NCPA - National Center for Policy Analysis

Pity The $40,000 A Year Waiter

November 30, 1999

Santa Monica, Calif., may by next summer enact a minimum wage of $10.69 an hour -- plus benefits. That would double the pay of some restaurants' tipped personnel and boost the pay of kitchen workers by 75 percent. Under such standards, a waiter still in high school could walk away with $40,000 a year in pay and tips.

  • While 41 U.S. cities have enacted minimum wage clauses applying to city contractors and others subsidized by local governments, Santa Monica would be the first to hit all businesses with more than 50 employees -- if they are in a tourist-heavy area near the ocean.
  • Affected restaurants in the area face the prospect of having to cut their payrolls or go out of business.
  • As an alternative, they could purchase and serve their customers cheaper and lower-quality items -- or move out of town.

One successful local restaurant chain with 35 locations, P.F. Chang's China Bistros, has seen its stock plummet by one-third from its former high since the new minimum wage threat became serious.

Source: Tim W. Ferguson, "Enacting Wealth," Forbes, November 29, 1999.

 

Browse more articles on Economic Issues