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Timing of Plans to Boost Pay Spurs Concern Among Restaurateurs

4 min read

Mark Abernathy has been in the restaurant business for 50 years but never, he says, has he faced a time like the present: “This is the most unstable, unpredictable situation I’ve ever seen.”

I’d called him to get his views on proposals to raise the federal minimum wage from $7.25 an hour, where it has been since 2009, to $15. Democrats in both the House and the Senate reintroduced a bill last week, the Raise the Wage Act, to increase the minimum, and the $15-an-hour minimum is also part of President Joe Biden’s $1.9 trillion coronavirus relief proposal.

Both measures would also eliminate the tipped minimum wage, or tip credit, for restaurant workers. The federal tipped minimum wage is the same now as it was in 1991: $2.13 an hour. In Arkansas, it’s $2.63 an hour. If restaurant workers who receive tips — servers, bartenders — don’t get enough money in tips to bring them up to the minimum wage, their employers are supposed to make up the difference.

But, just because of his long experience, I also wanted to hear Abernathy’s take on the industry-shaking pandemic. He is the owner and executive chef of Little Rock’s Loca Luna and Red Door restaurants, but first made his mark on the city’s restaurant scene with the legendary Juanita’s Mexican Cafe & Bar.

“There’s no question that if it’s passed, the cost of dining out is going to go up,” Abernathy said of the proposed minimum wage increase. “But I think everybody deserves to have a living wage,” he said, adding that $11 an hour, Arkansas’ current minimum wage as of Jan. 1, isn’t a living wage. “I would hate to think I had to support my family on $11 an hour.”

The problem, as he sees it, is that “you’re painting everything with the same brush. There are so many variables. … I think it all depends on the cost of living.” An hourly wage of $15 goes a lot farther in a small town in Arkansas than in New York or San Francisco.

The restaurant industry, at least as represented by its main lobbying organization, the National Restaurant Association, opposes the proposals. “The Raise the Wage Act imposes an impossible challenge for the restaurant industry,” Sean Kennedy, the association’s executive vice president for public affairs, said in a statement last week.

“While other businesses on Main Street are starting to see a recovery, restaurants across the country are struggling to stay open amidst indoor dining bans or limits that have been in place for ten months. The industry has laid off 2.5 million workers as a result of the pandemic, and 1 in 6 restaurants have shuttered.

“Our industry runs on a 3-5% pre-tax profit margin in a good year — during a pandemic is not the time to impose a triple-digit increase in labor costs. Far too many restaurants will respond by laying off even more workers or closing their doors for good.”

As for eliminating the tip credit, that “will cut the take-home wages of thousands of tipped employees who make far above the proposed minimum hourly wage,” Kennedy said. “These skilled hospitality professionals generally earn between $19-25 dollars per hour and have made clear many times before that they support a tipped minimum wage.”

A minimum wage increase “means upward pressure for us to get the best people,” Abernathy said. “We would have to start paying probably $19 or $20 an hour in order to keep the quality employees that I have.”

And he agrees that the timing isn’t great. “If we’re having a hard time now paying our employees, because we have limited sales — I lose money every month, every month,” he said. “I stay open so my employees can feed their families.”

We talked on Tuesday, the day Abernathy reopened Loca Luna after having shut the Riverdale-area restaurant 20 days earlier because of the pandemic. The Red Door restaurant has been “holding its own,” he said, but Loca Luna was hit harder because it relies more heavily on its busy bar and private dining.

He thought his Loca Luna employees could manage during the shutdown because they could get unemployment benefits. “But I guess because of a backlog, they’ve been unable to get any unemployment. It’s been a nightmare, so I’ve got all these employees and their families that were depending on unemployment compensation and they haven’t gotten any and they don’t know when they will.

“So I said, well, I’ll lose money but I’ve got to put my people back to work,” Abernathy said. “I can’t just let short-term [thinking] dictate everything I do. I’ve got a great staff and they’re like family. They stood by me and I’ll stand by them.”

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