Hanauer: Do as I say, not as I Do.

“It’s a fair point. We don’t pay $15 and I advocate for $15.”

Nick Hanauer is right — it is a fair point. Unfortunately, it is also arguably the most accurate statement the venture capitalist and self-described “.01%er” has made in his years-long crusade for an extreme minimum wage hike.

In a recent article for the American Prospect, Mr. Hanauer leads the ranks of misinformed advocates arguing for the elimination of the tipped wage. It’s clear he didn’t bother to do his homework before calling for a policy that could destroy thousands of jobs across the country. Since Mr. Hanauer made wild accusations about the National Restaurant Association working assiduously to keep wages low, let’s take a moment to correct just a few of the most outlandishly inaccurate points he makes in the American Prospect.


We’ll start with Mr. Hanauer’s claim that tipped workers are more than twice as likely as the average worker to fall under the federal poverty line, and restaurant servers nearly three times as likely, according to a 2011 study by the Economic Policy Institute.

The facts: The average household income for restaurant employees that earn the federal minimum wage is $62,507; and only 1 out of 4 minimum wage restaurant employees are considered heads of their house. Most restaurant employees earning minimum wage are supplementing a household income or are in school.

What Mr. Hanauer would have learned if he looked into the laws governing federal wages is that all tipped workers are guaranteed under law to earn at least the federal minimum wage, or the higher state minimum wage in many cases.


Hanauer argues that the median hourly wage for restaurant servers, including tips, is just $9.25 per hour.

The facts: On average, servers in the restaurant industry make $16-$22 an hour, which is more than double the federal minimum wage and can be significantly higher than the proposed $15 minimum wage (which again, Mr. Hanauer does not pay his own employees). In fact, tipped employees are among the most highly-paid employees in the restaurant industry.

What Mr. Hanauer fails to understand throughout his piece goes back to established federal law — if an employee’s tips plus their cash wages don’t add up to at least the federal minimum wage of $7.25 or higher in most states, their employer is legally responsible for bringing the employee up to the required minimum.

The practice of tipping has traditionally attracted millions of employees to our industry. The current tipped model has strong support from American diners who are more than happy to promote a spirit of hospitality by rewarding good service. A restaurant chain that recently experimented with a no-tipping policy found that 60 percent of customers and staff disapproved, and voted with their feet.

Mr. Hanauer is welcome to his own opinions, but not by making up his own facts. Apparently, when it comes to wages, he’s in the “do as I say, not as I do” camp. While advocating for $15 an hour, he is paying his employees $9, according to a recent a interview with Jason Rantz and featured in MyNorthwest.com:

“You don’t pay your workers $15 an hour,” Rantz told Hanauer. “If you go into business in North Carolina, reports are that you pay your workers $7.25.”
“We pay more than that, but it’s true that we don’t pay $15. We pay like $9,” Hanauer responded. “It’s a fair point. We don’t pay $15 and I advocate for $15.

The National Restaurant Association welcomes and actively engages in constructive conversations about the issues that impact the owners, operators and employees building careers in our industry. What we won’t tolerate is activists like Mr. Hanauer who are attempting to advance a political agenda by spreading misinformation about the hardworking Americans employed by restaurants across the country. Restaurants are the training ground for America’s 21st Century workforce, and our jobs provide pathways to the middle class for millions of workers regardless of their background or previous experience.

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