2.13 an hour. The Federal tipped minimum has remained at $2.13 an hour since 1991, which makes it only 29 percent of the present $7.25 an hour minimum wage.

Under federal rules in the Fair Labor Standards Act employers who pay a sub minimum wage must verify that tips are enough to bring an employee up to at least the minimum wage, a practice known as taking the tip credit. Taking the tip credit requires detailed recordkeeping because employers are required to verify that tips are enough to make up the difference of the minimum and sub minimum wage. If tips are not enough to equal the minimum wage then the employer is expected to make up the difference.

Here we learn first hand from Claudia how that can work. Her employer said “If you don’t make enough tips to make up the difference you have to report that you made up the money anyway.” Tax withholding based on $7.25 an hour when tips are little and the tipped minimum wage is $2.13 an hour can and does generate pay checks of zero.

Differences in table assignments in the dining room and individual work schedules can also cause wide disparities in earnings for the same job in the same restaurant, especially serving occupations. This makes equality of opportunity as big an issue for restaurant workers as in any other industry or profession.

Two more chapters report and describe personal experience with racial-ethnic and gender bias in restaurant work. Here the many people we meet give convincing details of differences in pay and opportunities based on the unfounded reluctance to have people of color and women in visible positions in the dining room.

The Bureau of Labor Statistics reports 11.55 million working in eighteen food preparation and serving occupations at a median wage of $9.10 in 2012. Their numbers are growing. Behind the Kitchen Door advocates for these workers. Its goals are modest as summed in a last chapter where she asks for those who dine out to vote with their fork and to expect restaurants that cut corners with their help to cut corners with the meals they serve to patrons. Jayaraman asks us to talk to restaurant workers and find out how they are treated and to “Always try to know from the workers if they will be getting all of their tips.” She asks for those who dine out to voice their political support for a higher minimum tipped wage and paid sick leave for restaurant workers.

The book is organized clearly and reads easily. Even though the book is short it dragged at times for me because Jayaraman described the lives of the people in her book in enormous detail, often describing families and life experiences unconnected to restaurant work. For some this may be an advantage and it does humanize the people in the book, but I wanted more examples with details about earnings, wage theft, tips, tip schemes and IRS involvement with tip abuses. In that way it is less of a labor book and more of an interview book than I would like, but despite these reservations it provides a good way for readers to know the workings of the restaurant industry and its problems.

Saturday, December 14, 2013

Bankruptcy in Detroit – Do not be fooled

The media coverage for the Detroit bankruptcy promotes Governor Snyder’s plan to default on Detroit debt and pension contracts by repeating the debt total over and over. Detroit has debt of $18 billion, $18 billion, $18 billion. Repeating the amount helps dramatize the notion there is no choice except to yield to terms handed down by a Federal Bankruptcy judge after considering proposals from an appointed city manager.

The state legislature of Michigan has the authority to govern every square inch of the state that includes Detroit. All states define and delegate their authority to govern the cities in carefully written enabling legislation, and also for all other sub state units of government. State legislatures grant authority to tax, borrow and spend and they can change it or take it away, anytime they want.

When there is no hope that a private company will ever be able to pay creditors, companies can expect to be dissolved and disappear in a bankruptcy. The state of Michigan and the city of Detroit cannot disappear and the state always has taxing authority that assures it can raise revenue to pay its bills. Michigan is not bankrupt.

Bond holders have a written contract that includes the state’s full faith and credit or some other written guarantee of payment. Pension holders have contracts and state constitutional guarantees of payment. Even if the state legislature will not vote new taxes and the state treasurer cannot borrow from anyone, the legal obligation for the state to pay is delayed, not cut or eliminated; that is unless the governor is successful in having his state’s contracts and laws overruled by a Federal judge.

Michigan’s elected state officials could have intervened long ago or during the many years in between as the auto industry abandoned Detroit. They continue to have complete authority and ability to solve Detroit’s financial problems, however divisive that might be. Instead the governor and the state legislature are choosing to pass the buck. They want an un-elected Federal bankruptcy judge to intervene and set Michigan budget priorities for them.

America’s high school students always learn the United States Constitution makes the Federal government supreme within its jurisdiction but powers not delegated to the United States by the constitution, nor prohibited by it, are reserved to the states. Governor Snyder and Judge Rhodes assert federal bankruptcy law can be used to wipe out state constitutional protections for pension holders and to meddle in statewide finances. If Federal bankruptcy law takes precedence over something as basic as state financial contracts, then no independent powers are reserved for the states. It forces states to accept the same relationship to the Federal Congress that Detroit has to Michigan: a subordinate relationship.

There is no previous example of a Federal Judge willing to apply federal bankruptcy law to a state as I have read several times because no one else has had the nerve to do it. Professional integrity typically brings restraint, especially for judges who want us to think they are wise and intelligent. Judges with their own agenda have been around a long time, but the impression keeps growing that judges are appointed expecting to be a part of a national political agenda.

Detroit continues to disintegrate because the automobile industry left Detroit. Long ago from the 1940’s to the 1960’s when Walter Reuther was president of the United Auto Workers union he tried hard to have the auto industry and corporate America take responsibility for more than their profits. He wanted companies to care about and take responsibility for their communities and the people working for them.

There was broad national political support to bail out debt ridden General Motors and Chrysler, but I am not hearing even token political support to maintain the pensions of wage earners and working people, only excuses and a media campaign for a power grab by appointed judges to do the dirty work. Walter Reuther would be sick and so should you.

Thursday, December 5, 2013

Earning tips at the Sub Minimum Wage

A recent article in the Washington Post [For low-wage workers, unprecedented anxiety, November 26, 2013] interviewed people with low wage jobs. It was not a surprise to find them anxious since today’s low wage jobs come and go and do not buy more than basic necessities anyway.

One of those interviewed had a new job working at an airport helping to get wheel chair passengers from the ticket counter through airport security, a special duty porter or sky cap. He thought he would be earning the federal minimum wage, $7.25 an hour, but learned on the first day of work his pay would be $5.25 an hour plus any tips he might receive.

The possibility of tips triggers a lesser known section of minimum wage rules in the Fair Labor Standards Act. Rules allow a sub minimum wage for tipped employees that date from 1966, when it was set at 50 percent of the minimum wage. However, Congress left the tipped minimum at $2.13 an hour when it raised the minimum wage in 1996 and again in 2007. The Federal tipped minimum has remained at $2.13 an hour since 1991, which makes it only 29 percent of the present $7.25 an hour minimum wage. Rules allow a sub minimum wage as low as $2.13 an hour for any employees in any occupation that customarily receives just $30.00 or more a month in tips.

Federal rules governing the Fair Labor Standards Act requires employers who pay a sub minimum wage to verify that tips are enough to bring an employee up to at least the minimum wage, a practice known as taking the tip credit. Taking the tip credit requires recordkeeping to verify that tips make up any difference of the minimum and sub minimum wage.

Notice a sub minimum wage relieves employers of the normal obligation to pay at least a minimum wage. A $7.25 an hour minimum wage is $1,160 a month at 40 hours a week and 4 weeks per month. At $2.13 an hour sub minimum wage for tipped employees is just $340.80 a month, which means a tipped employee needs $819.20 a month in tips to earn the minimum wage. At $5.25 an hour a sub minimum wage for an airport porter or sky cap is $840 a month, which means our sky cap will need $320 a month in tips to earn the minimum wage.

The Post reported the man’s take home pay at around $600 a month but tips were “not usually very much.” Since take home pay on $840 without tips is more than $600, the low pay before tips suggests one of the biggest problems for tipped employees: erratic and uncertain hours of work. Employers can layoff staff during slow periods in the day, or on slow days, to minimize their tip credit obligations.

Sub minimum rules are especially important at full service restaurants where tip sharing rules also apply. Without tip sharing, wages plus tips for waiters and waitresses will tend to be higher than wages and tips for a host or hostess or bartenders, bus staff and other staff with less access to customers. Wage gaps make it harder to get people to do the host and hostess job without paying higher wages as long as we expect people to prefer higher wage jobs to lower wage jobs.

With tip sharing waiters and waitresses pay part of their tips to equalize wages and tips for hosts, hostesses, bartenders and other staff. Tip sharing improves the economic situation of these other staff, but at the expense of waiters and waitresses and not the employer. Like the sub-minimum wage tip sharing saves wage costs for employers and makes it easier and cheaper to run a restaurant.

There are other exemptions to the minimum wage which are reported in the Department of Labor’s “Handy Reference Guide to the Fair Labor Standards Act.” The Department also publishes an annual report entitled “Characteristics of the Minimum Wage” which details the number of people working at or below the minimum wage. In 2006 there were 1.69 million working below the $5.15 an hour minimum wage. The minimum wage was raised to $7.25 an hour July 24, 2009. In 2010, 4.36 million worked at or below the higher minimum wage. As inflation cuts the buying power the number dropped until 3.55 million work at or below the minimum wage in 2012.

The 2012 report shows 4.7 percent of hourly paid wage earners are at or below the Federal minimum wage. The politicians could put a minimum on wages, but the sub-minimum wage along with a list of other exemptions assures the minimum will not be the minimum for the minimum wage.