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0:00:00 - (Doug Jenkins): Coming up next on Chamber amplified.
0:00:02 - (John Baxter): Can you imagine in a restaurant right now after the inflation we've all seen in the last three years, if you raised your prices another 2020 5%, we're very concerned people would lose customers and lose that that kind of customer counts and traffic.
0:00:17 - (Doug Jenkins): Hello, and welcome to the show. I'm Doug Jenkins from the Findlay Hancock County Chamber of Commerce. On each episode of Chamber Amplified, we're examining issues impacting the local business community. Whether it be employee recruitment, retention, marketing, it issues. It's really anything that can impact your business or the business community as a whole. Our goal is to give our members tips each week on at least one way they can improve operations and thrive in the current business environment.
0:00:42 - (Doug Jenkins): So we took part in an event a few months ago looking into tipped wages in Ohio. There's a chance that an initiative that would eliminate tipped wages could be on the ballot in the state in November. And while supporters say it would raise wages for employees who receive tips, I do find it interesting that an overwhelming majority of people surveyed who are tipped employees actually don't want the change going to sort that all out today, I'll be joined by John Barker of the Ohio restaurant and Hospitality alliance to talk about the details of what's being proposed and the unintended consequences that could happen should the initiative pass.
0:01:14 - (Doug Jenkins): Thanks for tuning in. Remember, if you're listening on Apple podcasts or on Spotify, you can rate and review the show. It really does help spread the word. Now, let's get into it. So let's go back to the beginning of this. As we know, in Ohio, there are all a litany of different issues that can appear on the ballot any year, and one that we're keeping an eye on right now could be something that impacts tipped wages going forward. So let's start there and just talk about what is potentially being proposed.
0:01:43 - (John Baxter): So in Ohio, we're able to amend the Constitution. We're one of the states that has, I would say it's one of the more easy constitutions to amend because the way it was set up. And so we have a group that's proposing to raise the starting wage in Ohio and at the same time eliminate the tip wage. And those are two different things, but they're coming together as a ballot initiative and, you know, they get enough signatures to get it on the ballot.
0:02:13 - (John Baxter): We would all vote on it in November of 2024.
0:02:16 - (Doug Jenkins): So, as always, it's important to be informed before signing a petition or going to the ballot box as it'dis ##s this, this could be very, well, it is very interesting, but people need to be following this because it could drastically change the way that restaurants have to operate and how waiters and waitresses are compensated and or wait staff is compensated. Let's talk just a little bit about the details of what's being pitched at this time.
0:02:46 - (John Baxter): Yeah, so the proposal as it's being considered right now would take the minimum wage in the state, which is 1045, and it's already indexed to inflation. So each year you notice that the state minimum wage goes up a certain amount depending on sort of the movement in inflation. And so this year it's a 1045. This would move it to dollar within 14 months. So starting in November, 14 months, it would go up $4.55.
0:03:16 - (John Baxter): And it's interesting, as we talk to people, by the way, that will be for all businesses, not just, not just restaurants. So if you have a little mom and pop grass cutting business or if you have an ice cream store, it doesn't really matter what you're doing. If you're paying less than 15, you'll have to adjust that. And some people say to us, well, everybody's paying 15, but not really. Like in some of our small cities and our rural markets, you know, some of our businesses are paying less than 15 because the cost of living is so much lower.
0:03:43 - (John Baxter): And typically the people who are making less than 15 are high school and college kids. It's their first job. Typically you, I'm not, not saying that's in every case, but that's typically the situation. So this would be a burden on small businesses and those in smaller towns and so forth. And that's a pretty big increase. $4.55 in 15 months is a lot for business to adjust to because think about those who are already paying 15 now. They've got to move people to 17 or 18. I mean, you got to continue to adjust.
0:04:11 - (John Baxter): Those that are making 18 now, they're 22. So everybody's payroll is going to go up significantly. And, you know, we're all for people making more money. We just prefer it to be the way the market has been doing it. It's been doing it very well in the last few years that we've seen inflation kind of go crazy. And so that is an issue for all businesses. And on that one, we are talking to everybody, right? Retailers, manufacturers, it doesn't really matter. Restaurants, of course, are part of that as well.
0:04:35 - (John Baxter): The second component, and these are connected. You can't separate them if they go into the ballot this way, is the elimination of the tip credit. And that's a different animal. So in the state of Ohio, if you are a server, so in a sit down restaurant, you know, I'm talking about a mom and pop restaurant or kind of a casual dining restaurant or fine dining, the business is able to pay you what they call a tipped wage, which is 525.
0:04:59 - (John Baxter): And then you get to keep all your tips. And that's been a system that's been in place in Ohio really for decades. And it's one that has worked really well, particularly from the eyes of the servers and bartenders who take advantage of this because they get to keep all their team tips. And the average server across the United States average is about $27 an hour. So they like it. It's a way for them to work kind of brief periods of time or, you know, maybe they're working part time at full time. Doesn't matter.
0:05:26 - (John Baxter): It make a significant amount of money. So they don't want that tip wage eliminate. Because if you eliminate it, everybody goes to the minimum wage. And that would be really a pay cut for people in the industry. And that's primarily restaurants, servers, you know, bartenders and then other people who work on tips, like, you know, young guys at parked cars and you've seen, you know, the valets and things like that.
0:05:48 - (John Baxter): Some hotels have, you know, tips, beauty shops. Oftentimes, you know, people work for an additional amount on tips. So there's some industries, but we're, we're the big one.
0:05:58 - (Doug Jenkins): So to your point, waitaff and people in these jobs have said, hey, we don't want this. Uh, have they reached out to you directly? Obviously you work directly, directly with restaurant and restaurant owners, but has it been different to work with when the staff is actually being the one saying, hey, we don't want this?
0:06:17 - (John Baxter): Yeah. So both groups really, the operators, which we talked to on a regular basis, 93% of them certainly don't want this because this would triple the amount of labor. They would, you know, be responsible for labor costs, that is on the servers and in bartenders. We've gone around the state talking to them as well. We try to get to every county in the state. There's 88 of them, right. To make sure that we go into modern pops and chain restaurants doesn't really matter, to get that feedback. And then we just closed a survey where we talked over 990 servers and bartenders.
0:06:48 - (John Baxter): And over 90% of people who responded to the survey also said they like the current tipping model because they like the flexibility of tipping. They like to be able to earn a higher wage. They average about $20 an hour. They like that. But we have people who are making 50, 75,000 in our fine dining restaurants. We have servers making over 100,000. And by the way, you can get a job like that. You don't have to have a PhD. You don't have to have a master's. You don't have to have a college degree. In fact, some of our folks that work in restaurants and bars, they don't even have a. Their high school diploma, but they are willing to work hard. It's a great place to land for them. They like what they do. They have that servant attitude, and they like to take care of people. They just love hospitality.
0:07:31 - (John Baxter): So they like the current model that we have.
0:07:35 - (Doug Jenkins): For the people who are advocating for this. This is maybe me editorializing a little bit, but it feels to me like, if all you want is chain restaurants, and I'm not saying there's anything bad with chain restaurants, I love several of them. My weight shows that. But if you. If you only want that, you're really going to start to price out the local mom and pop restaurants that really give a community. It's a lot of its personality and or one of the big draws to a community people have that attachment to. Oh, yeah, I remember this. This is my favorite local restaurant. We should go there. When you're in town, that type of thing, it feels like you're really gonna start to push them out of the market if this goes through.
0:08:16 - (John Baxter): Yeah. The biggest fear is the moder imposs, by the way. This affects everybody, but mom and pops typically have a lower kind of threshold for something like this. You know, anybody who has owned a restaurant, or if you have a family member who owns a restaurant, you know the profit margins, or about five to 7%. So of every dollar you make, you get to keep about a nickel. If you're really good, you get to keep seven cents. And so this would squeeze that entire profit. In fact, we actually created a financial calculator for operators and people in the business to kind of run with these changes that I described earlier on.
0:08:47 - (John Baxter): And what happens is they need to. They would need to raise their prices somewhere between about 20 and 25% to be able to stay where they are, to keep their profitability where it is right now. And can you imagine in a restaurant right now, after the inflation we've all seen in the last three years, if you raised your prices another 2020, 5%, we're very concerned people would lose customers and lose that kind of customer counts. And traffic, which would put a further burden, you know, on the business. And so this is a kind of a solution that the outside activists have come up with. By the way, they are based in Massachusetts, in Berkeley, California, to give you some idea of where they're coming from. It's called one fair wage.
0:09:27 - (John Baxter): They've come up with this and they want to bring it into Ohio, even though people in Ohio don't want it. So that's the reason, of course, we're making this, you know, trying to do this awareness campaign first and then obviously lead an opposition campaign to this.
0:09:39 - (Doug Jenkins): Are there examples of states that have enacted this type of thing and what's been sort of the repercussion or what has happened there?
0:09:47 - (John Baxter): There haven't been any states since. There are seven states that do not have you the tip wage, but they've never had it. So they're mainly west coast. Recently, this kind of a thing has passed in two jurisdictions, one in Chicago, but it hasn't rolled in yet where they only had to convince a group of aldermen. They're basically their city council. So we'll see what happens there. But restaurants are already very nervous about this. The other place they passed was in Washington, DC, where they were able to, again, to get, you know, get it passed in DC, which is a very unique little microcosm of the world. Right?
0:10:21 - (John Baxter): It's a high check. There's a lot of expense check and kind of dinners and things going on there, but it's passed there. And, and the first thing that we have seen, we've retracted a lot of data that 3700 servers and bartenders have lost their jobs since it began to eliminate the tip credit in Washington, DC, which is just devastating. That's the kind of thing that we're going to see in markets where they, to try to push this.
0:10:46 - (John Baxter): They're pushing it in Ohio, they're pushing it in Arizona, the state of Illinois, the state of Massachusetts, all the same time. So we're all pressing back on this because again, people in the industry don't want it.
0:10:56 - (Doug Jenkins): If people want to go learn more information about this. I know you've put together a lot of information at eatrin ohio.org, but what all can they expect to find there?
0:11:06 - (John Baxter): Yeah, probably the most important thing is we have captured video servers, you know, as they've spoken about this, and we're playing those videos on those sites. So if you go to eatrin ohio.org, you can go into the advocacy page or you can just go to protecttips Ohio do.com either way, you'll get to that and you'll see it from their own words, right. That we just ask people to speak about why are they servers, why are they bartenders, what do they like about it?
0:11:33 - (John Baxter): And why do they not want to see the elimination of the tip credit in their own words? And so I think that's the most powerful thing to understand. And we'll have many more of those. And as part of the survey that we did, we asked people to put comments in and would they be willing to, you know, record more. And in today's world with technology, we're going to have a ton of these, right. Where people are saying why they like the current model.
0:11:53 - (John Baxter): And again, I think that speaks volume. Right. Why, why would we make a change in Ohio if the people that is preported to help don't want it? That tells you everything.
0:12:03 - (Doug Jenkins): I'm curious. I always like to try and find solutions to things here and everything. And one of the ways you keep something like this off the batance is by making sure that the environment is good to begin with. Not that I think that it's necessarily bad, but obviously there'already, there's always room for improvement. Place. What can we do on the consumer side to make sure that, that people who are doing the wait staff and everything going take or being properly compensated by making sure either we're tipping right or the restaurants we select.
0:12:32 - (Doug Jenkins): Are there any thoughts on that side of the thing or that side of the issue?
0:12:37 - (John Baxter): Yeah, I think we've had such a good model in the United States in general and here at Ohio for a long time. You go in and you have a meal and if it s, it's a meal where you have a server, you know, you just want to take care of them at the end of it. Right. If they've done a good job, helped you out, you know, Prof. Service and they're friendly and all that. I mean, most people tip around 15% to 18%. I think generous tippers push up to about 20 very generous tippers. We've all heard do stories where they leave a couple hundred dollars or something at the end of the meal. Right. We're not really expecting that. But I do think, you know, take care of your servers. You know, they do work hard and those tips are really a direct compensation for how well they've done their job. And they love it. I mean, there's, you talk about instant gratification versus when you get a paycheck, right? You get it two weeks after you've done the work, maybe or something like that.
0:13:21 - (John Baxter): When you work in the restaurant or a bar, you get it immediately. And you get it either via the credit card that, you know, people debit card or cash that they give you. And so it's instant gratification. It's one of the reasons that people kind of love it, and then they're able to go back into the community and spend that money. Right. Which is what they do. Right. It's nice for the ecosystem. And, you know, our economy here in Ohio is pretty strong, although it's fragile.
0:13:44 - (John Baxter): And these are the kinds of things where you see this over regulation idea trying to come in and change something that we believe would weaken. And we do think one of the things that would happen with this or two things would happen. Pricing is going to go up significantly. So as a consumer, if this passes, you're going to pay much, much more for your food out at a restaurant. And number two is it weakens the kind of the p and l, the profit loss statement for restaurants.
0:14:07 - (John Baxter): We are concerned about losing restaurants because some of them made it through the pandemic, but they're still struggling. Right. It's still hard because they took on debt and they lost employees, and they had to kind of fight to bring people back. They had to fight to kind of rebuild their customer base. And, you know, we want to try to help them. We want a really robust restaurant scene all over Ohio. Right. Northeast Ohio, northwest Ohio, everywhere. Right. And.
0:14:30 - (John Baxter): And these are the kind of things that make us kind of just question whether or not that's go, going to be harder to do. You said it earlier, what we don't want to end up with is just chain restaurants. We love our chain restaurants. Right. But we also love our mom and moms. And everybody has a favorite independent restaurant or ice cream store or coffee shop. Right. And that's. That would put tremendous pressure on their business model. And we want to try to protect.
0:14:52 - (Doug Jenkins): Yeah, well, and every chain restaurant started off as a mom and pop for the most.
0:14:56 - (John Baxter): How many?
0:14:56 - (Doug Jenkins): I don't know. Any restaurants that I've ever gone to where it just, they wonder, like, what I'm gonna have is 300 restaurants nationwide. Like, it started off somewhere as someone wanting to say, just you're eliminating that possibility for people.
0:15:11 - (John Baxter): Doug, I spent about 18 years at the Wendy's company, and of course, you know, I got to know Dave Thomas when I was there. And Dave started Wendy's. Right, with one restaurant. His business plan was to end up with two restaurants. Enough. Enough places for all his five kids to have a job. Right. And work and STFF. He ended up with about 7000 on the books today. But you're right, it started off with one restaurant in Columbus, Ohio, right, on Broad street. Right.
0:15:36 - (John Baxter): And it went from there. But you're right, everybody at one point is a mom and pop and independent. And then if you do really well, right, you can grow it and be something more over time.
0:15:45 - (Doug Jenkins): So. Well, John, we appreciate your time again. Again today we'll make sure to drive people to eat, drink Ohio.org to get more information, and certainly an issue we'll be keeping an eye on. But thank you again for your time.
0:15:56 - (John Baxter): All right, thank you. Take care.
0:16:00 - (Doug Jenkins): Thanks again to John for joining us on the podcast. And again, I think we're all in favor of people making more money, but it is really important to examine the ripple effect that a change like this could have and be educated. Should you see it on the ballot or be asked to sign a petition? So chamber amplified as a free podcast for the community thanks to investment of members from the Finay Hancock County Chamber of Commerce.
0:16:22 - (Doug Jenkins): Because of our robust membership, we're able to focus on providing timely information to the Findlay and Hancock county business community, run leadership programs for adults and teenagers, and be an advocate for the area while also providing tools to help local businesses succeed. If that sounds like something you'd like to be a part of, just let me know and we can talk about how an investment in the chamber helps strengthen not just the community, but your business as well.
0:16:43 - (Doug Jenkins): That'll do it for this week's episode. If you have ideas for topics we should cover on future Epis, you can send me an email djenkinsindlayhancockchamber dot Comt. Remember, if you're listening on a website, perhaps our website, you can have every episode of Chamber amplified delivered straight to your phone. Just search for us in your favorite podcast player. Again, thanks for listening. We'll see you next time on chamber amplified from the Findlay Hancock County Chamber of Commerce.