2015-12-31 / Front Page

Minimum Wage Set to Rise

By Barry Bridges

The beginning of the new year will usher in pay increases for thousands of Rhode Islanders who earn the minimum wage.

The state’s minimum hourly pay will rise to $9.60 from $9.00 on Jan. 1, which will be the fourth adjustment in as many years. Since Jan. 1, 2013 when the minimum was $7.75, the legislature has enacted several laws that have increased the hourly rate by a combined $1.85.

Many states have upped their minimum pay in recent years, and thirteen others have increases taking effect this New Year’s Day. With Rhode Island’s latest change passed in the General Assembly’s 2015 session, the state’s minimum pay ranks among the highest in the country. California and Massachusetts head up the list, with each paying $10 per hour as of Jan. 1 (although some localities, such as Seattle, Wash., have established bas- es of as much as $15.

The federal minimum wage, which has remained at $7.25 since 2009, prevails in the almost two dozen states that maintain a lower requirement.

In separate legislation also passed last summer, the “subminimum” cash wage for Rhode Island tipped employees, such as waitpersons and bartenders, will also go up from $2.89 per hour to $3.39. This is the first increase for the tipped base in 20 years. An additional 50 cents will kick in one year from now on Jan. 1, 2017.

At a ceremonial bill signing on the measure, Gov. Gina Raimondo indicated that there are around 22,000 tipped workers in the state.

Although national surveys indicate that hiking the minimum wage has broad support among many Americans, opponents say that the move burdens employers, especially small businesses that may have to cut back and harm low-income workers in the process. But local business advocacy groups are expressing some support for the twin increases in Rhode Island.

Erin Donovan-Boyle, executive director of the Newport County Chamber of Commerce, said that there are many factors that go into a decision to adjust minimums. “Changes have been talked about for some time, so [the legislation] is not really surprising, but the Chamber just wants to be sure that all aspects are measured,” she said. This includes examining what increases mean for local families not only in terms of improved wages but also within the context of larger possible impacts such as altered benefits packages or reductions in hours. “In general, we’re supportive of efforts that are done in measured ways.”

While the Rhode Island minimum will now be among the highest in the country, Donovan-Boyle noted that New England generally has better pay across the board when compared to other regions.

As for the increase on tap for tipped employees, Donovan-Boyle said that several considerations have to be balanced. “If that amount were to continue to rise, it could significantly impact the business structure for those types of industries. We don’t want to shock the system. At what point does a restaurant stop accepting tips in favor of a flat wage for its servers? We will need to evaluate how it plays out.”

She added, “We are still lower than some of our neighboring states, which can place us at a competitive disadvantage.” Donovan- Boyle was unsure of the number of tipped workers presently employed on Aquidneck Island.

H. Robert Bacon, chairman of the Rhode Island Hospitality Association, issued a statement on the tipped minimum. “I feel that this increase represents a reasonable and incremental approach to the minimum wage issue. Ultimately it is the consumer that shoulders the burden of any wage increase, so it is important that factors such as the economy and personal income growth are part of the discussion and are factored into the decision to change mandated wages. I think that, in this case, they were.”

In several calls placed by Newport This Week to area restaurants, some proprietors had not fully analyzed the financial impact of higher tipped wages to their businesses, or whether those payroll changes could eventually translate into greater menu prices.

Scott Kirmil, owner of The Wharf Pub and Diego’s on Bowen’s Wharf, said that the Jan. 1 increase would most likely not be considered significant by most of his tipped employees, who average over $20 an hour on a typical night. “They already make pretty good money, and it may be that they use any extra to help pay their taxes.”

Whether Kirmil’s extra expenses will be passed on to his patrons remains to be seen. “In general, our margins are pretty tight, which is true of any seasonal town like Newport. Although I don’t see a drastic effect, it may be that I have to raise prices for our customers down the road.”

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