Bigger tip credit would ease wage increase

We have been following the conversation on a possible increase in the state minimum wage and holding our breath.

We completely understand the intent as written — but our concern is, if passed as written, that we will be giving an increase to the wrong group of employees. You see, our minimum-wage employees also receive tips; they are our best-compensated employees.

Some of our employees are paid more than minimum wage but do not receive tips. The increase will not increase their wages and, in fact, may prevent increases in the future because if wages are increased for our tipped employees, we will be hard- pressed to continue to raise the rates of our support staff and wages for new hires may be reduced.

We feel this has the opposite effect of the intent of this bill, which we understand to be to increase the income of the lowest wage earners.

In testimony, our industry is said to have the lowest wage earners. It is true that we are for many a first job and that many of our employees do not have prior working skills. Many restaurants hire at minimum wage. In fact, we are hiring employees that in many cases are just entering the work force and will need training on everything from showing up on time to proper sanitation for food handling.

We look at our role as trainers and give many a life skill that they will turn into a career. Some of those employees begin their career at minimum wage. All of them will earn more, as they acquire skills and become an asset in the workplace.

How will a minimum wage increase affect us? In addition to a labor increase in every extra dollar of wages comes a corresponding increase in taxes and insurance tied to wages. This can be anywhere from 7 to15 cents per dollar.

In addition, restaurants are taxed on every dollar an employee makes, even their tips. The tip credit is meant to assist us in offsetting this.

We also know it would cost us more to purchase the ingredients for the meals we prepare: "Buy local, eat local." Surely, our agricultural jobs would have an increase in wages, which would correspondingly increase the cost of the food we purchase.

What is the solution? How can an increased minimum-wage law help the 3,000-plus restaurants in Hawaii? The solution is to increase the tip credit. The federal tip credit is $5.12; Hawaii’s is 25 cents. An increase in this credit would greatly assist our restaurants.

We understand the intention of increasing minimum wage. We work side by side with our employees and want them to prosper. However, we are also well aware of the constraints it will put on our businesses that operate within such close margins.

If the minimum wage is increased, correspondingly increase the tip credit. This way, the employees who need a higher wage will get it. Restaurants will feel an impact but it will not be as severe or devastating.