INDIANAPOLIS (WISH) — President-Elect Joe Biden has proposed the federal minimum wage be raised from $7.25 per hour to $15 per hour.
That increase would pay raise comes with a catch: cutting tip wages.
Meanwhile, Indiana Democrats have come up with a similar proposal to increase Indiana’s minimum wage from $7.25 per hour to $10 per hour in 2022, and then by $1 each year until it reaches $15 an hour. That proposal faces slim prospects in the Republican supermajority of the Indiana General Assembly.
Rob Strong, owner of downtown Indianapolis Stadium Tavern, said, for most bar and restaurant owners, the toughest part of the coronavirus pandemic was cutting staff and shortening their hours, something he fears could happen again if the minimum wage increases and the tip wages go away.
“A lot of places don’t have that labor included in everything. You know, $15 an hour is a lot for a restaurant or a small business to cover,” Strong said.
Patrick Tamm, president and chief executive officer of the Indiana Restaurant and Lodging Association, said if the tip wage goes away, business owners would have no choice but to raise food and drink prices.
Michael Hicks, director of the Center for Business and Economic Research at Ball State University, said two of every 100 workers in the United States earn minimum wage. Usually, one of them is a teenager working a part-time job, and the other is almost exclusively someone on a waitstaff.
“If a 16-year-old on weekends and evenings is making $10 an hour in the midst of a recession, this is not going to affect to many people outside the restaurant industry,” Hicks said.
Indiana’s minimum wage has been the same as the current federal rate, $7.25, since 2009.
Three neighboring states — Illinois ($11), Michigan ($9.65) and Ohio ($8.80) — have higher minimum wages, according to paycor.com.