cartoon by Barry Deutsch/Ampersand
Minnesota has an interesting dude running for governor under the Republican banner. His name is Tom Emmer (rhymes with, um, nothing). Given his penchant for making up “facts” (which seems to be a litmus test to qualify for the right), Emmer spews the most dazzlingly wacko stuff. I’m guessing he must have studied with Sarah Palin and Michele Bachmann at the Glenn Beck Fox Faux Factorium.
Case in point, Emmer recently declared that Minnesota needs to reduce the minimum wage for those who garner tips (mostly those who serve food in restaurants). And you know why? Because according to Emmer, some of those fat cat servers are sucking up $100,000 a year. Yup. The very folks at St. Paul’s Eagle Street Grille who serve your burgers and Bud lite. Read on
Now according to the Minneapolis Star Tribune, the already-reduced wage for those who receive tips is $6.15 per hour at establishments with more than $625,000 per year in sales and $5.25 for employers with lower sales. “Federal law allows states to reduce that wage to as little as $2.13 an hour for employees who make more than $30 a month in gratuities -- a difference known as the ‘tip credit.’ Minnesota is one of seven states that does not permit a minimum-wage discount for tipped employees,” says the Strib article.
So to this point, Minnesota has come down on the side of the little people (and thanks to BP for that charming metaphor).
My math is suspect at best, but here’s what I’m figuring. Let’s say a server works for one of those low-end restaurants. Server earns $5.25 an hour, and works, oh let’s say 20 hours a week. Gross pay would be roughly $420 a month plus let’s say $29.99 in tips, for a total of 449.99.
Now let’s say that the server has monthly tips of 30.01. My read on this (simplistic, perhaps—I confess I do not know the fine points of employment law—perhaps there is a sliding scale of some sort) is that per the Feds, the employer can reduce the server’s hourly wage to/toward $2.13/hour. Ergo, working the same 20 hours per week, the employee might now receive wages + tips of $200.41/month. So it appears that the server would have to garner an additional 249.58 just to break even with the previous $5.25 wage.
My brother, who has developmental disabilities, is now doing piece work on an assembly floor. He used to earn nearly $7/hour. Now, if he’s lucky, sometimes he earns slightly more than $2.13 an hour. Is this germane? Maybe not, but it’s the lens through which I currently view economic injustice. And why has this happened? Because someone’s bottom line had to be adjusted, and where else to adjust but on the backs of those doing the real work? Fah!
Anyway, my own little cadre of reliable researchers tells us that wait staffers average $22,397 a year (Source: Economic Research Institute and thanks, Alan). Near as my fuzzy math informs me, that’s roughly 1/5 (or 20%) of the amount cited by candidate Emmer.
All of this served to illuminate the world of work and compensation for me. And here’s my emerging idea.
Based on Emmer’s rationale, I believe that any individual earning $100,000 or more who receives tips in the form of signing bonuses, performance bonuses, stock incentives, and/or other perks with dollar value shall be required to have their salaries reduced by 40%, as is the case in the $5.25 to $2.13/hour scenario. This would save employers, oh, kezillions of dollars (data source unknown).
And here’s the real beauty of it. The impact on state and federal income tax revenues would be significant, since lowered earnings would put high rollers in a lower tax bracket with fewer dodges; ergo, they would pay more taxes on less income.
Is this a great country or what?
Goose, meet gander.