During the COVID crisis, businesses in Connecticut were shut down, schools were closed, and everyone – including restaurateurs – settled in for a spare few years. Eventually, politicians declared COVID over and dazed struggling businesses began a painfully slow recovery. When the COVID waters receded, businesses that had not gone out of business, adapted to what some economists are still pleased to call the free market system.
We now discover that some of the more destructive restrictions imposed on the free market during COVID were both unnecessary and ruinously unproductive for both workers and employers. Businesses closed down, workers were thrown out on barren streets, and everyone suffered equitably.
In Connecticut, where taxes and regulations are onerous, large chain restaurants closed some operations and moved to greener pastures in less punishing states. Smaller Connecticut restaurants, unable to turn a productive profit, shut down and let their employees go.
There are two kinds of marketplaces: those in which prices are set by what used to be called barter, and those in which salaries, benefits and prices are determined by amorous politicians on the hunt for votes.
Barter is actually private contracting. Barter occurs whenever money is freely exchanged between two persons, one desiring goods or services and another willing to pay the prices offered. In a free market, the purchaser may shop around until he finds a price or a job suitable to him. In a market interrupted by excessive taxation and regulation, choices are considerably diminished. The free market allows for exceptions to a rule that benefit both employers and employees, but a ridged state ordered rule does not.
State controlled markets are common in what neo-progressive Democrats are pleased to call authoritarian, dictatorial or totalitarian regimes. Politicians, rather than two or more people freely bartering among themselves for open jobs, determine such things as fair labor prices, fair salaries or fair prices for goods and services. A gaggle of neo-progressive politicians in Washington D.C. or the state of Connecticut feel no compunction about vetoing what conservatives regard as the economic votes of the larger population as determined by choices freely made in our tattered free market.
This alternative politicized market bears in its train certain inescapable consequences. If the politically set wage or benefit is too generous, businesses that cannot adapt to the political dictates close or move in many cases to areas of the country or state in which the free market is not distorted by politicians on the make for campaign money and votes.
The politicized market also allows for state bullying absent in a free market arrangement in which prices and benefits are set by people freely choosing products or services. In a free market, it is the buyer who ultimately sets prices by choosing or refusing to choose certain products or services. In a politicized market, politicians choose for consumers by replacing what Adam Smith called “the invisible hand” with a balled fist. Consider, by way of example, the effort currently under way to force reluctant purchasers to buy unsellable products such as battery powered vehicles.
And here we are brought to a discussion of a minimum wage for the wait staff in a free market restaurant system.
The minimum wage set by the state for restaurant workers in Connecticut is $6.38 for wait staff and $8.23 for bartenders.
According to Connecticut’s Office of Legislative Research (OLR), a new, union favored bill before the General Assembly, SB 1177 AN ACT CONCERNING ONE FAIR WAGE, proposes to remove the current law’s “tip credit” provision, “which currently allows employers to pay hotel and restaurant staff and bartenders who customarily receive tips less than the minimum wage, as long as their tips make up the difference. Under current law, the tip credit allows employers to pay hotel and restaurant staff $6.38 per hour and bartenders $8.23 per hour, as long as their tips make up the rest of the minimum wage requirement (currently $14.00 per hour).
“Removing the tip credit requires employers to pay these employees at least the full minimum wage. By law, the minimum wage increased to $15.00 per hour on June 1, 2023, and then beginning January 1, 2024, it will be annually adjusted based on changes to the federal employment cost index (CGS § 31-58).”
The Yankee Institute, one of the few remaining “investigative journalism” projects remaining in Connecticut, reminds us in a recent posting Meghan Portfolio, “One Fair Wage a Bounty for Some, but Workers Missing Out on the Spoils” of the hidden dangers of the political marketplace: “Sen. Julie Kushner (D-Danbury), serving as the co-chair of the Labor Committee and former United Auto Workers (UAW) Regional Director, is collaborating with leftist group One Fair Wage. Together with union leaders and elected officials from Chicago, they held a press conference in Hartford on Tuesday (Dec. 5) to outline her commitment to advance a bill aimed at eliminating the sub-minimum wage for tipped workers.”
The workers missing out on the spoils, according to Yankee, are restaurant workers.
Executive director of the Connecticut Restaurant Association Scott Dolch surveyed 200 full-service restaurants in the state. Dolch found that among restaurants surveyed tips and the sub-minimum wage produced hourly incomes of $33 for wait staff and $38 for bartenders. The elimination of the tip credit provision for the purpose of imposing on state restaurants an hourly fee of $15.00 would considerably reduce the take home pay of restaurant employees and impose unsupportable burdens on Connecticut restaurants .
Owner of the Main Pub in Manchester Keith Beaulieu testified at the public hearing on the bill, according to a piece in CTMirror, “On average, our servers currently make approximately $29 per hour, and our bartender makes approximately $31 per hour. Those hourly averages include their tipped wage, plus tips. If the bill under consideration becomes law, my average annual payroll would increase by $135,821.68.”
And Joseph Addonizio, owner of Saybrook Fish House of Canton, pleaded, “Many Connecticut restaurants have made no profit the past three years with the COVID restrictions and now high wages, high food and energy costs, high packaging costs. For many of us having to potentially pay servers more money would be the final straw. Please leave tipped wages exactly where they are.”