Minnesota restaurants can't bear new minimum-wage burden

  • Article by: DAVID BURLEY
  • Updated: March 4, 2013 - 8:24 PM

The Affordable Care Act amounts to a hefty raise for employees. We cannot afford another.

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File photo: Blue Plate Restaurant Co. CEO David Burley, standing at the counter of the company’s Highland Grill in St. Paul.

Photo: Jim Gehrz, Star Tribune

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The land of 10,000 lakes is also the proud land of nearly 10,000 restaurants. Minnesota’s restaurant and hospitality industry is the state’s second-largest private employer, with more than 261,000 workers.

Who are the people making and serving your meals? Restaurants frequently provide a welcome paycheck for young people or those working part time. A national survey found that 70 percent of workers receiving minimum wage as their base salary at a restaurant are under age 25, and 80 percent work part time. That means they’re working and going to school, or working and raising kids, or working two jobs.

Restaurant owners and managers take our roles as job providers seriously. But the federal and state governments are preparing to hit us with a one-two punch that will force tough choices — reductions in staffing levels, transitions from table service to counter service, or delays in expansion plans that would include new hires.

In 10 months, Obamacare will be fully in force. Personally, I welcome it. I grew up in Australia, a country with national health care; I support President Obama and believe universal coverage is the right thing to do.

For our growing business, that means that starting next year we’ll pay approximately $1,600 per employee in new annual health care expenses. While we support the idea, the cost will drain our available resources and our ability to support much of anything else.

The health care benefit will increase the overall wage and benefit package our employees receive. One day they won’t have health coverage; the next day they will. That’s like getting a hefty raise. We cannot afford to give employees another raise on top of that health benefits bump.

State legislators are considering increasing Minnesota’s minimum wage from $7.25 an hour to as high as $10.55 an hour. For those well-meaning lawmakers who want to see working men and women earn more than $7.25 an hour, I have good news — we’re already there.

At Blue Plate, with tips included, our servers are making an average of more than $24 an hour. Statewide, the average is around $18 an hour. Both are well above the $10.55 proposal.

A mandated base-wage increase on top of mandated health care is too much for most restaurants to handle. The economy continues to struggle; consumer spending has not fully rebounded from the Great Recession. If the Legislature doubles down on mandates, restaurants will be placed in a difficult position.

We can afford the health care increase, or we can afford a minimum-wage increase. We simply can’t afford both.

However legislators work out the details, it needs to be done in a way that safeguards the ability of restaurants to maintain and grow jobs.

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David Burley is co-owner of Blue Plate Restaurant Company, which has seven restaurants in the Twin Cities.

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