Many of Connecticut’s table service restaurants and hotels are being spared from the hardest hit from the state’s 75-cent increase in the minimum wage.
After an intense lobbying effort, both industries were able to secure a provision in the legislation that essentially maintains the current minimum wage levels they are required to pay bartenders and hotel and wait staff, which stands at $7.34 and $5.69 respectively.
Workers at most other Connecticut companies will have to be paid $9 an hour by 2015.
In Connecticut, hotel and restaurant employers can count their worker’s tips as part of their minimum wage. This so-called “tip credit” currently allows tips to make-up 31 percent of the minimum wage for hotel and restaurant employees and 11 percent of the minimum wage for bartenders.
As part of the recent minimum wage increase, lawmakers also voted to increase the tip credit percentage to partially shield restaurants and hotels from the higher costs.
“We see this as a compromise to help the industry,” said Nicole Griffin, a lobbyist for the Connecticut Restaurant Association.
Connecticut’s current minimum wage of $8.25 has not been raised since 2010.
The measure will raise Connecticut’s minimum wage to $8.70 on Jan. 1, 2014 and then to $9 on Jan. 1, 2015. Originally, lawmakers wanted to increase the minimum wage by $1.50 over two years, but intense pressure from the business community brought that number down.
Lawmakers also wanted to tie future minimum wage increases to the Consumer Price Index, but that measure failed to garner support.
Many of the state’s top business groups, including the Connecticut Business & Industry Association and National Federal of Independent Business, lined up against the increases.
But the restaurant and hotel industries, which rely on a large workforce of lower paid workers, lobbied hardest against the measure.
The compromise on the tip-credit represents a win for some hotels and restaurants. It will especially benefit table service establishments that employ large numbers of bartenders and wait staff who receive tips, Griffin said.
Franchise owners of fast food establishments like Dunkin Donuts and McDonald’s, however, will feel the full impact of the wage hike, Griffin said.
Under the current tip credit, employers can pay restaurant and hotel servers a minimum wage of $5.69, while bartenders get $7.34.
The new law increases the tip credit percentages in 2014 and 2015 so that the employer’s share of these wages remains at their current dollar amounts.
When the minimum wage increases to $8.70 on Jan. 1, for example, the bartender tip credit will increase to 15.6 percent from 11 percent, keeping the minimum wage paid by the employer at $7.34.
Wait staff at J.Timothy’s Taverne in Plainville, for example, earn as much of $20 an hour when tips area calculated into their paychecks, said Tim Adams, a co-owner of the casual themed restaurant best known for its wings.
There has been debate over what impact a minimum wage increase would have on Connecticut’s economy. The Connecticut Voices for Children has argued it will stimulate the state’s economy and create jobs. A recent analysis by the Economic Policy Institute concluded that a two-stage, $1.50 per hour increase would create or support more than 1,500 jobs in Connecticut by injecting dollars and boosting demand in the communities where these workers live.
But Adams, the restaurant owner, said government officials and business owners often view the minimum wage on different terms.
Some politicians, he said, view the minimum wage as something people live off of long term. Adams said he sees it as a starting wage that gives someone the opportunity to work, and move up in a company.
And increasing the minimum wage means there will be fewer jobs available in a tough economy, Adams said.
