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St Paul Round-Up: Start Talking Tip Credit Now

As St. Paul city leaders look for funding to launch a study of the $15-per-hour minimum wage, many hospitality workers and business owners are calling for early consideration of a tip credit. Why? They want to avoid what happened in Minneapolis in June, when a minimum wage increase passed with no tip credit included.

More than three dozen hospitality workers and restaurant owners met in late October at Fitzgerald’s in Cathedral Hill to discuss the issue. Other groups, including Midway Chamber of Commerce, are also reviewing the impacts of raising the minimum wage.

The St. Paul City Council on November 8 approved a request for funding the study, and the city is working with the Citizens League to seek outside grant funding. The council’s resolution states that “the City Council would like to approach this issue in a context-specific way that takes into account the mix of businesses, job types, cost of living, and poverty rate in St. Paul.”  The Citizens League recently conducted a similar study of street assessment policy in partnership with the city, using a stakeholder task force. A similar approach would be sought with a minimum-wage increase, to allow for study of the many complex issues involved.

Even with all this momentum, St. Paul City Council President Russ Stark said he doesn’t expect a minimum-wage proposal to go to the city council until the second half in 2018, following the study process. 

The wage disparities issue, as outlined by $15 Now! and other advocacy groups, estimate that 22 percent of St. Paul residents live below the poverty line. Raising the minimum wage is one way to reduce disparities and cope with a rising tide of homeless residents, as rents rise faster than income. 

A tip credit is believed by many to be part of the solution. One proponent is Carol March, president of the Madison Restaurant Group, which includes eight restaurants in and around downtown, including Handsome Hog, Eagle Street Grille, Fitzgerald’s and Green Lantern, which combined, employ more than 500 people.

She recently met with a Midway Chamber group to discuss the minimum wage issue and how the tip credit could factor in St. Paul’s minimum-wage deliberations. “St. Paul could be at the forefront by having the tip credit issue outlined fully, and have it be part of the minimum wage discussions,” March said.

Workers in the front of the house, such as waitstaff and bartenders, can easily earn more than $30-plus with tips. But someone who just got out of culinary school, carrying as much as $30,000 to $40,000 in student loan debt, gets their start by peeling carrots for $10 an hour, said March. A $15 minimum wage for non-tipped workers would be a huge benefit for them.

But without a tip credit, advocates could end up hurting the very workers they are trying to help. “We’re hoping there’s not a rush to a decision in St. Paul, and that time is taken to understand the different impacts on different types of businesses,” said March. “A tip credit needs to be part of the discussion. I think there is a misunderstanding of what the tip credit means.”

A key message from the October session at Fitzgerald’s was that everyone affected in St. Paul needs to start organizing now, to get the tip credit issue in front of elected officials before their minds are made up.

Jennifer Schellenberg, a bartender at Red Rabbit, and veteran restaurant owner Tim Mahoney, said the message Minneapolis business owners and workers received was that they raised the tip credit issues too late in the city review process. They cautioned not to let that happen in St. Paul. 

What a St. Paul hospitality industry campaign would look like isn’t known yet. In February 2017, a coalition of Minneapolis restaurants started to ask that the wage hike be phased in and include a tip credit. This was promoted with the idea that tipped employees would continue to earn the $9.50 state minimum wage. Restaurants would make up the difference if that plus tips didn’t add up to $15 an hour.

Many at the October 24 session said they’re already seeing negative impacts to Minneapolis restaurants, with some hospitality workers changing jobs to work in other communities outside of Minneapolis. When much of a worker’s income is based on gratuities for service, mandating a minimum wage for those jobs doesn’t make sense.

Employers are already dealing with an increasing number of mandates, such as earned sick-and-safe time. “With more mandates and without a tip credit, we cannot survive,” Mahoney said.

He's not alone in that sentiment.

“We were really behind the eight ball in Minneapolis,” said Bob Manning, a sous chef at Public Kitchen. He added that there is a need to recognize that restaurants are a unique industry and that the tip credit must be considered.

“I didn’t spend years honing my craft to hand it over to politicians and to have them fix something that is not broken,” he said. 

In the news

Dining in St. Anthony Park will be very different after Muffuletta closed its doors November 11. The groundbreaking restaurant had been open for 40 years. It was the first in what became the Parasole group of restaurants. In 1977 Phil Roberts and Pete Mihajlov opened their European-style bistro, known for unique dishes and for having one of the first, if not the first, patio in the Twin Cities. Changing tastes, ongoing financial losses and two years of street construction, as well as a pending lease renewal, drove the decision to close. 

A West Seventh space eyed by several restaurant hopefuls, including the northern Irish-themed Glensman pub, will instead become an outpost for Parlour’s new St. Paul location. The opening is eyed for early 2018. The space was the Grandma’s Attic antique shop, but has been vacant for several years. The new restaurant will join a growing Seven Corners hospitality community. The design calls for the space to include a bar, a diner space and a lounge. 

The old Barbary Fig building on Grand Avenue has come down. The popular Mediterranean restaurant closed in fall 2016 after 28 years. No details have been released about a replacement.

The St. Paul Farmers Market winter market is moving to the Market House Collaborative in Lowertown, to open every Saturday. Look for vendors on the lower and possibly main levels, with meat vendors and Christmas tree vendors outdoors and other outdoor space available for parking. The recent closing and sale of Golden’s Deli means that space is no longer available for the winter market. 

The city of St. Paul will have to find another restaurant operator for its Como Park Pavilion after Como Dockside announced its closing on its Facebook page November 10, followed by a press release from the city announcing that the St. Paul Department of Parks and Recreation will seek a new operator for the space. Como Dockside opened in 2015, after a legal battle between the city and former pavilion restaurant owner-operator David Glass. Glass obtained an $800,000 settlement from the city, after he claimed that his lease was improperly terminated—the third-highest legal settlement in city history.

Como Dockside was operated by restaurateurs Jon Oulman, his son Jarret Oulman and John Mandelnan, who also own and operate Amsterdam Bar in downtown St. Paul and Minneapolis’ 313 Club.  

Como Dockside has a contract with the city calling for it to operate at the pavilion until 2020, and to pay the city at least $100,000 per year. The restaurant team has invested about $300,000 in the facility.

“The Como Lakeside Pavilion has so much potential and hopefully the community has recognized the complete transformation of the facility since we took over as the management partner in 2015,” said Jon Oulman. “We had hoped a year-round staffing model and upscale full-service restaurant concept would be successful at the facility, but unfortunately, due to seasonality of the facility and competitive labor market, we could see that long-term we’d need to adjust—and we felt a different vendor would be a better fit for this space.”

Como Dockside will continue to provide limited service in the facility through the end of the year. 

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