SERVERS COULD BE HURT BY MINIMUM WAGE PROPOSAL
There’s a little-known and less-understood proposal to increase Florida’s minimum wage from the current $8.46 to $15 by 2026. The initiative, known as the $15 Minimum Wage Initiative (Initiative #18-01), could appear on the November 2020 ballot as an initiated constitutional amendment.
If approved by voters, the initiative could substantially reshape if and how businesses in the Keys operate and succeed. So why shouldn’t a divemaster, bellhop, or bartender want an increased minimum wage? Daniel Samess, CEO of the Chamber of Commerce, cautions, “Most folks don’t understand what’s going on. The devil is in the details, and we’re being sold a Trojan horse.”
Samess is referring to the interplay of minimum wages and tips under Florida law. Currently, employers deduct a $3.02 “tip credit” from the state-mandated hourly minimum wage for tipped-employees. Servers are paid $5.44 per hour ($8.46 minimum wage minus $3.02 tip credit), and all tips (before taxes) are theirs to keep. It works out well for them because they usually earn more than $3.02/hour in tips, resulting in a much higher total income than minimum wage.
Under the proposed initiative, minimum wages increase but the tip credit remains constitutionally frozen at $3.02. This results in doubled labor cost to employers ($15 minus $3.02 = $11.98/hour). To offset higher costs, Samess hypothesizes business owners will raise prices, cut employees, lessen hours, and/or replace tips with a European-style service charge that businesses could keep.
Higher prices end up hurting businesses with low margins like restaurants and bars. “Business expenses go up; employees make less money; costs get passed on to the consumer,” says Samess. “Now a $10 hamburger will be $15. Who’s going to buy that?”
In a state and county so reliant on tourism, these price increases will be detrimental to the local economy. “We compete against other parts of Florida, other states, and the Bahamas for businesses and tourists,” explains Samess. “If we increase the prices of our burgers, our margaritas and our rooms, people won’t come to the Keys any more. We’ll price ourselves out. Then everybody really loses.”