What to Do When A Restaurant Puts a Minimum-Wage Service Charge on Your Bill
Paul Constant

I don’t understand the problem here. Sure, maybe the signs are a little passive aggressive, but maybe they just don’t want their customers thinking they decided to raise their prices by 6.5% overnight and go somewhere else, or perhaps they’re just drawing attention to the fact that higher payroll results in higher prices as they had been saying all along before the MW increase.

Now imagine that business added an “ADA surcharge” to the bottom of its checks, along with a passive-aggressive note explaining that the fee is to pay for the installation of the ramp.

It probably would come off as passive-aggressive because we’re not using to seeing restaurants behave that way, but plenty of other kinds of businesses do. Ever take an in depth look at your phone bill, utility bill, property taxes? They’re itemized by charge source.

Customers would understandably lose their minds. There would be a very real, very loud — and very deserved — furor over the owner’s business decision. Instead of the above example, you can imagine any number of moronic surcharges added to a bill: the Water Sprinkler Installation Surcharge, the Compost Handling Fee, the Indoor Plumbing Charge. And that’s what is happening here

Why would they lose their minds simply because a business owner itemized a bill? I agree it would be highly unusual in that industry, i’m sure it would raise some eyebrows, but it’s not like if they don’t put those signs up the customer won’t be charged the fees. The customer pays the same price regardless of whether they know what it’s for or not. Personally, i think it would be rather interesting for a business to break down my bill this way so i can see what percentage of the bill is earmarked for various fees and regulations placed on them by the government. Maybe if that were the norm, people would stop thinking businesses were never ending sources of money that can have ever increasing taxes and fees applied. Maybe then the average person would start to have an inkling of how profit margins work in a business, and just how small they tend to be.

Look: businesses raise their fees all the time. It’s why hamburgers don’t cost 15 cents anymore. They never advertise these increases — you don’t see signs on the front of a pancake house advertising “NOW WITH 1.7% HIGHER PRICES!” — but they happen on a regular basis.

Sure, we all understand that inflation devalues the purchasing power of a dollar, so prices must go up over time, but that implies that prices should increase at roughly the rate of inflation no? Which is currently at 2.5%, and that’s an annual rate compared to the 6.5% price increase referenced here. You’re telling me you can’t think of any reason a business might want to let its customers know the reason that their prices are increasing over night at twice the rate of annual inflation? Let’s say it took the business one month to raise the price by 6.5%, that compares to normal monthly inflation of .21% based on 2.5%/year. That means they just raised prices at about 30x the normal inflation rate.

Sure, businesses raise prices, but don’t conflate such a sudden increase with inflationary increases.

Rather than just raising prices naturally, these restaurant managers are making an overtly political statement when they add minimum wage surcharges to their menus.

Possibly, yes. Again, they could simply be trying to defer customer anger at their sudden price increase.

(As an aside: it’s interesting that restaurants are the only business that feels as though they can get away with this kind of fee structure — you don’t see minimum-wage retailers adding a baseline to the bottom of your checks, for instance. I’m not sure exactly why this is; perhaps tipping culture makes owners feel more emboldened to get away with this kind of action?)

They’re not the only kind of businesses that itemize their bills, as referenced above. Also, even if they were, what exactly do you feel they’re getting away with? Does the fee structure really matter if it costs the same either way? If payroll costs rise, the company will raise its prices, so do you really care how they structure the bill?

Whether they intend to or not when they put those itemized fees on menus, managers and owners are publicly stating that they don’t believe their workers are worth the minimum wage that they pay them. I have a hard time imagining what other purpose the public announcement of these charges could be, other than to turn the public against the minimum wage.

How about letting the public know that there are consequences to the bill they just voted in? Everyone wants to focus on the fact that MW workers got a raise, is it so out of line for the business community to point out the fact that that means everyone’s prices just went up as well?

This is more than just a customer complaint on Yelp. When we support a high minimum wage in Seattle, what we’re really saying is that we want an economy of high-quality employers. High-quality employers create high-quality goods and services. And employees who earn more spend more in their local economy, which is good for everyone.

Respectfully, you don’t know what you’re talking about.

First, you define “high-quality employers” as people who pay high wages, then you say that high-quality employers create high-quality goods and services. That’s a total non-sequitur, how does that follow? If anything, companies that have more money on hand for product development create high-quality goods, and that certainly doesn’t correlate with having to increase payroll. Perhaps you can make an argument that higher paid employees render higher quality services, but that’s pretty thin here as well. Employees whose employers have been forced by law to pay higher wages are not going to have some increased sense of loyalty and work ethic towards their employer. Presumably, if they thought the employer was worth those things they would already be serving at that level.

You could also argue that people who pay their entry level employees higher than minimum wage are high-quality employers, and thus their employees will produce higher quality service. But those employers aren’t really represented in the scenario here where the government has forced higher wages, so it’s not applicable.

As for employees making more money to feed into the local economy, you’ve not thought this through. Most businesses operate on very thin profit margins. Walmart, the perennial example of corporate greed for liberals, works with a 2.57% profit margin. With such a narrow margin, any increase in the cost of doing business has to be met with an increase in revenue, because if that margin disappears, everyone gets fired. That revenue increase comes in the form of higher prices as seen here.

So think about that for a moment. Every increase in wages is passed on to the customers in the form of higher prices. You’re right to say that employees earn more, but now everything costs more. The purchasing power of the employee hasn’t altered, and the local economy hasn’t been effected much.

I get it — change is difficult. It’s not easy or fun to ask business owners to modify their model. But people who decide to run their own business are smart, capable individuals, and they survive because they learn how to adapt. Once a business does the right thing and removes the fees from their menus, you should reward them with your business again. Everybody makes mistakes; the important thing is that we’re building something great together here in Washington, and we don’t want to leave anyone behind.

These notions here are why the US business environment has been suffering as our companies are put at competitive disadvantages to companies in less restrictive countries. This is at the heart of the Bernie Sanders phenomenon where people think all rich people are crooks with endless supplies of money to be tapped into, that we can tax them at ever increasing rates because hey, they’re smart and they’ll figure out how to deal with it right? Well, they deal with it by moving operations off-shore to somewhere cheaper to operate, or by going out of business because they were out-competed.

You specify here that you just want these fees removed from the menu so let me ask, are you upset that the prices have been increased, or simply that the business said anything about it?