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Taxpayers picking up $9 billion tab due to low restaurant wages, study says

The release of the report comes a day before the National Restaurant Association's annual lobby day on Capitol Hill.

April 14, 2015

Restaurant Opportunities Centers United released a new report outlining the public cost of the full-service restaurant industry's low wages, the firm announced. The release of the report comes a day before the National Restaurant Association's annual lobby day on Capitol Hill.

ROC acknowledges the restaurant industry as one of the largest and fastest growing economic sectors in the country, but states that, according to a press release, restaurant workers occupy eight of the ten lowest-paid occupations as reported by the Bureau of Labor Statistics. At least five of these are in full-service, the company said, with the lowest wage in the country the federal tipped minimum wage frozen at $2.13 an hour since 1991.

This "sub-minimum wage" requires the majority of tipped workers' wages be paid by customers, ROC said.

Key findings of the report include:

• Nearly half of the families of full-service restaurant workers are enrolled in one or more public-assistance programs.
• The cost of public assistance to families of workers in the full-service restaurant industry is $9,434,067,497 per year.
• Tipped restaurant workers live in poverty at 2.5 times the rate of the overall workforce.
• Restaurant workers as a whole experience poverty at a rate over twice that of the overall workforce – 20.9 percent.
• Large full-service restaurant companies like Darden and DineEquity pay their workers so little that many of the employees of these companies rely on taxpayer-funded programs.
• The taxpayer cost of a single Olive Garden is $196,970 annually.

With annual revenues of over $91 million, 750 staff, and nearly 40 congressional lobbyists, the ROC claims that the National Restaurant Association is one of the most powerful business lobbies in Congress and state legislatures, with members restaurant giants such as Olive Garden parent company Darden, DineEquity, Brinker International, Bloomin' Brands, Cracker Barrel, McDonald's, YUM! Brands and more.

The NRA prioritizes measure to oppose raising wages for tipped workers, the majority of whom are women, according to ROC, and is leading the fight to keep the federal tipped minimum wage at $2.13, lower than the regular minimum wage in 43 states.

ROC said that the NRA bears responsibility for the gender inequities and sexual harassment produced by maintaining a two-tiered wage system, resulting in the restaurant industry being the single largest source of sexual harassment claims to the Equal Employment Opportunity Commission. ROC reported that 90 percent of female tipped restaurant workers make claims of sexual harassmenton the job.

Under its campaign "One Fair Wage," a multistate and national initiative to raise the lower, tipped minimum wage to 100 percent of the regular minimum wage, ROC is working to eliminate the two-tiered wage system.

Picking up the NRA's Tab: The Public Cost of Low Wages in the Restaurant Industry report can be found here.