Come December, some small business owners are facing payroll costs increase of $260,000 per year.
In a move that blindsided the New
York restaurant industry, the Commissioner of Labor recently approved a 50
percent increase in the tipped worker wage—from $5 per hour to $7.50—effective
Dec. 31, 2015. The approval came at the recommendation of the Tipped Wage
Board, appointed by Gov. Cuomo, who is also pushing for an overall increase to
the state’s minimum wage.
Pete Mitchell, owner of five
restaurants, including Parker’s Grill in Geneva, doesn’t know what he’s going
to do. Come December, his payroll costs will increase by $5,000 a week, or
$260,000 per year, and you can only raise your prices so much, he says.
“My menu is already geared toward
the person who’s watching their budget,” Mitchell says. “People come to my
place because they are budget-conscious, because they know that for $12, they
can have a beer and a really big sandwich and a big pile of French fries, and
they can walk home full and happy….My menu is already as tight as I can get it
and still make a profit so I can reinvest my dollars year after year and remain
competitive with the guy right next door who’s doing the exact same thing.”
Deborah White, owner of Dutch
Village Restaurant in Clymer, is already struggling to stay afloat and compete
with restaurants in nearby Corry, Pennsylvania, where the server wage is $2.83.
In addition to higher wages, White also pays higher taxes, utilities and insurance,
and she has seen fellow business owners move to Pennsylvania as a result.
White says she has been
brainstorming ideas for how to proceed—including tip sharing, giving servers
more work to eliminate some other positions and making her restaurant a no-tipping
establishment—but she knows none of the options will make everyone happy, and
she will still have to raise prices to make it work.
