Job growth at restaurants has been a bright spot in the U.S. economy. The Huffington Post had an article to this effect on April 6, 2012 that drew over 500 comments. I completed a white paper this summer for the National Restaurant Association that makes similar points about job growth in the industry and refutes accusations by activists concerning “low road” competitive practices and discrimination against minorities.
Restaurant work gives millions of people a start even though this has never been a high wage industry. Restaurant employees were able to claim significantly higher wages at the end of the 90s when the country was close to full employment and workers were scarce. Unfortunately the job picture and the economic situation of restaurant customers has not been as strong in any year since President Clinton left office. What raises my hackles is that some self-anointed labor advocates, most egregiously a group called the Restaurant Opportunities Center United, refuse to recognize this reality. The ROC’s leadership instead demands that restaurants ignore the still soft economy and pay what they define as a “livable wage” plus “normal” benefits. Even more unrealistic, ROC leaders make the claim that restaurant owners could do this if they simply made an “enduring” and “non-negotiable commitment” to do so: Yeah, right.
Why do these self-righteous attacks on the restaurant industry concern me? Because bumper-sticker ideas like the “livable wage” and noisy demonstrations in front of high profile restaurants detract attention from policy options that would do more than chants to restore full employment. The ROC spells out what it means by a “livable wage” in the seven cities it has “studied” (New York, LA, Chicago, Miami, Detroit, DC, and New Orleans). Meeting the definitions would require wage increases of 48 to 135 percent with the costs of benefits added on top.
Most Americans understand that increases of these magnitudes would reduce restaurant employment, not increase it. The political danger is that voters may take these out sized demands as what progressives have to offer, and support the anti-labor side. The ROC’s seven studies and its costly foundation-subsidized efforts to set up restaurants as “social enterprises” in New York and Detroit demonstrate that what it proposes are money-losing propositions.
The important role restaurants play in creating jobs for minorities, the less educated, immigrants and young people with limited alternatives is well understood by Americans. A large percentage of us have worked in restaurants so we know that these jobs are often a first step on the economic ladder.
In 2011, restaurants and drinking establishments added almost 370,000 jobs, an increase of 3.1 percent while U.S. employment grew at 1.5 percent. Restaurants are perhaps the fastest growing job-creators in the country and are one of the few sectors where employment today is higher than it was before the Great Recession began in 2008.
Restaurant jobs are a safety net for millions of people who have few other possibilities. What the ROC slogan-chanters miss is that better wages and benefits in restaurants depend on the availability of job opportunities in other sectors of the economy. It is not tight-fisted restaurant owners who keep wages and benefits down. It is the fact that millions of people are looking for work which suppresses wages and benefits in nearly every industry.
Unemployment dropped below 4 percent and “the American job machine” created 23 million jobs during the Clinton years. For that reason, wages were rising. When the overall economy fully recovers and workers are scarce again, wages will rise in restaurants and across the entire economy. Bumper sticker slogans touting the “livable wage” will not alter that reality.
The seven ROC papers also charge that the restaurant industry is rife with discrimination. No doubt there is some in a sector with hundreds of thousands of locations. Census data shows, however, that in 2007 minorities owned more than 47 percent of restaurants in 6 of the 7 cities studied, and less than that only in New Orleans. Many current owners and managers of restaurants started in the kitchen or as waiters or waitresses and worked their way up.
In sum, the restaurant industry is growing again and it is a good thing. It makes jobs for those who need them most and is a sign that American consumer confidence is improving. It would be good if workers were scarce so that wages and benefits would rise faster, but belligerent demands for 50 or 100 percent wage increases will not make it so. Restaurant employees will get paid more when the pool of workers seeking restaurant jobs is reduced by job growth across the entire economy. Radical demands that tarnish the progressive brand are not helping the country move in that direction.