By Anna Roberts
Through an executive action earlier this month, President Obama overhauled the overtime pay threshold, potentially propelling low-wage workers into the middle class. The new regulation, in conjunction with minimum wage laws now in effect, could mean a higher station for food service workers.
America’s economic recovery has been atypical. Unemployment fell to five percent, yet full employment has not been declared. Wages are not rising quickly enough to outpace inflation. Job growth has been concentrated in both the low-wage and high-wage thirds of the economy, while middle-wage jobs are vanishing.
“Nobody who’s working 40 hours a week should be living in poverty and scraping by to make a living wage,” said Mark Vincent, a Ph.D. candidate in economics at the University of Massachusetts at Amherst, researching the minimum wage.
Low-wage jobs—earning less than $32,000 per year—have surpassed their pre-recession levels by 800,000.
Georgetown’s Center on Education and the Workforce reported last December that food, personal services, sales, and office support have added 58 percent of all low-wage jobs since the recession. Those industries only gained 86,000 middle-wage jobs, and 4,000 high-wage jobs by contrast.
Although 1.9 million middle-wage jobs—earning $32,000 to $53,000 per year—were created during the recovery, that number is still 900,000 short of pre-recession levels. High-wage jobs have bounced back as expected; accounting for 44 percent of all new jobs created. That’s 2.9 million jobs.
The food service and hospitality industry is on an upswing right now. In 2015, Americans spent more money in restaurants than they did on groceries for the first time ever, according to the U.S. Department of Labor.
The National Restaurant Association estimates that by 2016 the restaurant industry will earn $782.7 billion, up from $586.7 billion in 2010. If sales hit the 2016 projection, that revenue will account for four percent of U.S. gross domestic product.
Food service workers, who were hired consistently throughout the recovery, stand to gain a lot because of higher minimum wage laws, like in New York and California.
Governor Cuomo set the first minimum wage hike for New York on December 31, 2015. Fast food workers and full minimum wage workers are on track to reach $15.00 per hour within three years. Tipped minimum wage workers max out at $10.00 per hour. The burden of paying these workers a living wage is tied to the generosity of customers.
For Californians, the minimum wage will increase by a dollar every
“By placing the burden on companies to pay their workers a living wage, the government could actually lessen it’s expenditures on the social safety net that makes it possible for individuals earning low wages to survive,” Mark Vincent said.
When policy makers across the country see $15.00 per hour as an attainable goal, it’s clear the economy has the capacity to handle the increase. In fact, Vincent said, if wage growth had kept pace with inflation we would see a minimum wage over $18.00 an hour right now.
In addition to new minimum wage laws, Obama’s overtime rule, which goes into effect on December 1, 2016, could prop up many low-wage food service workers into the middle class. The rule will raise the minimum salary requirement to qualify for time and a half pay from $23,660 to $47,476 per year. This value will increase every three years based on wage growth and inflation, the Labor Department reported earlier this month.
Ryan Sutton, Eater’s editor, has endorsed the overtime pay rule as particularly beneficial for chefs, head cooks and pastry chefs, as their median wage is $45,920 nationally in managerial positions. Those professions often log more than 40 hours per week. Entry-level line cooks and other back of house workers earn much less than that and certainly work long hours.
Logging overtime hours is normal for Bianca Triantafillou, 24, a pasty cook at a midtown steakhouse. She averages 45-50 hours per week and earns $12.00 per hour. Her restaurant pays her overtime already, which nets her and additional $100-200 every week.
The daytime pastry cooks, she says, have set hours from noon to eight. Her manager regulates their hours to make sure they aren’t staying longer than necessary.
“I get overtime but my manager never tries to cut my hours back because I offer to close every night,” Triantafillou said. Her typical shift begins at 3 p.m. and ends at 1 a.m.
Triantafillou, who graduated from culinary school three years ago, is looking forward to the new minimum wage laws going into effect over the next two years. If she’s still at the same job in 2018, making $15.00 per hour, and a new pastry cook, fresh out of school, was hired at the same rate, Triantafillou would ask for a raise.
“I would feel comfortable asking for a raise then because they shouldn’t be making more than me if they just started.”
Triantafillou’s assertion is indicative of the larger potential effects the overtime rule could have. Workers already making more than the minimum will have leverage to ask for more money. Or, employers could preemptively raise wages in anticipation of the increases to avoid concentrating workers at the low end of the wage pool.
At the very least, the federal, unilateral threshold will ensure that low-wage workers at the very bottom won’t have to fight to receive the pay they deserve.
Sutton says that a salaried sous chef, who earns under $40,000 and works 55 hours per week, could see his or her weekly pay increase by $430. Of course, employers could raise wages, but cut hours or resort to other tactics to avoid paying their employees more.
When the tipped minimum wage bumped up from $5.00 to $7.50 this January, Richie Monsalve, 26, a bartender at an east-side restaurant, noticed that his paycheck didn’t reflect the raise he had anticipated. Servers and bartenders at his workplace are tipped via a point system, where points correspond to hours worked. Since the wage hike, the value of a point has decreased.
“They adjust that raise with our tips,” Monsalve said. “You get two points for every hour your work, but two points doesn’t get you as much money anymore.”
Monsalve’s employers have perhaps elected to pay for the minimum wage increase by placing a higher burden on the customer. Some restaurateurs, most notably Danny Meyer’s Union Square Hospitality Group, have eliminated tipping entirely in favor of paying all their workers a fair, stable wage.
Raising the minimum wage to secure a living wage for all Americans is just one part of the conversation. Updated overtime pay measures help low-wage workers advocate for themselves, which could help fight against dodgy employers.
The crux of this issue is creating policy that encourages upward economic mobility. If the food service industry continues to add jobs at a high rate, it could serve as a platform to see if these new labor laws can in fact reignite the middle class.
