Saru Jayaraman likes to say the restaurant industry had a “pre-existing condition” long before the pandemic. “It was already the nation’s second largest private sector employer with the absolute lowest wage jobs of any industry,” says Jayaraman, the cofounder and president of One Fair Wage. The pandemic only exacerbated the financial insecurity of working in the restaurant industry—but with the added threat of contracting a dangerous virus. “Millions and millions of these workers were forced to go back to work before they felt safe or ready because they got no benefits, [and] they had no choice,” she says. “And what our data has shown is that when they went back to work, it was a nightmare.”
A report by One Fair Wage found that nearly half of food service workers had at least one coworker who contracted COVID-19. More than 80% of them saw their tips decline during the pandemic, and a majority said their tips fell further when they enforced COVID-19 protocols with customers. The pandemic also amplified the sexual harassment and misconduct endemic to the industry. “Worst of all, 40% of workers reported that sexual harassment went way up,” Jayaraman says. “Hundreds and hundreds of women submitted comments that they received from male customers along the lines of: ‘Take your mask off, so I can see the pretty face of my server before I tip’—basically obligating these women to expose themselves to the virus for a chance to earn their income.”
This is part of a series on big ideas that Biden can tackle in his first 100 days. Read the rest of the stories:
One way to repay these workers, many of whom are risking life and limb to stay employed amid a pandemic, would be to raise the federal minimum wage, which has stagnated at $7.25 an hour since 2009—and put an end to the subminimum wage, an entirely legal way for employers to deny a living wage to countless tipped workers and people with disabilities. Amid widespread public support for raising the minimum wage, President Biden is well-positioned to capitalize on this moment and turn many of the jobs that we have deemed “essential” during the pandemic into good, sustainable jobs.
The case for $15
During his campaign, Biden pledged his support for a $15 federal minimum wage, and his $1.9 trillion pandemic relief proposal can and should deliver on that promise. The bill has a chance of passing in the Senate without bipartisan support through budget reconciliation, which only requires a simple majority, rather than the usual 60-vote threshold—and Democrats have already voted to approve the budget resolution, despite Republican opposition. But it’s increasingly unclear whether Biden’s minimum wage proposal will survive intact, in part because the Democrats would need a key vote from Senator Joe Manchin of West Virginia, who does not support raising the minimum wage to $15, and in part because it may not pass Senate rules about what can be included in reconciliation bills.
In the meantime, Congress has also reintroduced a new iteration of the Raise the Wage Act, which would increase the minimum wage to $15 an hour by 2025 and eliminate the subminimum wage. The subminimum wage for tipped workers—which originated with white business owners who sought to exploit cheap Black labor—has remained unchanged at $2.13 for nearly 30 years; though many states have since raised the wage (and seven have eliminated it altogether), 16 states continue to pay workers just $2.13 an hour. And a loophole in federal labor law has allowed upwards of 1,200 employers to pay more than 300,000 people with disabilities far below the minimum wage.
The more we pay low-wage workers, the better—because they will spend that money. ”
Against the backdrop of a pandemic that has disproportionately hurt low-wage workers, a moral case to raise the minimum wage is clearer than ever. According to the Economic Policy Institute (EPI), increasing the minimum wage to $15 by 2025 would impact nearly 32 million workers across the country. That means almost a quarter of the U.S. workforce could stand to earn around $3,3000 more each year, and nearly 60% of workers whose families are living below the poverty line would get a raise. A minimum wage increase would also overwhelmingly benefit women—who make up a majority of minimum wage workers—and people of color, granting a raise to 31% of Black Americans and more than a quarter of Latinx workers.
But many experts also believe that raising wages would help stimulate economic growth. The EPI estimates that rolling out a $15 federal minimum wage by 2025 would cut back on annual government spending for public assistance programs by anywhere from $13.4 billion to $31.0 billion. (A recent analysis from UC Berkeley found that the government allocates about $107 billion a year for services like food stamps and Medicaid.) Workers who earn higher wages are also more likely to spend their money and spur further economic growth. “Anything we can do to redistribute money toward low-wage workers is actually smart economic policy right now,” says EPI economist Ben Zipperer. “The more we pay low-wage workers, the better—because they will spend that money. They’re much more likely to spend that money than somebody who’s already wealthy.”
Why big business is still opposed
The argument against a $15 minimum wage from Republicans in Congress and business groups like the National Restaurant Association (NRA) and National Federation of Independent Businesses has historically focused on the possibility that an increased wage would lead to significant job losses. Some lobbying groups like the U.S. Chamber of Commerce and the Business Roundtable have come around to raising the federal minimum wage but are still resistant to a $15 minimum wage; others, like the NRA, have long cited the restaurant industry’s thin margins and lobbied against any increases to the federal minimum wage. In light of the pandemic, some businesses and economists have also posited that a $15 minimum wage might place an undue burden on industries that are already struggling to stay afloat. A study released by the Congressional Budget Office just this week claimed a $15 minimum wage could raise pay for 27 million people and lift 900,000 people out of poverty, albeit while eliminating 1.4 million jobs.
But economists at the EPI argue that those fears of job loss are out of step with recent analysis of wage increases and haven’t been borne out in the cities and states that have already passed a $15 minimum wage: California, New York, Massachusetts, New Jersey, Illinois, Maryland, Connecticut, and Florida. (All of these states are still in the process of phasing in a $15 minimum wage through yearly increases; many other states and localities have also raised the wage floor above $7.25.) “There are so many states that are either at $15 or on a pathway to it,” says Judy Conti, the government affairs director at the National Employment Law Project. “We’re not seeing any correlation that leads to job loss. That’s not the way the low income market works. The market for lower wage workers is marked by a lot of churn.”
Low-wage workers are more likely to switch jobs frequently to increase their wages or fall victim to wrongful termination. If anything, wage increases that improve the overall quality of a job can help reduce that turnover and increase retention. In fact, in the seven states that have already nixed the subminimum wage for tipped workers, tips are actually higher, according to Jayaraman. “For all the fear mongering and scare tactics of the National Restaurant Association,” she says, “those seven states actually have had higher restaurant sales per capita, higher job growth in the industry, higher small business growth among restaurants, and even higher rates of tipping.”
We’re not seeing any correlation that leads to job loss. That’s not the way the low income market works.”
Another concern raised by business groups is that poorer states would struggle more with absorbing a $15 minimum wage, unlike the states that have already passed it, which are among the wealthiest in the U.S. But a paper by the Institute for Research on Labor and Employment found that even low-wage counties with minimum wage increases did not see a sweeping decline in employment.
A years-long movement to raise wages—and now, a pandemic—have pushed this issue to the forefront. That Biden has taken up this mantle is a testament to the success of worker-led movements like the Fight for 15 campaign, which has been a driving force behind minimum wage increases across the country that have, in turn, catalyzed federal legislation. In 2012, fast food workers in New York City went on strike and called for a $15 minimum wage (which they eventually won in 2015, through a state wage board convened by Governor Andrew Cuomo). Since then, eight more states have adopted the wage increase—the most recent being Florida, where a ballot measure to raise the minimum wage passed with 60% of the vote, even as the majority of residents cast their ballots for Trump. That leaves 42% of the workforce eligible for a $15 minimum wage in the coming years, regardless of what happens at the federal level.
“I’m very optimistic because we’ve been at these junctures before,” says Mary Kay Henry, president of the Service Employees International Union, which has led the charge on Fight for 15. “When those workers demanded $15 and a union on a New York strike in November of 2012, nobody believed that was a legitimate demand. They were laughed at; they were ridiculed. They made something that was seen as ridiculous mainstream.”
It’s notable that Biden has also pointedly called for eliminating the subminimum wage. (The U.S. Commission on Civil Rights also recently published a report that urged Congress to phase out the subminimum wage for disabled workers.) The pandemic has both compounded the issues faced by some people with disabilities—those with mental illness, for example—and also expanded the community, as COVID long-haulers have found themselves dealing with serious, long-term symptoms. About two-thirds of people living in poverty reportedly have a disability, in no small part because discriminatory wages for disabled workers persist more than 30 years after the passage of the Americans with Disabilities Act.
“The subminimum wage for workers with disabilities came out of the Fair Labor Standards Act—it’s over 80 years old, and it was never designed to be a permanent program,” says Rebecca Cokley, a program officer at the Ford Foundation and former director of the Disability Justice Initiative. “These programs have persisted because they’re profitable. If you can pay your workers less than minimum wage, you’re going to stay in business.”
The path forward without Congress
Despite Republican opposition, budget reconciliation could be a viable path to passing the $15 minimum wage. But Jayaraman believes where Congress may seek a compromise is with respect to the subminimum wage. “I think it will be hard for Democrats to not deliver on some kind of minimum wage increase,” she says. “I think the real question is will the restaurant association succeed in getting Democrats who are in control to negotiate a lower wage for tipped workers? That has been on the negotiating block in multiple states that passed $15 an hour.”
If Biden can’t get this passed through legislation, however, the progress advocates and workers have made at the state and local level bodes well for the administration. The recent win in Florida is a potential model for how minimum wage increases can succeed on the ballot, even in more conservative states. “What we’ve seen in purple, red, and blue states is that voters want it, and that when there is enough momentum behind this popular idea, the stakeholders and politicians just get out of the way and do the right thing,” says Jonathan Schleifer, the executive director of the Fairness Project, a nonprofit that supports ballot initiative campaigns and has worked on minimum wage increases in nine states. “Deep red states are passing minimum wage increases with more than 60% of the vote—and you just don’t win with 60% of the vote on many issues in this country anymore.” Schleifer says the Fairness Project has already identified states like Ohio and Idaho, where getting a minimum wage increase on the ballot is viable if federal legislation fails.
What we’ve seen in purple, red, and blue states is that voters want it.”
As for the subminimum wage, many states have already introduced restrictions to curb the egregiously low wages offered to many people with disabilities. In 2002, Vermont became the first to ban the subminimum wage for disabled workers, and six other states have since followed its example. (Vermont has also been particularly successful at bringing those workers into mainstream jobs with more equitable wages.) One Fair Wage already has campaigns underway in New York, Michigan, and Washington, D.C., where Jayaraman believes the subminimum wage for tipped workers could be eliminated.
One consequence of the pandemic, she says, is that sentiment has shifted even among restaurant owners. “What’s so interesting is the pandemic really revealed to small business restaurant owners how the National Restaurant Association never stood for them,” Jayaraman says. “And in fact, independents were kind of infuriated with the way in which chains got in the front of the line for Paycheck Protection Program [loans].” That prompted dozens of small businesses to form their own independent coalitions—and reverse their stance on subminimum wages.
If businesses are finally coming around on this issue, perhaps it’s time our political leadership does the same. “Listen, $15 is necessary, critical, amazing,” Jayaraman says. “But ending the subminimum wage would be a historic legacy of Biden and this Congress.”