As minimum wages continue to increase across the country, small businesses often feel the biggest burn, according to Willie Degel, who runs six restaurants in New York, including Uncle Jack's Steakhouse, Uncle Jack's Meat House, Jack's Shack and Uncle Jack's Sandwich Shoppe. He believes there should be three minimum wage rates to keep small businesses afloat and big businesses honest.
"I understand that employees need to earn a living wage, but a one-size-fits-all increase will penalize smaller businesses disproportionately while also potentially resulting in job cuts that hurt the very employees they're supposed to help," said the CEO, who pointed out that New York's minimum wage increase cost him $350,000, forcing him to cut the busboys he was using at his upscale eateries. Letting go those 22 employees, however, only offset the extra costs by 30 percent.
He "absorbed the other 70 percent (by) taking a major bite out of my bottom line. Larger businesses typically have a bigger cushion to roll with these punches," he said in an interview with FastCasual. The rest of the interview with Degel is included below.
FC: What do you think the minimum wage for each level should be?
Degel: For tipped employees:
- $8 to $10 for private companies with less than $25 million in revenues.
- $12 to $15 for private companies making $25-$50 million.
- $15-20 for publicly traded companies.
FC: What level would your businesses fall under?
Degel: I fall into the small business category with about $20 million in revenue, so my minimum wage would be $8-10.
FC: Have you gotten any feedback from other restaurateurs about this idea?
Degel: Everyone I have discussed this with agrees with me 100 percent.
FC: What is your plan to get this idea going? Have you pitched this to any legislators? Are you starting any petitions, for example?
Degel: No, I am simply planting seeds by discussing the concept with fellow restaurateurs and in media forums, like a recent FOX Mornings with Maria segment. I think the idea will start to gain traction the next time the minimum wage increase comes up for debate.
FC: What would you say to people who think it sounds complicated?
Degel: It’s essentially a sliding-scale system. There are plenty of precedents for that.
FC: Wouldn't the smaller brands that pay less have a harder time finding workers when foodservice employees could make more by working for a bigger brand?
Degel: Theoretically, yes. But there are always more people looking for positions than jobs available so smaller brands will always be able to find employees. In addition, the paycheck isn’t the only factor that job seekers consider when looking for work. Issues like hours, location and benefits also drive the decision. I would be the last person to support a tiered minimum wage if I thought it would affect my ability to attract employees, but I don’t believe it will.
Topics: Operations Management