Minnesota's Oasis Cafe Makes You Pay A "Minimum Wage Hike" Fee
When Minnesota increased the minimum wage on Aug. 1, small businesses faced a few options. They could employ fewer people to offset the new labor costs. Or they could marginally increase the price of certain menu items. Or they could add a line to their customers’ bills reading “Min. Wage Fee” and let everyone know how they feel about the new law. The Oasis Café in Stillwater, Minnesota chose to go with the last option, deciding to deal with the increased minimum wage by adding a 35-cent fee to their customers’ bills.
While the first two options could certainly have negative consequences as well, Oasis Café’s decision is a distinctly political move that is turning some of the restaurant’s loyal customers away. If many of the café’s customers are indignant about the newest fee on their receipt, it’s not because they don’t want to pay the 35 cents. Rather, they resented that the restaurant had chosen to address the problem in a way that blamed the employees and even the customers for a federal decision.
For some background: On Aug. 1, a new law increased Minnesota’s minimum wage from $6.15 per hour to $8 per hour, with plans to further increase the hourly rate to $9.50 by 2016. While the effects of this new law are felt throughout the state by large and small companies alike, it’s small businesses like the Oasis Café in Stillwater particularly who are feeling the effects of the minimum wage increase most significantly. The Oasis management reported that the new law would cost the restaurant $10,000 per year.
Sure, the new Minnesota law does make provisions to help ease the transition for small businesses, taking into account that smaller companies with less annual revenue might struggle to find the funds to uphold the new law.
Oasis Café complains, however, that these small adjustments are not nearly enough. In response to the many customer complaints on Facebook, the restaurant replied:
With regards to why we're charging a $.35 fee to cover the recent $.75 increase in minimum wage…we estimate the increase in labor cost will cost our company more than $10,000 per year… which has to be offset by an increase in revenue in order to operate profitably. Rather than increase the prices of our menu items, we chose to charge a flat fee. If the state of Minnesota would pass tip credit, like 43 other states have done, none of this would be necessary. For what it's worth, we pay our people very well. Our dish washers start at $10/hour, our cooks start at $12/hour and our servers average more than $20 when you consider what they earn in tips.