Supply and demand have driven the wages for restaurant workers to levels that typically far surpass what’s mandated by state or local regulations. Add in the automatic annual increases that many jurisdictions set in minimum-wage laws passed years ago, and there was little impetus for state and local lawmakers to take up the contentious matter of raising the pay floor.
That legislative lull may be ending as another factor is mixed into the political calculations of what’s an appropriate wage for the times. Literally from Washington to Massachusetts, legislatures are taking up the issue again as workers try to keep pace with skyrocketing housing costs.
A proposal has already been introduced in Los Angeles’ City Council to hike the minimum pay rate for hotel and airport workers to $25 an hour en route to hitting $30 by 2028. The minimum wage for workers at large hotels in the city is currently $18.86 an hour, so advocates are looking for an initial increase of roughly 33% for a sizable segment of the area’s workforce.
Even though restaurant workers aren’t the beneficiaries of the increase, the updraft will almost certainly put pressure on their employers to pay more.
A key reason for the proposal: a continuing steep climb in the area’s rents.
Similarly, worker advocates say a wage-earner in Massachusetts would need to make more than $41 an hour to cover the average cost of a two-bedroom apartment within the state.
They plucked that target figure from the 2023 update released yesterday of an annual report from the National Low Income Housing Coalition. The study of housing costs across the nation found that an hourly worker would need to be paid at a rate of $28.58 an hour on average to afford the typical rent for a two-bedroom apartment, and $23.67 to cover the lease on a one-bedroom place.
The report is entitled, “Out of Reach.”
“In no state, metropolitan area, or county can a full-time minimum-wage worker afford a modest two-bedroom rental home,” the Coalition said in announcing the study’s release. “A full-time minimum-wage worker cannot afford a modest one-bedroom rental home in more than 92% of U.S. counties.”
The study calculates that workers in 16 states would need a minimum wage of at least $26 an hour just to cover rent for a two-bedroom home.
It attributes the situation to a combination of landlords aggressively seeking rent increases throughout the pandemic and workers having used up all the aid they received during the crisis.
The report puts data behind a trend that has bedeviled restaurateurs for years in many of the nation’s most economically vibrant markets. In areas like Silicon Valley, the Hamptons or booming areas of the Sunbelt, workers can’t be found because they can ill afford to live there. Yet the elevated white-collar incomes that pushed up housing rates make those areas a motherlode for restaurants.
Even before the study’s release, organized-labor forces were arguing that far higher wages are needed, particularly for restaurant workers, to keep families housed. In early May, the Service Employees International Union issued a report alleging that 10,000 fast-food workers in California are homeless because they can’t afford rent at their current wage rate. At $15.96 an hour, the rate is one of the highest in the nation.
The new housing study is almost certain to stoke pressure for minimum wage increases after a stretch of relative quiet on that front. There are already signs of the momentum building.
Pennsylvania’s Democrat-controlled House of Representatives is expected to pass a bill that would raise the state’s minimum wage to $11 an hour starting Jan. 1, from the current threshold of $7.25. The rate would climb by $1 an hour at the start of the following four years so that it hits $15 an hour by 2028.
The bill under consideration would leave a tip credit in place but would significantly decrease the gratuities portion of the minimum pay that servers are due. The labor costs of full-service places would jump significantly.
A proposal to raise Maine’s minimum wage to $15 from the current $13.80 was recently passed by both chambers of the state legislature, but Gov. Janet Mills has indicated that she’s likely to veto the measure.
At the federal level, bills to increase the national minimum wage to $17 an hour have been introduced in both the House of Representatives and the Senate. The proposals aren’t expected to pass, despite their sponsorship by big-name lawmakers such as Bernie Sanders, I-Vt.
Now advocates for minimum-wage increase have a potent new weapon in their arsenal. And it’s not as if housing rates appear ready for a correction.