Back on February 17, 2017, Paul Constant writes on Civic Ventures:
The Latest Anti-$15 Trick Is to Complain About the Cost of Doing Business. Here’s Why It’s Bogus.
The joke in media circles is that if you can find three instances of anything, no matter how ludicrous—people wearing their pants backward, anti-deodorant activists, a tiny online community that doesn’t believe tornadoes exist—you can write a trend piece about it in the lifestyle section of your local paper.
Well, have I got a trend piece for you: three Washington state restaurants recently started adding surcharges, fees, and charges to customer bills, ostensibly in response to increased minimum wages statewide and within the city of Seattle. More specifically, a handful of restaurant owners and regional managers made that decision — it’s very likely the wait staff and dishwashers weren’t consulted on this policy before it was implemented.
Here are the restaurants in question:
Case 1: Michael Tomasky writes at the Daily Beast about a weird charge that appeared on a room service bill at Seattle’s W Hotel:
On the morning of Jan. 31, the man ordered room service. Yogurt and granola, bread, juice, and coffee. The staff person brought the food and the bill, which came to $23 even. The man looked down at the bill and noticed that there was a $2.21 food tax charge; nothing unusual there. But then there was also something called the “MW Surcharge,” totaling $1.50. MW Surcharge, the man thought; what the heck is that?
His question was answered immediately as he looked at the bottom of the bill, where he saw the words: “A 6.5 percent surcharge has been added to help offset the cost of the Seattle Minimum Wage. This is not for services provided and is not paid directly to service staff.”
Case 2: TV station KREM in Spokane:
A restaurant on the north side of town is charging a minimum wage fee after a law went into effect that raised the Washington minimum wage to $11.
Waddell’s Pub and Grille North is charging a service charge of 3 percent on each bill, they said, instead of being forced to raise their prices.
The owners have named it the “minimum wage fee.”
Case 3: Owen Pickford noted this week on Twitter:
So. These additional charges are bullshit.
The thing is, restaurants incur expenses all the time. It’s the price of running a business in a civilization: we demand that eating places follow worker safety and food safety guidelines, for instance, so nobody gets hurt. We demand that they follow labor standards because we don’t want children to work when they should be in school.
And we insist that businesses follow certain standards that we agree on as a community. These standards can and do change over time. Seattle voted to eliminate smoking in restaurants, for instance, because it was a public health concern. Believe it or not, some bar owners argued against the smoking ban because they thought it would hurt their business, but we had to proceed with the ban despite the cries of a few regressive voices.
So picture a hypothetical situation for a moment: Based on a regulation from the Americans with Disabilities Act of 1990, a restaurant with a steep staircase leading to its front door is required to add a ramp to its entrance. Now imagine that business added an “ADA surcharge” to the bottom of its checks, along with a passive-aggressive note explaining that the fee is to pay for the installation of the ramp.
Customers would understandably lose their minds. There would be a very real, very loud—and very deserved—furor over the owner’s business decision. Instead of the above example, you can imagine any number of moronic surcharges added to a bill: the Water Sprinkler Installation Surcharge, the Compost Handling Fee, the Indoor Plumbing Charge. And that’s what is happening here.
Look: businesses raise their fees all the time. It’s why hamburgers don’t cost 15 cents anymore. They never advertise these increases—you don’t see signs on the front of a pancake house advertising “NOW WITH 1.7% HIGHER PRICES!”—but they happen on a regular basis.
Rather than just raising prices naturally, these restaurant managers are making an overtly political statement when they add minimum wage surcharges to their menus. They are protesting the fact that they have to pay their workers a living wage. As Working Washington pointed out on Twitter, the Garage’s owner donated $500 toward an attempt to repeal the $15 minimum wage, which would pay the surcharge on over $25,000 worth of food at the Garage.
(As an aside: it’s interesting that restaurants are the only business that feels as though they can get away with this kind of fee structure — you don’t see minimum-wage retailers adding a baseline to the bottom of your checks, for instance. I’m not sure exactly why this is; perhaps tipping culture makes owners feel more emboldened to get away with this kind of action?)
Whether they intend to or not when they put those itemized fees on menus, managers and owners are publicly stating that they don’t believe their workers are worth the minimum wage that they pay them. I have a hard time imagining what other purpose the public announcement of these charges could be, other than to turn the public against the minimum wage.
So say you’re eating out and you notice a minimum wage charge on your bill. What can you do about it?
If you should find one of these alerts on your bill when you’re out for lunch, the first thing you should do is make sure the restaurant is charging tax on the surcharge. If they’re not collecting tax on their extra charges, they areviolating Washington State’s tax code.
The next thing you should do is make the surcharge publicly known on social media. This can sometimes pay off very quickly: the W Hotel backed down the same day that Civic Ventures founder Nick Hanauer called them out on Twitter, for instance. If you’re looking for a signal boost, you can alert us here at Civic Ventures, let our friends at Working Washington know, or contact your favorite local journalist. Make yourself heard.
This is more than just a customer complaint on Yelp. When we support a high minimum wage in Seattle, what we’re really saying is that we want an economy of high-quality employers. High-quality employers create high-quality goods and services. And employees who earn more spend more in their local economy, which is good for everyone.
I get it—change is difficult. It’s not easy or fun to ask business owners to modify their model. But people who decide to run their own business are smart, capable individuals, and they survive because they learn how to adapt. Once a business does the right thing and removes the fees from their menus, you should reward them with your business again. Everybody makes mistakes; the important thing is that we’re building something great together here in Washington, and we don’t want to leave anyone behind.
I wonder to what extent the proponents of raising the minimum wage did not expect prices to consumers to rise. Price levels virtually always rise to compensate for any increase in costs.
Suppliers and providers of retail products and services also tend to raise prices in anticipation of an increase in effective demand (i.e., wages), so that workers pay more in real terms even before they get their increases. Customers resist paying more for the same products or services workers produce, decreasing demand, and thus decreasing the need for workers — which also hits any business with high fixed costs . . . such as workers with high wages. The solution is either to get rid of workers (sometimes you can’t), go bankrupt, or go out of business before you lose what you have.
. . . or you could shift compensation from fixed wages to variable profits, which not only doesn’t increase costs, it gets the workers more than with fixed wage increases in most cases, so they benefit three ways: they have more money to spend when prices aren’t going up, the company stays in business, and they don’t lose their jobs.
That’s what Capital Homesteading is designed, in part, to do.
Support the Capital Homestead Act (aka Economic Democracy Act) at http://www.cesj.org/learn/capital-homesteading/, http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-a-plan-for-getting-ownership-income-and-power-to-every-citizen/, http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-summary/ and http://www.cesj.org/learn/capital-homesteading/ch-vehicles/.
