Two House bills would raise the cost of labor for Kentucky restaurants

February 4, 2014 

  • Stacy Roof is president & CEO of the Kentucky Restaurant Association; chef Josh Moore, owner of Volare restaurant in Louisville, is chairman of the association.

Two bills have been introduced in the Kentucky House of Representatives that could significantly affect the restaurant industry in Kentucky, our employees and the customers we serve.

House Bill 1 proposes an increase in the state minimum wage while HB 191 would reduce the tip credit available to Kentucky businesses that employ workers who regularly receive tips.

The Kentucky Restaurant Association is opposed to both bills and recognizes their unintended consequences.

Rather than helping workers, HB 1 undoubtedly would reduce employment opportunities, particularly for unskilled individuals and for teenagers seeking their first jobs.

HB 191, meanwhile, would mandate higher wages for employees already making much more than minimum wage.

If these individuals get a government-mandated raise, it probably will be their co-workers who will suffer since there will be less money available for non-tipped employee increases.

Kentucky's restaurant industry provides fair wages and job opportunities for more than 191,000 people who would be affected by these bills.

Our industry is an industry of opportunity. Restaurant jobs are a great training ground for all careers, providing workers with the resources and opportunities they need for a variety of fields.

These jobs teach critical skills including personal responsibility, teamwork, discipline and accountability. Many workers advance from their entry-level positions.

In fact, nine out of 10 salaried restaurant employees began in hourly positions. Part-time, entry-level work is important and fills a critical need in Kentucky's work force, providing additional income and flexibility for workers trying to balance their careers with family responsibilities or as a way to remain involved in their communities.

Most industry workers are students with irregular schedules, teenagers saving for school, or parents and caregivers who need a job with flexible hours that fit their busy lives.

The majority of restaurant industry employees earn more than minimum wage. The median hourly wage for restaurant workers nationally is $9.10.

Only 5 percent of restaurant employees earn minimum wage, and those who do are predominantly teenagers working part-time jobs.

Of those who are tipped, our research shows that the average tipped restaurant employee earns $14.55 an hour, far from the $2.13 wage often cited.

Federal law requires that tipped employees be paid a "cash wage" of at least $2.13 but allows tips the employee receives and reports to be counted to meet the minimum wage.

If for some reason that $7.25 minimum is not met, it is the employer's obligation to pay additional "cash wages" to ensure that every employee makes at least minimum wage.

Ultimately, it will be our customers who would suffer the most if HB 1 and HB 191 become law.

If the cost of labor for restaurants rises dramatically as proposed in these bills, menu prices would have to increase. Both bills' provisions would negatively affect Kentucky restaurants, and, in turn, Kentucky families that are our customers.

Stacy Roof is president & CEO of the Kentucky Restaurant Association; chef Josh Moore, owner of Volare Restaurant in Louisville, is chairman of the association.

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