Bluestem's post, Mark Dayton confuses own children for cop lobby, wants to let them rewrite minimum wage, raised the ire of Kenn Rockler, Tavern League of Minnesota. He thought the post was the stupidest but still wants to buy lunch.
Here's the email we received this morning at 12:27 a.m.:
That article was one of the stupidest articles I have read. If you would like to hear the truth about why the lack of a Tip Credit is regressive to the lowest paid workers, I would love the opportunity to buy you lunch, coffee, or a glass of wine.
Lest you think of me as some overly conservative lobbyist who wants to repress restaurant employees I testified numerous times before both Senate and House Committees that I thought the minimum wage should go to $10 an hour over 36 to 42 months. I was also quoted in trade publications, on radio, and in some small newspapers. I was criticized by other business lobbyists for my testimony.
Are you familiar with the TRDA (Tip Reporting Determination Act) and why it was instituted? So again if you would like to know why Governor Dayton's position might be evolving, join me and learn how regressive your thinking really is. I will be waiting to hear from you.
We'd prefer press releases and fact sheets over lunch, coffee, or a drink, since even though we're a poor country blogger, there's that ethics thing our journalist friends sometimes quibble about.
But the items he mentions are online. When he mentions the "TRDA (Tip Reporting Determination Act)," we assume that he's talking about the Tip Reporting Determination Agreement established in 1993 for which the IRS provides information here and here.
As for Mr. Rockler's testimony, we did find that he indeed appeared before committee hearings in the Minnesota Legislature. See search results for his name here. He has spoken about the omnibus liquor law,
According to that search, his most recent testimony on the minimum wages dates from the 2013 session.
On February 27, 2013, Rockler testified in the second batch of citiizens and lobbyists, both for and against raising the minimum wage before the Joint Committee of the Labor, Workplace, and Regulated Industries and the Select Committee on Living Wage Jobs.
While video is available only for the first batch of people testifying for and against raising the state minimum wage (see right-hand column with Related Video and Audio), Rockler's testimony begins at 2:37:46 in the audio of the full testimony.
Here's what Rockler said:
. . .Kenn Rockler, representing the Tavern Owners League of Minnesota and the Bowling Proprietors Association of Minnesota. I'll probably go little bit against some of my friends who have been testifying here in that my major issue is not the minimum wage. I don't think it would behoove us to go up too fast, too dramatically, but I'm here on behalf of the tip credit.
There's no question about it. You were passed out a chart--I'm not sure if everyone brought it tonight--but on the front page, it talks about the exact comparison between Minnesota and--I just happened to choose the entire Big Ten and the Dakotas, but as has been mentioned before, either 42 or 43 states have a tip credit.
I think the salient figure here is that Illinois, which is the highest salaried state with the exception of Minnesota, we are 46.5 percent higher on our tipped employees. What is "tip credit" by the way? I've gone around to the capitol probably spoken to just about a hundred legislators over the past six weeks, and you know you have a lot of different issues that you have to learn.
I will say this: I think less than one out of every ten people really understand where the tip credit comes from and what it's all about. Tip credit is the realization that while only the servers get a direct tip from the customers, that's it's actual a team effort, the old "Ther'es no 'I' in team." With that realization, the federal government and 43 states allow an employer to make up the difference between the minimum wage with the amount of tips that are earned at that point by the server.
Somebody said that tips aren't a wage. I just heard that before. Actually tips are a wage. Minnesota considers them a wage in every way possible. They charge Social Security, FICA, payroll [taxes]. It's only not considered a wage when it comes to the minimum --the wage act at this point.
The next page I'd like you to look at, if you've got the packet, is there's three pages in there that have the IRS Tax Reporting Determination Act in there. The debate is over as to whether or not who the highest paid employees are in a restaurant. Who won that debate? The IRS.Twenty-five years ago, they put in standards that are in there in those three pages asnd what they said was, "we know that there's a lot of money being made in tips; therefore, every restaurant is going to have to do the following.
They have to report their gross sales, their charge sales, the gross tips declared and the charge tips declared, and if for some reason the restaurant has less than eight percent of their gross sales declared as tips, then it's up to the owners to allocate those tips and the minutae is in that three page system right there.
What does that mean? How does that relate to wages? Well, if in fact a server says, well, I don't make eight percent of my gross sales [in tips], he or she is allowed to say, well, I'd like to have an IRS audit. To the best of my knowledge, 25 years, 50 states and the District of Columbia, no server has ever asked for an audit.
Somebody might be aware of it--and by the way, we want our servers not to make $10 an hour or $20 an hour. We want them to make $50 dollars an hour. If you're coming there as customers, I think it'd be happier and serve you better if they're making $50 an hour than idf they're making $10 dollars an hour.
But the net result on this that by having the tip credit that we are doing right now, that I heard that Mr. [Dan] McElroy testify earlier, we are driving people from full service places where they make the most amount of money into fast casual and casual. I just went for the first time to a Panera Bread that was mentioned by Mr. Svensson here; I didn't realize that-- I tried to leave a tip--you are not allowed to leave a tip there.
Now it costs you a lot less to go there, they're very successful, they're the darlings of Wall Street right now, but when you raise the wages without giving a tip credit, you are driving people away from the highest paid jobs to jobs that are one-third or one-half of that amount.
Representative O'Neill asked, "What type of solution would we in the restaurant industry have?"
Well, mine's going to be a little more dramatic than anybody else here has talked about here, but I really truly believe that if my son or daughter were right now in the restaurant business working as a server, a bartender or a waitress, I believe that they would make more money with this proposition. And that's, let's do this. Let's have the tipped wage or the cash wage as it's known, in minnesota ;et's go to $4.50.
Some people will say, "You want to decrease the wages?" [Bluestem's note: current minimum wages and coming increases are listed here by the MN Dept of Labor and Industry] Well, I don't think it does decrease the earnings in most of the cases, because most of the time, tipped employees where they make their money is by the most amount of business that comes through.
Let's have the Minnesota exception in there. Let's have an idea that was actually proposed by two legislators from Woodbury a number of years ago and was supported by a bipartisan group, both Democrats and Republicans. Let's not allow that tipped wage in Minnesota unless the tipped server every single pay period makes at least $11 an hour.
I'm not sure if anybody has an objection to that system but I haven't been able to figure out a logic reason why and I know that the people in the back of the house would benefit from that and they are truly the ones that we need to boost up....
[Representative Sheldon Johnson breaks in the tell Rockler he has one minute more].
Tricky subject. Hard to do . . . [He closes testimony]
On March 12, 2013, Rockler appeared before the Committee on Commerce and Consumer Protection Finance and Policy. His testimony (audio only) begins at the 30:15 minute mark. This is the testimony where he talks about the compression of non-tipped staff's wages. At the 31:20 mark or so, he says:
But where are they going? Many of you go to Chiptotle, you go to Panera Bread, you go to Caribou Coffee..
He then mentions the tip credit again, while asking for the $4.50 tip-credit wage.
On April 29, the second engrossment of the Winkler bill came before the House Ways and Means Committee. Rockler testified (video available, testimony begins at the 17:55 minute point). Rockler introduces himself, then discusses the need for a two-tier wage, commending Bob Gunther's HF1225. He repeated the no-tipping-at-Panera-Bread story, and estimates that the restaurant industry will lose "somewhere between 15,000 and 20,000 jobs" in the first year following the implementation of the minimum wage bill. He notes that in recognition ofthe coming changes, restaurants like Famous Dave's were going to fast casual. Watch the video, including his responses to questions.
Thus, in his testimony, there's only one sentence about wage compression for the lowest-paid workers. Perhap an more elaborate explanation shows up in the trade magazines he mentions, or the handouts the committee members received.
We note, too, that the Dayton boys were proposing a tip-credit wage of $7.25 for any tipped employee making $12 or more when tips are calculated. This is a more generous minimum wage for servers than what Rockler recommended in his 2013 testimony.
Meanwhile, the Republican Party of Minnesota is pretending in a fundraising appeal that Dayton hasn't backed off completely from his earlier statement in the Rochester Post Bulletin--and that all Democrats now agree with the recanted statement.
Perhaps Rockler can send us his 2013 packet via email, so readers can learn what they're missing. We really don't want lunch, coffee or a drink. a
Photo: Kenn Rockler in 2007. Via MPR.
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