Higher wages and split tips: Working for fair pay in the Detroit service industry

Like many servers, Carnaghi was often disappointed or downright disgusted with behavior prompted by the convention of tipping. Customers often talked down to her and other female servers, as well as servers of color. And when customers weren't mistreating her, she found herself jumping to conclusions about how some guests might tip based on their race or nationality."The tip scenario, where the guest is basically paying your entire wage, turns you into either a prostitute or a racial profiler," Carnaghi says. "You're left holding the bag on all of this psychology."So when Carnaghi and partner Molly Mitchell opened their own restaurant, Rose's Fine Food, in Detroit last year, they decided to address the tipping problem—by eliminating it. All staffers at Rose's start at $10 per hour. Tips are accepted, but divided evenly among all staff, front and back of house, adding about $5 per hour to employees' wages. Even without tips, which Carnaghi says the vast majority of customers still leave despite her early efforts to discourage it, the base wage at Rose's is a major improvement over Michigan's minimum wage for tipped employees, $3.23. It's also a bit more than the state's standard minimum wage of $8.50.

Deonte Lucas, a server at Rose's Fine Foods

 
Carnaghi and Mitchell's unique decision fits into a recent national trend, as restaurateurs in New York and on the West Coast have chosen to eliminate or otherwise modify the traditional concept of tipping. Rose's is also among a handful of Detroit restaurants and food businesses who have implemented progressive measures to do better by their servers. And merely paying a living wage isn't the only way they're doing so.These changes aren't necessarily easy ones to make, of course. The tipping system and other service-job customs stick because they're the cheapest, easiest legal way for restaurateurs to maintain a staff, and going above and beyond minimum requirements cuts into profits. But Carnaghi and Mitchell accept their situation."We're not losing money," Carnaghi says. "But it's more like Molly and I have decided to make less money, and the trade is that we're doing something progressive. That's as important to us as money in a lot of parts of our lives."Rethinking the tipElsewhere in Detroit, restaurateurs are endeavoring to pioneer a new legal method of doing what Carnaghi and Mitchell are doing at Rose's. After working from dishwashing up through a variety of roles at Russell Street Deli in the mid-'90s, Ben Hall and Jason Murphy bought the place in 2007. They inherited a split-tip system similar to Rose's, although tips were divided only amongst waitstaff and not back-of-house employees.But they also sought to change other restaurant business paradigms. Hall and Murphy start their wait staff at $5 an hour, and seniority can bring wages up to $10 an hour—again, high above minimum wage for tipped employees. Hall says the co-owners have also sought to "de-hierarchalize" the traditional concept of "prime shifts" versus "graveyard shifts," equalizing the financial reward of doing either a slow Monday shift or a bustling Saturday shift.As a result, Hall says his staffers live distinctly different lifestyles from many of their compatriots in the Detroit food service industry."I'm not going to go so far as to say they're local heroes, but on the block they have the reputation of being guys who have jobs and make money and get new cars and their kids go to school," he says. "They do all these things that we would think of as a throwback to a working lower-middle class ideal that hasn't probably existed so much in the past 20 or 30 years. And they're doing it in a job that traditionally never offers those opportunities."

Andrea Mehall taking an order at Russell Street Deli 
Hall and Murphy are very actively engaged in furthering the kind of progressive policies they've implemented. Murphy has given congressional testimony on the subject and both have had dialogues with other area restaurant owners about better practices in the restaurant business.

As Hall and Murphy prepare to open a new restaurant on the outskirts of Corktown, Hall says the partners' next step is to introduce a standard service charge on customers' bills that will replace the traditional tip. That move provides a legal workaround for Department of Labor regulations requiring that employees spend at least 80 percent of their time doing tipped work (i.e., waiting tables) in order to legally receive tips. Therefore, Hall and Murphy could then split a "tip"-like charge among all staff, front and back of the house, while remaining fully in the legal clear. "Luckily, there's smart people working on it who realize that it's a zero-sum game and that ultimately you're creating this incredible inequality in the kitchen," Hall says. "If you can't face that inequality, the restaurant will always be fundamentally a broken space."Early adoptersTrying to do better by food service employees isn't necessarily a new concept in Detroit. Avalon International Breads owners Jackie Victor and Ann Perrault were doing it way back in 1997, when they opened with a "triple bottom line" business philosophy."Now it's like, 'Yeah, whatever, nobody cares,' because everybody does it," Victor says. "But in 1996 nobody knew what we were talking about."The triple bottom line concept evaluates a business' performance by financial, social, and environmental metrics. Victor and Perrault, who identified as social activists rather than bakers or business people before they started Avalon, have upheld the social component in a variety of ways. Avalon employees receive paid time off starting at 48 hours for new employees and maxing out at 20 days as an employee gains seniority.

Production manager, Curtis Wooten, preparing pumpkin beer bread for baking. He has been working at Avalon for 17 years.  
The bakery also offers employees a life insurance policy, and offered health insurance long before the Affordable Care Act mandated it. Victor says Avalon's employee healthcare plan has a low premium and high deductible, but the business also subsidizes a portion of employees' deductible costs if they do have medical troubles."Our healthcare system in this country is broken," Victor says. "We can't fix it. But we can just be a bridge to a less dysfunctional system."Avalon has also endeavored to offer workers a living wage. The bakery's current starting wage is $12 an hour, but Victor isn't much for tooting her own horn on that policy. She aspires to offer wages closer to $15 an hour, but her business' $2.2 million expansion into a second bakery facility in 2013 set that goal back a bit. "I hope to under-promise and over-deliver, because we're not where we want to be," she says. "We're not where I want to be. We're better than where a lot of businesses are, but we're not as good as others."In some ways, Victor sounds pleased that other food businesses are now doing not just as well, but better, for their employees. She believes better wages and working conditions for food industry employees are on the rise, helped along by higher-end businesses like Whole Foods.Victor modestly doesn't mention herself as an influencer, but it's hard to dismiss the effect that activism-minded business owners like herself, Hall, and Carnaghi might also have at a local level. Victor does note that there are currently more jobs in what she describes as "Detroit's artisan food industry" than there are people to fill them, so she expects an even brighter future ahead for Detroit food service employees."I feel like right now wages are being naturally grown by competition, which is a good thing," Victor says. "That's the good part about capitalism."