Shot in the Dark

An Idea Whose Time Has Come Again

Watch for the DFL smear machine to try to spin this story:

Republican gubernatorial candidate Tom Emmer says Minnesota should factor tips into the hourly pay for minimum wage workers in restaurants and other gratuity-based jobs.

After visiting a St. Paul restaurant Monday on a listening tour, Emmer advocated for a so-called “tip credit” to the state minimum wage.

This is entirely about bringing jobs back to the hospitality business in Minnesota, which has suffered badly in recent years, not only from the economy but from years of ill-advised regulations.

Minnesota is among seven states that currently prohibits employers paying workers less than the minimum wage if they earn tips, according to the U.S. Department of Labor.

However, that’s only been true since 1990.  Before then, Minnesota had a tip credit also.

Minnesota has a state minimum wage of $5.25 for small employers and $6.15 for large employers, based on annual sales.

Emmer says tying base pay to tips will “level playing field so the employers can continue to exist, survive and thrive.”

Federal law permits states to drop the minimum wage to tipped employees to $2.13 per hour.

Opponents argue tips are too volatile to count on, especially for workers at the bottom of the pay ladder.

So here’s the question:  are the “workers at the bottom of the pay ladder” better off hustling for tips (which can be volatile and low, and can also be really really good money), or out of work entirely?

Because in this economy, that’s pretty much the choice.

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Mitch Berg

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16 responses to “An Idea Whose Time Has Come Again”

  1. Dog Gone Avatar
    Dog Gone

    Only if you try to define it that way, Mitch.

    I’m guessing that Emmer is not going to be getting many votes from that section of the hospitality industry. But it does show that Emmer isn’t all that keen on paying the lower level workers much in the way of a living wage.

    Bet he is really big on those unimited CEO salaries though….

    Some people call that redistribution of wealth, just upwards to the tiniest possible highest income fraction of a percent, which doesn’t make for a good economy for any of us.

  2. Dog Gone Avatar
    Dog Gone

    sorry – typo – that should have read unlimited CEO salaries.

    I saw last week where the CEO of Walmart made more in an hour than his average employees made in their entire year’s salary. I bet Emmer LOVES that.

    Keeps those peasants down where they belong, right Righties? And those masters you like to sing about up on top.

  3. K-Rod Avatar
    K-Rod

    *facepalm*

  4. Terry Avatar
    Terry

    Uh, Dog Gone, you might meditate for a moment on who pays the salary of the CEO of Walmart, and why they pay him (if true) “more in an hour than his average employees made in their entire year’s salary”.

  5. Mitch Berg Avatar
    Mitch Berg

    I bet Emmer LOVES that.

    You state that as a pejorative.

    Why would Emmer, or anyone for that matter, not celebrate merit, achievement and excellence?

    Does WalMart’s CEO not deliver value for the shareholders?

    Does WalMart’s success in a lousy economy not keep those hundreds of thousands of workers working, while so many are not?

    Does WalMart’s success not generate billions in tax revenues to pour down government’s insatiable maw, to pay for yet more madness?

    Let’s turn that around, DG; what SHOULD the CEO of the world’s largest free-market corporation, a company with gross revenues equal to the gross domestic product of Belarus, one of the few companies in America that is hiring, one that has engaged in the largest corporate higher-education program in history, make, expressed as a multiple of the average worker’s salary? And more importantly, why?

    Because the whole “he makes more money in an hour than his workers do in a year” is a fairly meaningless statistic; my CEO at United Heathcare made more in *two* hours than I, a senior designer, made in a year; my current CEO makes more in three weeks.

    Give us answers, or at least rationales, not the same chanting points that every other leftybloggers is duly intoning off of Media Matters’ cut sheet (knowingly or not) today.

  6. Mitch Berg Avatar
    Mitch Berg

    I’m guessing that Emmer is not going to be getting many votes from that section of the hospitality industry. But it does show that Emmer isn’t all that keen on paying the lower level workers much in the way of a living wage.

    “Living Wage” is the metaphorical “poster child” of outcome-based policy. Which job is better, DG – a job that pays $12 an hour but doesn’t exist because it doesn’t provide $12/hour of value, or one that pays $4/hour with between $5 and $30 an hour in tips that actually exists in the real world?

    Bet he is really big on those unimited CEO salaries though….

    Perhaps you can show us where the Governor of Minnesota is responsible for setting CEO salaries?

    Some people call that redistribution of wealth, just upwards to the tiniest possible highest income fraction of a percent, which doesn’t make for a good economy for any of us.

    Again with the outcome-based policy. Goverment-mandated pay raises in every case make the economy worse for all of us; artificially high minimum wages mean fewer lower-income jobs; artificially-low CEO salaries contribute eventually to less hiring because companies are less aggressively-run.

    (Countdown until DG produces a link to a leftyblog that purports to debunk the link between high minimum wages and “living wage” laws and the unavailability of entry-level jobs, which will have been soundly thrashed by a myriad of actual economists; 10…9…8…)

  7. Mr. D Avatar
    Mr. D

    I saw last week where the CEO of Walmart made more in an hour than his average employees made in their entire year’s salary. I bet Emmer LOVES that.

    Dog, have you tried the math on that assertion?

    Let’s assume the typical full-time Walmart associate makes about $10/hour; anyone who is willing to stay with the company for more than a year or so would make at least that. That works out to about $20,800 a year, assuming a 40-hour week and 2 weeks of paid vacation.

    If the CEO of Walmart made more than that in an hour, he’d have made $43,264,000, assuming a 40-hour work week and 2 weeks of paid vacation.

    As it happens, we know how much the CEO of Walmart made in 2009. The information is here:

    http://www.reuters.com/article/idUSTRE63I52E20100419

    Turns out he made about $19 million, so you’re off over 100%, unless you assume all Walmart employees make less than minimum wage.

    But I bet you got your chanting point from this article:

    http://abcnews.go.com/Business/walmart-ceo-pay-hour-workers-year/story?id=11067470

    Which also points out that your source, a Chicago alderman, got his numbers wrong. Fancy that.

    As an aside, you’ve now relied on the assertions of a Chicago alderman and a Klansman to make your points on this blog. And that’s just today. Might I suggest your self-proclaimed research skills are just a smidge off-kilter?

    And all of this has nothing to do with Tom Emmer’s proposal, by the way.

  8. Terry Avatar
    Terry

    I am afraid that Dog Gone believes in the Economy of Wishful Thinking, exemplified in this piece by Matthew Yglesias:
    http://www.thenation.com/article/36877/great-time-be-alive

    Yglesias asserts that it is the government’s job to enforce economic equality. It’s just a raw assertion, he doesn’t explain why this should be the job of the federal government. He gives us a laundry list of what everybody should get:

    The goal should be a country where every neighborhood features safe, well-paved streets, excellent schools, functioning mass transit and a healthy environment. Families should have equal access to medical treatment if they fall ill, to preschool and to decent nutrition for their children, and to a secure retirement after a few decades in the workforce.

    He then states that this will be payed for by raising the income taxes on everybody but especially people making over $250k or $500k a year.
    He has no idea how much this will cost. He does no calculations at all, but he is sure the money is there. He never says “income tax”, but then he talks about taxing high earners. Does he even know that the real wealthy people — people who live off their capital — don’t pay income tax? Or social security? Or medicare tax? It could have been written by a starry-eyed college freshman.
    And what will be your reward if you not only complete high school, but on to college, than medical school? Or build an industry up from nothing as Gordon Moore did with Intel or Steve Jobs did with Apple?

    Those with skills that are more highly valued in the marketplace would still have fancier cars, larger televisions, more upscale clothing.

    Mr. Yglesias graduated cum laude from Harvard with a degree in philosophy. I’d like to think that if his professors read this drivel they’d yank his diploma. Seriously — if you read this, and knew that the writer graduated in top of his Harvard class with a degree in philosophy would you send your kid there?

  9. Terry Avatar
    Terry

    I should have mentioned that before Harvard, Yglesias attended the tony Dalton School, tuition $35k/year in 2010.
    This an elite: a person with privilege unearned that wants to control the way you live your life and the way you spend your money. The CEO of Walmart isn’t telling me to use mass transit or trying to levy a tax on fast food or “sugary drinks”.

  10. Chad The Elder Avatar
    Chad The Elder

    DG-

    How would limiting the salary of CEOs do anything to help the “peasants” anyway? Seems like the peasants of Chicago are pretty happy that their government–you know the people who are looking out for them–has finally relented and allowed Walmart to set up stores (and the jobs that come with them) in some of the city’s poorer neighborhoods.

  11. Bill C Avatar
    Bill C

    Keeps those peasants down where they belong, right Righties? And those masters you like to sing about up on top.

    So, if the CEO didn’t make eleventy bazillion dollars, you seem to think all that money that didn’t go to the CEO would go back to the cashiers and shelf stockers? It wouldn’t. The extra profits would go to shareholders. Just because there is another C-level exec making so much money doesn’t change what salary levels a particular job is graded for. I was at UHG during the time when Mitch’s CEO made more in an hour than Mitch did all year. When Billy McG got shown the door because of stock option back dating, my salary sure as hell didn’t go up because the company was no longer paying him tens of millions of dollars. Corporate pay grades have NOTHING to do with executive compensation. HR sets the pay grades, the board sets executive compensation over and above whatever the HR paygrades are. The current CEO still gets an HR paygrade (I think that level is in the range of $130K-260K currently) as a base and whatever bonuses and stock options he receives are negotiated in a separate contract.

    Again the axiom holds true: Liberals think there is just one pie, and if anyone has more of the pie than someone else, it is unfair. Conservatives know that there is a kitchen full of ingredients and utensils that can be used to make MORE PIES.

    BTW, why do we never hear any caterwauling from the left regarding sports figures or Hollywood salaries? Why, if A-Rod wasn’t paid his $250M-or-whatever-it-was contract he had, NY Yankees tickets might only be $375 each instead of $6092346093460468235!

  12. Terry Avatar
    Terry

    Bill C — In the imagination of the Lefties, the money “saved” by reducing CEO salaries would never go to the employees. It would go to the government. Leftists covet everything. Don’t believe me? Look at how eagerly they embrace lotteries and tax the bad habits of the poorest people in this country. Rich people can smoke cigarettes. Poor people? smoke or eat, you can’t afford both. your choice pal. I wonder how much food stamps you have to swap to get one of those $12.50 NYC packs of smokes?
    Social Security and medicare take 14.5 percent of every worker’s paycheck from dollar one.

    You produce wealth with the sweat of your brow. They take it.
    Lincoln would have a word for that.

  13. Chuck Avatar
    Chuck

    What does a server at Manny’s earn per year? Someone just said WCCO radio interviewed a server earning around 100K there. Hmmm, that is just $50,000 less then some Madison Wisc bus drivers make.

  14. DiscordianStooj Avatar
    DiscordianStooj

    Your link is bad.

    I’m pretty sure the “smear machine” will “spin” the story by saying that Emmer wants to lower the minimum wage for tipped employees. And that Emmer said there are servers who make $100K. Which may be true, but is irrelevant to whether or not the minimum wage should be lowered.

    As an aside, does anyone know if employers pay payroll taxes on tips?

  15. justplainangry Avatar
    justplainangry

    DogPrescottPile. Paging DogPRescottPile. Cleanup on Facts Aisle. Again.

  16. DiscordianStooj Avatar
    DiscordianStooj

    Also, the media is “spinning” the story by interviewing Emmer’s sources.

    http://www.startribune.com/local/97905219.html?page=1&c=y

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