The Problem That’s Tearing Restaurants Apart

2015-09-02_1259Roberto A. Ferdman,
Copyright 2015, South Florida Sun-Sentinel. All Rights Reserved.
http://www.washingtonpost.com/news/wonkblog/wp/2015/08/20/theres-a-serious-problem-with-how-restaurants-pay-their-staff/

All across the country, restaurants are struggling to fill their kitchens. It’s happening on the East Coast in New York City and in the Midwest in Chicago; it’s happening out West, too, in Los Angeles, San Francisco and Seattle. Good cooks, who were once in excess supply, are suddenly a lot tougher to find.

The truth is that despite what is shown on the Food Network or other cooking shows, being a cook is grueling work that’s not for the faint of heart. The slowdown in immigration over the past five years has also made it harder for kitchens to find staff because the industry is deeply reliant on immigrant labor.

But there’s another problem that’s been bubbling up for decades: Many of the people who work the kitchen have been getting shortchanged — especially when compared to the wait staff serving customers.

“The back-of-house staff are typically underpaid compared to the front of the house,” said Darren Tristano, executive vice president of Technomic, a restaurant industry research firm. “It’s a really big issue.”

On paper at least, cooks in this country are paid more than waiters. The median pay for cooks is about $10 an hour, according to the Bureau of Labor Statistics. For waiters, it’s roughly $9 an hour. But those numbers don’t tell the whole story — because waiters are paid tips and kitchen workers are not. And tips completely skew the comparison.

The government’s estimate for how much waiters make includes a bit of guesswork about how much they earn from tips, since tips are often paid in cash, and things paid in cash tend to slip through the cracks. The Atlantic wrote about the issue earlier this year: “The IRS estimates that as much as 40 percent of tips go unreported. It’s hard to track for an obvious reason: Everyone likes giving and getting tips in cash. Nationally this adds up to as much as $11 billion in unreported (and untaxed) income.”

Waiters, in other words, are probably making a lot more money than Bureau of Labor Statistics data make it seem. PayScale, which tracks salaries through crowdsourcing, estimates that in cities like Miami, Boston and San Francisco, waiters can expect to make $13 an hour in tips alone, on average. Elsewhere, tips can add well over $10 an hour to servers’ salaries.

Waiters working in big cities understand this. But so do cooks, and they aren’t happy about it.

“The fact that servers are making so much money in tips is certainly a reference point that causes cooks to be dissatisfied with their pay,” said Michael Lynn, a Cornell University professor and one of the country’s foremost experts on tipping. “That is absolutely true. It’s the way it is.”

Waiters aren’t paid like everyone else. Unlike cooks, who are subject to the federal minimum wage, servers are instead compensated based on the assumption that they are going to earn some extra money on the side.

Restaurants are required to pay their wait staff what is known as the tipped-minimum wage, which is $2.13 per hour.

The understanding is that tips will make up for the difference between the tipped and regular pay floor. But even when the tips don’t make up that difference, waiters still make no less than the federal minimum wage because restaurants are legally required to pay the rest.

The truth, however, is that that rarely happens. The average base pay for waiters is $4.90, according to PayScale. What they make in tips is earned on top of that, and tips alone more often than not amount to a good deal more than the $7.25 federal minimum wage.

“It can be a very high-paying job,” said Tristano. “Especially considering that many entry-level cooks earn at or near the minimum wage.”

Kitchen workers aren’t allowed to share tips. Early on, it was common practice for restaurateurs to pool together tips and then split them among their entire staff. It was also common for tips to disappear en route to the employees, likely into the pockets of management.

Realizing the need for regulation, the government intervened, creating a set of rules known as the Fair Labor Standards Act, which stipulates, among other things, that, if tips are pooled, they can only be distributed among workers who “customarily and regularly receive tips.”

Cooks do not qualify. Neither do dishwashers or janitors.

“You can force a waiter to share a tip with a busboy or bartender but not with someone in the kitchen staff,” said Lynn. “It’s illegal to split tips with the cooks.”

Part of the reason for the measure was to ensure that there was no room for defrauding the public. If people think they’re tipping the waiter but aren’t, there’s a lack of transparency. But mostly, Lynn said, it was a hasty response to the outgrowth of firms plucking tips away from servers.

“It was a less than optimal solution,” he said. “It was patchwork. The problem is that it doesn’t really benefit the people working the back of house.”

Tristano agrees. “It’s not working for cooks,” he said. “It’s not working for them at all, and that’s never really been addressed.”

The number of chefs and restaurateurs who are concerned about the current system is growing. Last year, a panel that included celebrity chef Michael Chiarello and Shake Shack founder Danny Meyer discussed how the tipping system is creating pay inequality within restaurants. In 2013, New York Times restaurant critic Pete Wells wrote a passionate takedown of tipping.

“The restaurant business can be seen as a class struggle between the groomed, pressed, articulate charmers working in the dining room and the blistered, stained and profane grunts in the kitchen,” Wells wrote.

Many restaurants have responded by breaking from the traditional tipping system. Some have gotten rid of tips altogether. For instance, Sushi Yasuda in New York City added this note to its credit card slip a couple years ago: “Sushi Yasuda’s service staff are fully compensated by their salary. Therefore gratuities are not accepted.” Many others have simply added a flat service charge.

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