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Analysis of Legislation Affecting Hospitality

Alannah R. Williams

American Public University System

HOSP302 B001 Spring 2023

Williams Hedgepeth

May 28, 2023

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Americans living in the world today face the harsh reality that the federal minimum wage

is too low to adequately support families and provide a decent quality of life. From a financial

standpoint, it is clear that the current minimum wage falls short of meeting basic survival needs.

This situation has caused low quality of life for minimum wage families.

By raising the minimum wage, it not only improves the living conditions of struggling

families but also enables them to afford essential items for a better life. For example, higher

minimum wage would empower families to access healthy food, secure a proper education, and

afford healthcare.

Increasing the minimum wage has the potential to bring about significant positive

changes in workers' lives, as well as the overall economy. One group that particularly stands to

benefit from an increased minimum wage is the hospitality industry workforce. The hospitality

industry is known for employing a large number of low-wage workers, including servers,

bartenders, housekeepers, and other entry-level positions. Many of these workers rely on tips as

part of their income, which can often be unpredictable and inconsistent (Giang, 2012). Raising

the minimum wage in this sector can directly benefit these workers by providing a more stable

and livable income.

The reliance on tips can create a power dynamic between workers and customers, where

workers may feel compelled to provide exceptional service in hopes of receiving higher tips.

This power imbalance could be reduced by increasing the minimum wage, which will also give

employees a fair pay system. Moreover, a higher minimum wage in the hospitality industry can

contribute to improving the overall well-being of workers. It can help alleviate financial stress

and reduce the need for multiple jobs to make ends meet.
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Moreover, raising the minimum wage can have a positive impact on employee morale.

When workers feel that their efforts are recognized and rewarded through a fair wage, they are

more likely to experience job satisfaction and motivation. This can lead to increased productivity

and improved performance. When employees are compensated fairly, they are more inclined to

invest their time and energy into their work (Babic, n.d.). This results in positive outcomes for

both the workers and employers.

Another significant advantage of increasing the minimum wage is the reduction in

turnover rates. In many cases, workers earning low wages are forced to seek additional

employment or work long hours to make ends meet, often sacrificing their personal well-being

and family time. According to a research on the effects of salary increases for employees at the

San Francisco Airport, for instance, security screeners' yearly turnover fell from 95% to 19%

when their hourly compensation increased from $6.45 to $10 per hour (Raise The Minimum

Wage, 2016).

By providing a higher minimum wage, workers may not need to work multiple jobs,

which can lead to better work-life balance and increased job retention. Katherine Williams, a

determined freshman in college, found herself in a situation where she needed to work to afford

essential items like food and dorm room supplies. She took up a job at the local KFC, a popular

fast-food chain.

However, her experience working there quickly became a frustrating endeavor.

Katherine's starting wage at KFC was only $7.50. Awage that she found to be insufficient for her

needs. She realized that this meager income barely covered her basic expenses, let alone any

additional items she desired for her dorm room or even regular meals. The long hours spent at

the restaurant felt like a waste of time to Katherine, as the paycheck she received did not reflect
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her dedication and hard work. Katherine eventually chose to resign in order to pursue a

higher-paying position. (K.Williams, personal communication, May 27,2023).

A stable and satisfied workforce can lead to reduced turnover costs for employers, such

as hiring and training expenses, while fostering a sense of loyalty and commitment among

employees. Beyond the direct benefits to workers and employers, raising the minimum wage can

also have a positive impact on local economies. When low-wage workers receive higher

incomes, they are likely to spend a larger portion of their earnings on essential goods and

services.

This increased consumer spending can stimulate local businesses and support the growth

of the overall economy. Additionally, as workers have more financial stability, they rely less on

social welfare programs, leading to potential cost savings for governments. By implementing a

fair and livable minimum wage, we can create a more prosperous society.

Adjusting the minimum wage for inflation is an important consideration when discussing

the need for its increase. Inflation refers to the general increase in prices of goods and services

over time, which reduces the purchasing power of a given amount of money. When the minimum

wage remains stagnant while the cost of living rises, workers earning minimum wage face

difficulties in meeting their basic needs. Indexing the minimum wage to inflation is one approach

advocated by proponents of maintaining its value over time.

Indexing involves linking the minimum wage to a specific economic indicator, typically

the Consumer Price Index (CPI), which measures changes in the prices of a basket of goods and

services. By tying the minimum wage to inflation, it is automatically adjusted periodically to

reflect changes in the cost of living (Congressional Research Service, 2016, p.2). Indexing the

minimum wage to inflation has several benefits. Firstly, it ensures that the minimum wage keeps
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up with the rising cost of living. Additionally, it protects consumers' spending habits from

deterioration and offers some measure of security to both employees and employers.

The federal minimum wage, at $7.25 per hour, has not been raised in more than a decade.

It is intended to provide a livable wage, however this is not always the case. Since the late 1960s,

the hourly wage has failed to keep pace with the cost of living. In reality, a minimum-wage

worker with a family of four earns significantly below the poverty threshold.

The Fight for $15 movement is an initiative in the United States that pushes for a $15

minimum wage for employees in a variety of occupations. The movement gained momentum in

2012 when fast-food workers in New York City walked off the job, demanding higher wages and

the right to unionize (Miettinen, 2022). Since then, it has grown into a nationwide movement

with widespread support from workers, labor unions, activists, and policymakers.

The primary goal of the Fight for $15 movement is to address income inequality and

improve the financial well-being of low-wage workers. Proponents argue that the current federal

minimum wage, which stands at $7.25 per hour as of 2021, is inadequate to meet the basic needs

of individuals and families. They contend that raising the minimum wage to $15 per hour would

lift millions of workers out of poverty, reduce reliance on public assistance programs, and

stimulate economic growth by increasing consumers' purchasing power.

The movement has successfully influenced minimum wage policies in several cities and

states. For instance, Seattle, Washington, became one of the first major cities to pass legislation

gradually raising the minimum wage to $15 per hour. Similarly, other cities like San Francisco,

Los Angeles, and New York City have implemented their own minimum wage increases to reach

$15 per hour or higher.

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The impact of minimum wage increases can vary depending on factors such as the local

cost of living, industry characteristics, and the pace of implementation. Additionally, the specific

design of minimum wage policies, such as exemptions for certain industries or small businesses,

can influence their overall effects. Overall, the Fight for $15 movement has been influential in

raising awareness about low wages and income inequality in the United States. While the impact

of minimum wage increases remains a subject of ongoing research and debate, these efforts have

prompted discussions about the need for fairer wages and the potential trade-offs associated with

raising the minimum wage.

In conclusion, raising the minimum wage in the hospitality industry and adjusting it for

inflation are crucial steps towards improving the financial well-being of workers and ensuring

fair compensation. The hospitality industry employs a significant number of low-wage workers

who heavily rely on tips as part of their income. By increasing the minimum wage, these workers

can benefit from a more stable and livable income, reducing their financial stress and providing

them with a better quality of life.

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References

Adia. (2021, November 15). Does the hospitality industry need to increase the
minimum wage? https://adia.works/blog/increasing-the-minimum-wage/

Babic, M. (n.d.). 6 simple reasons we should raise the minimum wage right now.
Politics of Poverty | Oxfam.
https://politicsofpoverty.oxfamamerica.org/6-simple-reasons-we-should-raise-the-min
imum-wage/

Congressional Research Service. (2016). The Federal Minimum Wage: Indexation.

https://crsreports.congress.gov/product/pdf/R/R44667

Giang, V. (2012, November 29). 13 jobs where tips are a huge chunk of your salary.
Business Insider.
https://www.businessinsider.com/industries-where-workers-rely-on-tips-2012-11

Miettinen, D. (2022, December 2). SEIU’s Mary Kay Henry on the fight for $15’s
10-year anniversary. Marketplace.
https://www.marketplace.org/2022/11/28/fight-for-15-10-year-anniversary-seiu-mary-
kay-henry/

Pro Con. (2022, February 22). History of the minimum wage. Minimum Wage.
https://minimum-wage.procon.org/history-of-the-minimum-wage/

Raise The Minimum Wage. (2016, November 7). How do employers benefit from a
higher minimum wage? Raise the Minimum Wage.
https://raisetheminimumwage.com/question-answer/employers-benefit-higher-minim
um-wage/
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Sanders, B. (2023, April 17). We must raise the minimum wage to a living wage. the
Guardian.
https://www.theguardian.com/commentisfree/2023/apr/17/bernie-sanders-minimum-
wage-living-wage