Hospitality open to increasing minimum wage, but not now

The Wisconsin Restaurant Association chief says now is not the time to raise wages in restaurants. 

Association President and CEO Kristine Hillmer was a panelist on the latest virtual luncheon “Hospitality industry stirs after year of COVID.” Yesterday’s lunch hour event featured Wisconsin’s eatery and alehouse leaders a year after the economy shut down as a result of the COVID-19 pandemic. 

Mark Garthwaite, the executive director of the Wisconsin Brewers Guild, said it’s clear that Wisconsin workers cannot subsist on low wages. The current challenge is that if restaurants, taverns and brewery taprooms can’t be full of people, it makes it difficult to operate on such slim margins.

Hillmer explained restaurants and bars have tight profit margins as low as 3 percent. That means 97 cents of every dollar brought in is already spoken for, whether for labor, food or overhead costs. Add in capacity restrictions, such as the ones currently remaining in Dane and Milwaukee counties, and the state’s favorite haunts are in the red.

“We welcome a conversation on changing the minimum wage; we do not feel that now is the best time at least for our industry because we are so hard hit.”

The minimum wage in Wisconsin is $7.25 per hour. The governor’s budget is calling for a phased increase to $10.15 by 2024. Congressional Democrats almost succeeded in making the federal minimum wage $15, but the provision was removed from the federal stimulus before it went to the president’s desk.

Tavern League of Wisconsin President Chris Marsicano said many of his members are already paying higher than minimum wage to keep good workers. But he doesn’t think it would be fair to pay entry-level workers the same amount as employees that have been working at the business for several years. 

Hillmer added that higher wages could price entry-level job seekers out of the market. It will also raise menu prices, she said, much to the disappointment of Wisconsinites, who are known to be frugal.

If the minimum wage goes up too far, there’s not many restaurants that are going to survive, said Marsicano, who also owns Village Supper Club in Delavan and is a restaurant association member.

“If you look at what’s happened in some major cities that have gone to local minimum wage mandates, you’ll see that the hospitality industry has been hit very hard by that,” he said. “Definitely, we need to pay quality wages, but it has to be something in line that will be sustainable for our business and industry.”  

Wisconsin’s legislative Dems are seeking to not only lift the minimum wage, but strike the tipped wage of $2.33 per hour. In a bill introduced earlier this month by Rep. Francesca Hong, D-Madison, and Sen. Chris Larson, D-Milwaukee, tipped workers would make the current minimum wage of $7.25 with the intention of creating equity in the workplace.

In yesterday’s luncheon, Hillmer emphasized the importance of the tip credit to the industry. She explained that $2.33 is what the restaurant pays per hour, but there’s no ceiling on how much per hour the worker can make in tips. If the worker does not make more than $7.25 an hour after tips, the restaurant pays the $7.25 — the tip credit is not a sub-minimum wage.

“What that allows somebody like Chris or other restaurateurs to do is you can utilize the tip credit for your servers and then you can have higher wages in back of your house. Without that tip credit, you are not going to have that flexibility, you’re going to have all sorts of disparity,” she said. “I’m really worried about that effort.”

Garthwaite said while everyone wants everyone to have a good paying job, the nature of the industries is not so straight forward. 

“I think we are preparing, we have to prepare, that eventually, we do have to incrementally get to a point where those are more attractive wage jobs for attracting more employees,” Garthwaite said. 

Watch the discussion here:

-By Stephanie Hoff