Battle Lines Form in the Restaurant Industry

YOUNGSTOWN, Ohio – Ohio’s restaurant advocacy group is fighting an effort to sharply raise the minimum wage and eliminate the minimum wage for tipped workers.

The Ohio Restaurant and Hospitality Alliance has mounted an informational campaign to thwart a proposal to increase the minimum wage to $12.75 on Jan. 1, and to $15 on Jan. 1, 2026.

A group called One Fair Wage – Ohio is behind the effort. It is attempting to put a constitutional amendment on the November ballot that would raise the minimum wage, and also eliminate the minimum wage for tipped workers – including waiters and bartenders – within five years.

Currently, the Ohio minimum wage is $10.45 per hour, and the tipped minimum wage is $5.25 per hour, with yearly increases linked to the consumer price index.

John Barker, director of the Ohio Restaurant Alliance, says the amendment would be catastrophic to the restaurant industry if it passes.

The increase in labor costs would force restaurateurs to cut staff, reduce hours and raise menu prices by 20% to 25%, he says. It would also put the state at a competitive disadvantage for tourism because dining would become more expensive, he says.

In Ohio, the state constitution can be amended by voters if the measure gets a simple majority (50% plus 1) in an election. Ohio is one of 14 states that allows voters to amend the constitution with a simple majority and without legislative action.

Forty-three states have a tipped employee minimum wage. Those that don’t are California, Oregon, Washington, Alaska, Nevada, Montana and Minnesota.

One Fair Wage is a national organization of nearly 300,000 restaurant and service workers and other workers and employers. The Service Employees International Union also supports its effort.

The Massachusetts-based OFW seeks to end all subminimum wages in the United States and improve wages and working conditions, particularly in the service sector.

According to the group’s website, “One Fair Wage policy would require all employers to pay the full minimum wage with fair, nondiscriminatory tips [in addition to their wages], thus lifting millions of tipped and subminimum wage workers out of poverty.”

The Covid-19 pandemic brought the tipped wage issue to a head, according to OFW.

“[Of the] six million restaurant workers who lost their jobs nationwide at the start of the pandemic, 56% reported they couldn’t access unemployment benefits because they were told their subminimum wage was too low to qualify for benefits,” according to the organization’s website.

Over 4 million restaurant workers returned to their jobs between the summer of 2020 and early 2021. “However, …nearly 69% [of them] reported their tips decreased by at least half because sales were down,” according to OFW.

To get its proposed constitutional amendment on the November ballot, OFW must get 413,000 signatures from registered voters in 44 counties by July 3.

Informational Campaign

The Ohio Restaurant Alliance claims the raise in minimum wage and elimination of the tipped wage would not only jeopardize jobs but decrease workers’ income.

The alliance has met with legislators and local chamber and tourism officials in the state’s three biggest cities, says Barker, its director. The alliance has also conducted some in-person and teleconference meetings with restaurant employees.

“Once they understand it, they don’t want to see this happen,” Barker says.

If the proposed amendment does qualify for the November ballot, the alliance will expand its informational campaign and target voters.

“We’re operating as if [OFW] will get it on the ballot,” Barker says.

In addition to waiters and bartenders, the tipped wage affects hairstylists, parking lot attendants, food delivery drivers, and any worker who would normally be tipped.

Barker says many bartenders and waiters in the state currently make between $25 and $40 an hour and would likely see a decrease if the measure is approved.

Many restaurant workers are high school and college students, who take the jobs because of the flexible schedules and the opportunity to make decent money, Barker points out. A decrease in available jobs would limit their opportunities, he says.

“Most restaurants’ profit margin is only about 5 or 6%,” Barker says, adding that owners are still struggling in the wake of the pandemic.

The OFW proposal would raise minimum wage by $4.55 an hour within 14 months of its passage. “That is a massive increase,” Barker says.

One Ohio senator recently proposed a compromise.

Sen. Bill Blessing, R-Colerain Township (near Cincinnati), in early May introduced Senate Bill 256, which would also raise the hourly minimum wage to $15.

Blessing’s proposal would raise the wage incrementally, however, reaching $15 in 2028. It would also continue the tipped wage, which would increase to $7.50 by 2028.

In an interview with Ohio Capital Journal, Blessing explained why tipped and nontipped restaurant workers should support his bill, even though it would raise their pay at a slower pace than the amendment would.

“Apparently, there are a number of servers out there that make significantly more than the potential $15 minimum wage,” Blessing said. “They view it as, ‘Well, if you get rid of the tipped wage, even if you do it slowly, people won’t be inclined to tip.”

Officials Respond

Mahoning County Commissioner Carol Rimedio Righetti is in favor of a minimum wage increase but believes it should be more gradual.

“Maybe from $10.45 to $12 at first,” she says. “For a restaurant owner, that would be a lot.”

She agrees that the current minimum wage is not enough to live on. “Everyone deserves a raise,” Rimedio Righetti says. “[The current wage] doesn’t buy many groceries.”

But she also believes that a sharp increase in menu prices to compensate for a wage rise would make diners less likely to tip.

She states that many places that hire first-time workers, or part-time workers, are already paying over minimum wage.

The Youngstown Warren Regional Chamber has not yet taken an official stance on the proposed amendment. It is waiting to see if the measure is put on the ballot and to read its exact language.

But Lyle B. Huffman, vice president of governmental affairs, says the chamber will likely oppose it.

“We’ve been following this since last fall,” he says. “We are waiting to see if they get enough signatures. But with the numbers put out by the [restaurant alliance], we are extremely concerned.”

The chamber will likely oppose the amendment, he says. Huffman has been informed that One Fair Wage has already acquired enough signatures to get the measure on the November ballot.

The chamber recently convened a roundtable with the restaurant alliance that included restaurateurs, hoteliers and their suppliers.

“The One Fair Wage group looks at it from the perspective of ‘the minimum wage isn’t high enough,’” Huffman says. “But when the average tipped employee is making $27 an hour, that’s hard to swallow.”

The chamber exists to help its members, he points out.

“We’re not in favor of any regulation on a business,” Huffman says. “Telling them what they have to pay their employees is a negative. And the statistics suggest that within a few years we’ll see a percentage of restaurants closing because they can’t afford the front-of-house costs.”

Copyright 2024 The Business Journal, Youngstown, Ohio.