The Tipping Point 

When Oakland's new minimum wage kicks in on March 2, many restaurants plan to raise prices — and, in a few cases, eliminate tips altogether.


The verdict could not have been clearer. Last November, more than 80 percent of Oakland voters approved Measure FF, thereby raising the city's minimum wage from $9 to $12.25 an hour. It was a resounding victory for Lift Up Oakland; the coalition of labor unions and community organizations that sponsored the ballot proposal; for progressives who supported the cause; and, of course, for the upwards of 40,000 workers who are expected to receive a raise as a result.

But on March 2, when the new minimum wage kicks in, many Oakland restaurant owners say they will raise menu prices — by more than 20 percent in some cases — to finance the wage increase. Local restaurateurs have widely disparate views on how much of a price hike they think will be necessary, and some of their conclusions about the impact of the minimum wage contradict the analysis of labor economists, who have tended to downplay the impact that minimum wage hikes have on restaurants.

In addition, a growing number of restaurant owners are using the minimum wage increase as an opportunity to address a longstanding pay inequity in the dining industry. They describe a common scenario in which servers, whose paychecks have traditionally been bolstered by tip revenue, earn far higher incomes than cooks and other back-of-the-house employees, who generally benefit very little, if at all, from tips. Restaurateurs say the result is that a part-time server who waits tables at a busy, upscale restaurant might make two or even three times as much money per hour as someone who's working long hours as a line cook.

Fred Sassen and his wife Elizabeth Sassen are the co-owners and chefs at Homestead, a quintessentially Bay Area kind of farm-to-table restaurant in which the couple make their own cheeses and bake their own bread. Sassen said that while he supports the minimum wage increase, he believes that if he doesn't make dramatic structural changes at his restaurant, implementing a higher minimum wage for servers would ultimately go against the spirit of the law, the intent of which was to benefit a business's lowest-paid workers.

According to Sassen, the only employees at Homestead whose base pay is currently $9 an hour are the servers, whom he estimates also take home between $25 to $45 an hour in tips on top of that, which comes out to an effective wage of roughly $35 to $55 an hour. That's in stark contrast to Sassen's cooks, who generally only make about $15 an hour — more than the minimum, but barely a living wage in a city with an increasingly high cost of living.

Sassen argues that a straightforward implementation of the minimum wage increase would only benefit the workers who already get paid the most, thereby widening the existing pay gap at his establishment. And so he and his wife plan to implement an alternative: On March 2, they will raise the price of everything on the menu by 20 percent, and eliminate tipping altogether. With that added revenue generated by the price increase, the Sassens plan to give all of their back-of-the-house employees a raise — to as much as $18 an hour. But their servers will experience a substantial pay cut. Instead of $35 to $55 an hour, they'll be paid a base wage of between $18 and $24 an hour — and will receive no tips.

Homestead is one of a handful of mostly higher-end Oakland restaurants that are planning to move toward this tip-free model. It's a radical step, and one that's sure to spark controversy — both from the segment of the dining public that likes to tip waiters and waitresses for good service, as well as from labor activists who say that restaurant owners like Sassen are using the minimum wage hike as an excuse to unfairly slash servers' pay.

But the move by Homestead and other restaurants also raises broader questions that the minimum wage hike is now — inadvertently, perhaps — prompting both restaurant owners and customers to grapple with. For example, which employees at a restaurant are responsible for creating the most "value," in terms of what a customer experiences when he or she eats out — and are those employees compensated accordingly?

Lev Delany, chef and co-owner of Chop Bar in the Jack London district, explained that he hoped the overwhelming support for Measure FF meant that voters were saying they support a living wage and are willing to pay for it through higher prices, rather than that they want to force business owners to pay their staff more out of some pile of money restaurateurs are secretly hoarding.

"They need to put their money where their mouth is," Delany said.

Even if you accept Sassen's conclusions about tipping, the high wages that servers at restaurants like Homestead receive are not representative of the nation's food industry as a whole. Indeed, ever since a massive fast-food-worker strike in New York City two years ago sparked a nationwide movement — including protests in Oakland — the plight of the typical restaurant worker has received more and more attention.

According to a report published in October by the Restaurant Opportunities Centers (ROC) United, a national organization that advocates on behalf of restaurant workers, more than a quarter of Oakland restaurant workers who were surveyed received food stamps or some other form of public assistance, and more than a third didn't have the money to purchase an adequate amount of food to eat — a bitter irony for folks who spend most of their waking hours cooking for and serving food to others.

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