Archive for Sunday, November 19, 2006

Serving up more costs

Minimum wage increases add up for Steamboat restaurants

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Server Hailey Dault delivers drinks to customers at The Shack on Wednesday morning. Colorado minimum wage increase is expected to have minimal effect locally.

— Andie Failla was surprised to learn that Colorado voters decided she should get a pay raise come January.

"I didn't know it was coming," said Failla, a server at The Tap House restaurant and bar in Steamboat Springs.

About 53 percent of Colorado voters supported Amendment 42 on Election Day earlier this month. The ballot measure calls for a statewide minimum wage increase for all employees. Fifty-seven percent of Routt County voters supported the amendment, which also will adjust the minimum wage annually for inflation.

Non-tipped workers received a raise of $1.75 an hour, meaning they'll soon earn $6.85 an hour. Tipped workers such as Failla will earn $3.83 an hour, plus tips, instead of $2.13 an hour.

"The thought is appreciated," said Failla, who is working her way through college, but she acknowledged that she isn't sure she deserves a raise.

The significance of the wage increase in Routt County and its communities is unclear.

"It certainly will have an impact - more so in some of the rural communities in the Eastern Plains," said Scott Ford of the Small Business Resource Center at Colorado Mountain College's Alpine Campus in Steamboat. "It does help some people, and it may impact the small businesses that were paying an employee a minimum wage because that's what they can afford."

Voters in six other states also approved ballot measures to raise the minimum wage above the federally mandated $5.15 an hour. The measure won with 76 percent of the votes in Missouri, but it was closer in Colorado, where business groups mounted an aggressive opposition campaign.

In Steamboat Springs, the increase is unlikely to have a huge impact because even workers at fast-food restaurants make about $10 an hour.

"Our minimum wage is essentially what the market will demand and bear," Ford said. "Our minimum wage here is more market-driven."

Restaurant owners and other businesses that employ tipped workers will take what they believe is a significant hit.

"I don't know what I think about it, but it's stupid," The Tap House co-owner Dave Daggett said about the increase. "It's a raise for the wrong people."

Daggett said good servers make upwards of $20 an hour in tips and wages working at The Tap House.

"Why are we giving that person a raise versus ag workers?" Daggett asked. "That's who needs one."

While doing payroll Thursday, Daggett estimated the minimum wage increase for his tipped employees will cost his business about $25,000 a year.

"You do something like this, and it comes off your bottom line," said Tim Pahula, co-owner of 8th Street Steakhouse. "When you've got five servers for eight hours, it really adds up," Pahula said.

He said the increase also will cost his business about $25,000 a year, which means more money for the government because they will be able to collect more in taxes.

Restaurants in Steamboat, including his, operate with low profit margins and will have no choice but to pass the increased costs to customers, Pahula said.

"It not a huge thing, but some things will have to change," he said.

It might mean a quarter more for a soda, and some of the specials might not be so special.

"To the consumer, they probably won't notice," Pahula said.

Perhaps the one good thing about the wage increase is that it affects all restaurants equally, Pahula said.

"It's like the smoking ban," he said. "Every restaurant has to make changes."

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