Behind the Kitchen Door: Inequality, Instability, and Opportunity in the Greater New Orleans Restaurant Industry

Transcription

1 Behind the Kitchen Door: Inequality, Instability, and Opportunity in the Greater New Orleans Restaurant Industry By the Restaurant Opportunities Center of New Orleans, Restaurant Opportunities Centers United, and the New Orleans Restaurant Industry Coalition Primary Research Support Provided by LaNysha Adams, Restaurant Opportunities Centers United Editorial Support Provided by Nirupama Jayaraman Design by Christopher Chaput Funding Provided By: The Ford Foundation Foundation for the Mid South The Gulf Coast Fund The Hill-Snowdon Foundation The Kellogg Foundation The Louisiana Disaster Recovery Foundation Twenty-First Century Foundation Oxfam America February 9, 2010

2 Dedicated to all the restaurant workers who lost their lives in Hurricane Katrina, restaurant workers who have not had the opportunity to return to the New Orleans area after the Hurricane, and all restaurant workers in the Greater New Orleans region.

3 Behind the Kitchen Door: Inequality, Instability, and Opportunity in the Greater New Orleans Restaurant Industry By the Restaurant Opportunities Center of New Orleans, Restaurant Opportunities Centers United, and the New Orleans Restaurant Industry Coalition Primary Research Support Provided by LaNysha Adams, Restaurant Opportunities Centers United Editorial Support Provided by Nirupama Jayaraman Design by Christopher Chaput Funding Provided By: The Ford Foundation Foundation for the Mid South The Gulf Coast Fund The Hill-Snowdon Foundation The Kellogg Foundation The Louisiana Disaster Recovery Foundation Twenty-First Century Foundation Oxfam America February 9, 2010

4 Executive Summary Executive Summary Behind the Kitchen Door: Inequality, Instability, and Opportunity in the Greater New Orleans Restaurant Industry was conceived of and designed by the New Orleans Restaurant Industry Coalition - a broad gathering of academics, policy analysts, worker advocates, worker organizers, unions, restaurant workers and restaurant industry employers. This report represents one of the most comprehensive research analyses of the restaurant industry in New Orleans. The report uses data from 530 worker surveys, interviews and focus groups with 28 restaurant workers, and 29 onehour interviews with restaurant employers in New Orleans. The results of this primary research are supplemented by analysis of industry and government data, such as the Census, as well as a review of existing academic literature. Our study was inspired by the need for examination and analysis of the restaurant industry, which is fundamental to the New Orleans economy and critical to the lives of thousands of restaurant workers and employers. The restaurant industry is an important and growing source of locally based jobs, and provides considerable opportunity for the development of successful businesses. It is therefore essential to make information about the industry from the perspectives of both workers and employers available to all stakeholders to ensure the industry s sustainable growth. A Resilient and Growing Industry New Orleans is home to a vibrant, resilient, and growing restaurant industry. The industry includes over 2,500 food service and drinking places that make significant contributions to the region s tourism, hospitality and entertainment sectors and to its economy as a whole. In 2008, the gross domestic product by the New Orleans metropolitan area from the accommodations and food services sector was $2.6 billion. Perhaps the industry s most important contribution to the region s economy is the thousands of job opportunities and career options it provides. Since 2001, employment growth in the food services sector has outpaced that of the New Orleans regional economy overall (see Chapter II, Figure 1). New Orleans metropolitan area restaurants employ over 44,000 workers 8.6% of the region s total employment. Since formal credentials are not a requirement for the majority of restaurant jobs, the industry provides employment opportunities for new immigrants, whose skills and prior experience outside the United States may not be recognized by other employers, workers who have no formal qualifications, and young people just starting out in the workforce. Many Bad Jobs, A Few Good Ones There are two roads to profitability in the New Orleans restaurant industry the high road and the low road. Restaurant employers who take the high road are the source of the best jobs in the industry those that provide living wages, access to health benefits, and advancement in the industry. Taking the low road to profitability, on the other hand, creates low-wage jobs with long hours, few benefits and exposure to dangerous and often-unlawful workplace conditions. Many restaurant employers in the New Orleans metropolitan area appear to be taking the low road, creating a predominantly low-wage industry in which violations of employment and health and safety laws are commonplace. While there are a few good restaurant jobs in the restaurant industry, and opportunities to earn a living wage, the majority are bad jobs, characterized by very low wages, few benefits, and limited opportunities for upward mobility or increased income. According to the U.S. Bureau of Labor, the median wage for restaurant workers is only $7.76. In our own survey of restaurant workers, the vast majority (84.5%) reported that their employers do not offer health insurance (see further Chapter III: Workers Perspectives). Earnings in the restaurant industry have also lagged behind that of the entire private sector. In terms of annual earnings, restaurant workers on average made only $16, in 2008 compared to $44, for the total private sector. i

5 Executive Summary A majority of workers in our study reported overtime and minimum wage violations, lack of health and safety training and failure to implement other health and safety measures in restaurant workplaces. Almost 40% of the workers surveyed in our study (38.1%) experienced overtime violations and more than one-quarter (27%) reported working off the clock without being paid. One major finding of this report is that New Orleans restaurant workers suffer from a particular form of instability due to the repeated hurricanes in the region. 56% of all workers surveyed reported having their employment affected by a recent hurricane, and many workers in interviews repeated the common experience of returning from a mandatory evacuation during any of the recent hurricanes Katrina, Rita, or Gustav to find that they had been replaced at their restaurant workplace, and had thus lost their jobs. Workers reported that this phenomenon led to instability, including housing instability, and sometimes forced them to leave the region. It is largely workers of color who are concentrated in the industry s bad jobs, while white workers tend to disproportionately hold the few good jobs. Workers also reported discriminatory hiring, promotion and disciplinary practices, as well as verbal abuse motivated by race, national origin or English language facility. Almost one third (29.4%) of workers that we surveyed reported experiencing verbal abuse, and of these workers, 33.6% said that this abuse was made on the basis of race (see further Chapter V: Segregation & Discrimination). The Social Costs of Low-Wage Jobs Our research also reveals the hidden costs to customers and taxpayers of low-wage jobs and low road workplace practices. Violations of employment and health and safety laws place customers at risk and endanger the public. For example, restaurant employers who violate labor laws are also more likely to violate health and safety standards in the workplace such as failing to provide health and safety training, or forcing workers to cut corners that harm the health and safety of customers (see further Chapter VI: The Social Cost of Low-Wage Jobs). The pervasiveness of accidents coupled with the fact that so few restaurant workers have health insurance can lead to escalating uncompensated care costs incurred by public hospitals. For example, 32.3% of surveyed workers reported that they or a family member had visited the emergency room without being able to pay for their treatment. Finally, low wages and lack of job security among restaurant workers lead to increased reliance on social assistance programs resulting in an indirect subsidy to employers engaging in low road practices and fewer such public resources available to all those in need. A key finding of our research is that whenever restaurant workers and high road employers are hurt by low road practices, so is the rest of society. The High Road Is Possible It is possible to create good jobs while maintaining a successful business in the restaurant industry. Our interviews with employers revealed that as long as there is an enduring commitment to do so, it is possible to run a successful restaurant business while paying living wages, providing benefits, ensuring adequate levels of staffing, providing necessary training, and creating career advancement opportunities. In fact, over 12% of the workers we surveyed reported earning a living wage, and similar numbers reported receiving benefits, thereby demonstrating both the existence of good jobs and the potential of the industry to serve as a positive force for job creation. Workers who earn better wages are also more likely to receive benefits, ongoing training and promotion and less likely to be exposed to poor and illegal workplace practices. For example, workers earning $18.31 per hour were also much more likely to have health insurance than workers earning less than the minimum wage of $6.55 per hour. Workers earning less than $6.55 were also almost much more likely to experience overtime violations in their current workplace. ii

6 Executive Summary Our Recommendations The New Orleans Restaurant Industry Coalition recommends the following steps to address the workplace problems documented in our study: 1. Workers should have a grace period to return to their jobs after a mandatory hurricane evacuation. To increase stability among this low-wage workforce, local legislative bodies should require employers to provide workers with a grace period after a mandatory evacuation before being replaced permanently. 2. Labor, employment and health and safety standards should be strictly enforced, and legislators should consider an employer s compliance with such legal standards in granting government licenses, which by statute are intended to be granted only to responsible employers. Employers must be educated about their legal responsibilities towards their employees concerning health and safety standards. Agencies should provide employers with the necessary support to observe their obligations to their workers and to the public. It is in the interest of both workers and the public at large that existing standards be observed and enforced. 3. Initiatives and incentives should be considered to assist and encourage employers to provide living wages, basic health care benefits, and advancement opportunities to restaurant workers. Such initiatives could include rent and property tax incentives for employers who implement exceptional workplace practices, and subsidies to employment-based health insurance or support of collective health insurance provisions across the industry. 4. Workers should have access to paid sick days and a higher tipped hourly minimum wage than $2.13. Policymakers should level the playing field by requiring all employers to provide paid sick days to their employers, and raise the minimum wage for tipped workers to be closer to the minimum wage for all other workers. The lack of paid sick days can result in public health challenges for the entire region. 5. Workers should have equality of opportunity. Policytmakers should explore initiatives that encourage internal promotion and discourage discrimination on the basis of race and immigration status in the restaurant industry. 6. Model employer practices should be publicized to provide much-needed guidance to other employers in the industry. The vast majority of employers we interviewed agreed in theory that high road workplace practices were better. However, many did not appear to implement them in practice. 7. Workers should have the right to organize. Barriers to organizing restaurant workers should be addressed. The public benefits of unionization in this and other industries should be publicized as significant benefits to workers and employers. 8. Further study and dialogue should be undertaken that includes the perspectives of restaurant workers, employers, and decision-makers. Such dialogue can help ensure effective and sustainable solutions to the issues identified in our study especially race-based discrimination, and the impacts of the industry s practices on health care and public program costs. The information collected here from workers, employers, and industry experts is critical to ensuring that the Greater New Orleans restaurant industry truly shines as not only an important contributor to the region s job market and economy, but also to the well-being of its workers and communities. iii

7 Table of Contents Behind the Kitchen Door: Inequality, Instability, and Opportunity in the Greater New Orleans Restaurant Industry Executive Summary i Chapter I: Introduction & Methodology 1 Chapter II: Overview of the Greater New Orleans Restaurant Industry 4 Chapter III: Workers Perspectives 12 Chapter IV: Employers Perspectives 27 Chapter V: Segregation & Discrimination 39 Chapter VI: The Social Cost of Low-Wage Jobs 52 Chapter VII: Conclusions & Policy Recommendations 59 Appendix & Endnotes 61 Contents Copyright 2010 Restaurant Opportunities Centers United (ROC-United)

8 Chapter I C H A P T E R I Introduction and Methodology I am a strong supporter of the restaurant industry in this state an industry made up largely of small business owners, who are the backbone of Louisiana s economy. Indeed, the restaurant industry is a key player in our efforts to continue to expand our economy and create opportunity for our people. Not only has Louisiana s restaurant industry made significant contributions to our economy and workers, but also our distinctive culture that is renowned throughout the country. Governor Bobby Jindal 1 The New Orleans restaurant industry has enormous potential, both as an employer and as an engine of economic growth. Over the past twenty years, the food and beverage service sector has expanded, and despite the recent economic downturn, it continues to outpace other industries. 2 Unlike many jobs in the manufacturing and technology sectors, restaurant jobs cannot be outsourced. For this reason, they are anticipated to occupy an ever larger share of the region s economy in the near future. The region s restaurants are an important source of jobs particularly for people of color, new immigrants and young people just starting in the workforce. 3 Thousands of New Orleans metro restaurant workers earn living wages and receive health care benefits. The industry also offers opportunities for joining the ranks of the many entrepreneurs who have fulfilled their dream of opening their own restaurants. Most jobs in the industry, however, are characterized by low wages - sometimes below poverty level - no health insurance, no sick and vacation days, few advancement opportunities, and exposure to poor and illegal workplace conditions. ABOUT THIS STUDY This study was conceived and designed by the New Orleans Restaurant Industry Coalition - a broad gathering of academics, policy analysts, worker advocates, worker organizers, unions, restaurant workers and employers. It represents one of the most comprehensive research analyses of the restaurant industry in New Orleans history. Data were collected from 530 worker surveys, one-hour interviews and focus groups with 28 restaurant workers, and 29 interviews with restaurant industry employers in New Orleans collected over a one-year period. The results of this primary research are supplemented by analysis of industry data and a review of existing academic literature. This project was inspired by the need for examination and analysis of the overall health of an industry increasingly important to New Orleans economy and critical to the lives of thousands of restaurant workers and employers. The restaurant industry is an important and growing source of locally based jobs and provides considerable opportunity for development of successful businesses. It is therefore essential to make information about the industry from the perspectives of both workers and employers available to all stakeholders to ensure the industry s sustainable growth. Our primary research and analysis of government and industry data reveal that there are two roads to profitability in the New Orleans restaurant industry the high road and the low road. Restaurant employers who take the high road are the source of the best jobs in the industry those that enable restaurant workers to earn living wages, access health benefits, and advance in the industry. Taking the low road to profitability, on the other hand, creates low-wage jobs with long hours and few benefits. It ultimately harms workers, other restaurant employers, consumers, public health, and taxpayers. Our research and existing government and industry statistics indicate that the majority of employers in the New Orleans restaurant industry, like employers in other parts of the country, are employing low road workplace practices, contributing to the creation and perpetuation of a predominantly low-wage industry where few workers enjoy basic workplace benefits and safe and healthy working conditions. These practices often lead to violations of workers basic rights, as well as federal and state wage and hour laws and health and safety regulations. As a result, as the restaurant industry creates jobs, it has the potential to create jobs that allow workers to support their families, but often instead ends up contributing to the proliferation of bad jobs in the current economy jobs that cannot sustain workers, their families, and our communities. Our worker surveys and interviews illustrate the impacts such bad jobs have on people s lives. 1

9 Chapter I Our interviews with employers highlight many of the factors that drive them to take the low road to profitability, often against the principles of good business practice they espouse. It is possible to achieve success in the restaurant business by pursuing the high road, but employers ability to do so is undermined by pervasive use of low road workplace practices, creating an unlevel playing field. Our research also demonstrates the importance to public health and public coffers of encouraging and supporting the majority of restaurant employers to improve practices. In our research, we also found a high degree of separation and racial disparity in wages and working conditions between white workers and workers of color in Greater New Orleans. Our research suggests at least two key factors contributing to these disparities: (1) racial segregation by occupation or position; and (2) racial segregation by industry segment. High levels of racial segregation by occupation are demonstrated by the divide between the front of the house workers such as servers and bartenders with whom diners interact and those who remain hidden in the back of the house. Restaurant workers in the front of the house generally receive higher wages better working conditions, training, and advancement opportunities than those behind kitchen doors. The majority of white workers in the Greater New Orleans restaurant industry are employed in front of the house positions. Workers of color are largely concentrated in the back of the house in the lowest paid TERMS USED IN THIS REPORT Front of the House and Back of the House refer to restaurant industry terms for the placement and function of workers in a restaurant setting. Front of the house workers generally include those interacting with customers such as wait staff, bussers and runners. Back of the house workers generally refer to kitchen staff including chefs, cooks, food preparation staff, dishwashers and cleaners. In this report, high road is used to denote employer practices that involve investing in workers by paying living wages, providing comprehensive benefits, opportunities for career advancement, and safe workplace conditions as a means to maximize productivity. The results of such high road practices are often reduced turnover as well as quality food and better service. Low road refers to strategies that involve chronic understaffing, failing to provide benefits, pushing workers to cut corners, and violating labor laws, and health standards. jobs requiring the longest hours, with the greatest health and safety hazards, and offering the fewest advancement opportunities. In addition to these disparities, restaurant workers we spoke with reported experiencing high levels of verbal abuse, excessive discipline, and barriers to promotion that they believed to be based on race and immigration status. Patterns of segregation that resulted in differences in wages and employment opportunities were also apparent in the industry segments which employ Greater New Orleans restaurant workers. White restaurant workers were significantly more likely to be employed in fine dining establishments, whose price points offer the highest concentration of living wage jobs in the industry. By contrast, African-American workers were much more likely to be employed in the lower-paying quick-service segment of the industry. Finally, Greater New Orleans complex history of racial inequality combined with the inevitable hurricane season casts an ongoing shadow over this large and growing service industry. We recognize that many of the restaurant workers of color who were forced to leave the region because of Hurricane Katrina are not part of this survey sample, because they are no longer in the region. Even in their absence, however, workers in our survey sample described the negative impact repeated hurricanes, combined with their lack of power in the industry, have had on their jobs and lives. This report includes the perspectives of both high road and low road employers, government and industry data, the experiences of workers, and academic research. In effect, we have created a unique and rich source of information on the metropolitan area s restaurant industry to help guide efforts to end discriminatory workplace practices, and promote the high road business model to serve as a positive engine of economic growth in Greater New Orleans. 2

10 C H A P T E R II Overview of the Greater New Orleans Restaurant Industry

11 Chapter II C H A P T E R II Overview of the Greater New Orleans Restaurant Industry A. A Significant and Growing Industry The restaurant industry is increasingly significant for Greater New Orleans, and is one of Louisiana s largest employers. The tourism industry, which includes the restaurant industry, is now considered one of the state s largest and fastest-growing industries. 4 The Greater New Orleans metro area is home to over 2,500 food service and drinking places, a number that grew substantially in the 1990s, and is expected to keep growing. 5 The City of New Orleans is also home to a growing number of exclusive, fine-dining restaurants. 6 The restaurant industry makes up over half of the Greater New Orleans tourism and hospitality sectors, and contributes greatly to the state s economy. State sales tax revenue generated by the Louisiana restaurant industry is more than $134 million annually. 7 In Greater New Orleans alone, the gross domestic product by metropolitan area from the accommodations and food services sector was $2.6 billion in As the City of New Orleans undergoes reconstruction from the devastating effects of Hurricane Katrina, tourists are expected to generate more than $5 billion in spending and up to $300 million in tax revenues. 9 Although considerable skills are needed to work in this industry, no formal credentials are generally required, making restaurants a particularly viable source of employment for workers who have not had the opportunity to pursue formal training. Restaurant employment is also an important entry point into the job market for new immigrants to the United States, whose credentials and experience abroad, are often not recognized by other employers. B. How Many Jobs? As indicated in Table 1, the Food Services and Drinking Places sector provides over 44,000 jobs per year in the New Orleans metro area (hereafter food services sector ), and is the largest private sector industry in all of Orleans parish. In fact, the food services sector contributed to 65% of employment in the Leisure and Hospitality supersector. 10 The restaurant industry has been one of the largest and fastest-growing sectors of the Greater New Orleans economy, even despite the current economic crisis. 11 The food services sector currently employs more people than a wide variety of both old and new economy industries such as finance, securities, and manufacturing. 12 TABLE 1. Employment in the Food Services Sector and Other Select Industries, Greater New Orleans, 2009 Industry Employment (in 1000s) Share of Total Employment Total Greater New Orleans Employment % Leisure and Hospitality % Health Care % Food Services and Drinking Places % Manufacturing % Construction % Hospitals % Source: Bureau of Labor Statistics, Current Employment Statistics, July 2009 In this table, Greater New Orleans refers to the New Orleans metropolitan statistical area (MSA), which includes Jefferson, Orleans, Plaquemines, St. Bernard, St. Charles, St. John the Baptist, and St. Tammany parishes Note: Industry Categories are not mutually exclusive 4

12 Chapter II The restaurant industry has potential for providing low-wage workers with access to advancement to jobs that will allow them to support their families. This is evidenced by the fact that the industry is growing and that there are some living wage jobs. From our survey data 12.3% of all workers surveyed reported an hourly wage of $18.31 or higher. Since 1992, employment growth in the food services sector has outpaced that of the New Orleans metro area overall. 13 Figure 1 depicts employment growth in the food services sector from 1990 to 2008, compared to job growth in the overall metro area. After Hurricane Katrina, the Greater New Orleans real GDP underwent a serious decline, as evidenced by a sharp decrease in employment (see Figure 1). The Department of Labor s Bureau of Labor Statistics findings on the economic impact of the Hurricane Season demonstrates that the decline in overall employment was due to the displacement of 1 million people (including documented and undocumented immigrants). 14 Hundreds of thousands still have not returned, yet the post-katrina population increase adds numbers to the workforce in Greater New Orleans. While job growth in all industries continues to lag compared to their pre-katrina levels, the restaurant industry has not nearly suffered the kind of job losses locally or nationally experienced by the economy as a whole. Even while the rest of the regional economy was experiencing serious decline in December 2007, the restaurant industry continued to experience growth. 15 Since the beginning of the recession in December 2007, manufacturing job losses have accounted for the overwhelming majority of the job loss in the entire state. 16 From January 2008 until December 2008, the economy as a whole experienced a 3.5% job loss, while the restaurant industry experienced 2.3% job loss. 17 Figure 1: Job Growth in the Food Services Sector and in Total Employment, Greater New Orleans, = Food Services & Drinking Places Total MSA Employment Year Source: Bureau of Labor Statistics, Current Employment Statistics Note: Greater New Orleans refers to the New Orleans metropolitan statistical area (MSA), which includes Jefferson, Orleans, Plaquemines, St. Bernard, St. Charles, St. John the Baptist, and St. Tammany parishes. C. What Kind of Restaurant? The food services sector includes four industries: full-service restaurants, limited-service eating places, special food services, and drinking places. 18 The restaurant industry generally includes the first two of these categories; namely, full-service restaurants and limited-service eating places. Although the Census does not distinguish between different types of full-service restaurants, we consider both fine dining restaurants and family-style or franchise restaurants falling within this category. Limited service restaurants are also known as quick serve restaurants that do not offer waiter service. 5

13 Chapter II Within full-service restaurants and limited-service eating places, we have identified three general sub-segments of the restaurant industry which are presently not specified in government data, but were most useful for understanding the varying practices and strategies used by individual businesses Fine dining, or what is commonly referred to as table-cloth restaurants; Family-style restaurants, also described as casual dining, including both franchise or chain restaurants such as Olive Garden or Applebee s, and smaller establishments, frequently neighborhood-based and/or ethnic restaurants; Fast-food or quick-serve restaurants. We also found through the interviews with employers that workplace practices are driven by factors such as whether a restaurant is part of a hotel, a larger corporation, chain or group and how many other restaurants the owner has, if any. We found that the majority of the fine dining restaurants are part of restaurant groups or are one of multiple (three or more) restaurants under the same owner. Non-franchise, family-style restaurants are overwhelmingly single-owned or one of two restaurants owned by the same party. These trends had profound impacts in terms of employers power, or lack thereof, to define standards and policies that affect their business and buying power, which is a key component of their competitiveness and profitability in the industry. D. Where are the Jobs? The regional restaurant industry tends to be centrally located in Orleans and Jefferson Parishes. As indicated by the data contained in Table 2, the Orleans Parish accounts for more than one third (39%) of the Greater New Orleans area employment in full-service restaurants, and a quarter (26%) of the area s limited-service eating places. Nearly half (43%) of employment in limited-service restaurants are concentrated in Jefferson Parish. Table 2. Employment by Parish in the Restaurant Industry, Greater New Orleans, 2007 Full-Service Restaurants Limited-Service Restaurants Total Orleans Jefferson St. Charles St. Tammany St. John St. Bernard Plaquemine 100% 39% 37% 1% 20% 2% 1% 0% 100% 26% 43% 3% 20% 3% 4% 1% Source: U.S. Bureau of the Census, County Business Patterns, E. Who Gets the Jobs? Most jobs in the restaurant industry do not require formal education, and, with the exception of chefs and sommeliers (wine stewards), employers generally do not require workers to have educational degrees or vocational certification. This is not to say that restaurant workers do not have skills or that restaurant work is not demanding. Back of the house workers, often working in hot, cramped spaces must be able to complete the tasks required to accurately fill orders in a timely and quality fashion in a high pressure environment. Front of house staff and other employees who interact with customers need strong interpersonal skills, time and task management skills, and a working knowledge of food preparation and presentation. The industry is consequently an important source of jobs and income for large numbers of new workers who do not have formal training or are new to the workforce. The industry is also a source of employment for women, youth, people of color and immigrants particularly new immigrants, whose prior education and experience abroad is often not recognized by employers in the U.S. The Bureau of Labor Statistics reports that the restaurant industry is the single largest employer of immigrants in the nation. In 2005, immigrants represented more than 1.4 million of the industry s employees nationwide, a number that has likely increased since then. 19 Post-Katrina, population estimates of the immigrant population have been based on rough headcounts, making it impossible to determine the demographic characteristics of the population. In 2000, the U.S. Census Bureau estimated 4% immigrants in New Orleans of whom 3.1% of whom were Latino. 20 This percentage increased from 3.1% before the storm to 4.9% in the year after the storm and 6.6% the following year. 21 Given the difficulty in determining accounting for the most accurate number of this population, we assume that the immigrant contribution to the restaurant workforce is much higher. 22 6

14 Chapter II F. What are the Characteristics of the Workforce? The New Orleans restaurant industry is largely young and female. Slightly more than 50% of restaurant workers in the region are under the age of 24. Although people of color comprised the majority of the population of the metropolitan area prior to the devastation of Hurricane Katrina, workers of color comprise less than half of the industry post-katrina. The industry is also fairly well-educated; more than 43% of all restaurant workers in the region have had some college education. TABLE 3: A Demographic Profile of Greater New Orleans Restaurant Workers, (column percentages) Restaurant Workers 2008 Only Difference* ( ) All New Orleans Workers Difference* (Restaurant Workers - All Workers) Gender Male Female Age and older Race/Ethnicity Non-Hispanic White Non-Hispanic Black Asian Hispanic/Latino any race or more races and Other Nativity Citizen by Birth Foreign Born World Area of Birth US Latin America Asia Europe Africa Years in US Born in the U.S or more Ability to Speak English Speaks very well Speaks well Speaks, but not well Does not speak English

15 Chapter II Restaurant Workers 2008 Only Difference* ( ) All New Orleans Workers Difference* (Restaurant Workers - All Workers) Education Less than High School High School Degree Some College Bachelors Degree and Higher *Difference is percentage point difference Source: U.S. Bureau of the Census, Public Use Micro Sample from US Census (2000) and American Community Survey (2008). Note: Greater New Orleans refers to the New Orleans metropolitan statistical area (MSA), which includes Jefferson, Orleans, Plaquemines, St. Bernard, St. Charles, St. John the Baptist, and St. Tammany parishes. G. What do the Jobs look like? Jobs in the restaurant industry generally fall into one of three categories, each corresponding to different levels of compensation, potential for mobility, access to training, workplace conditions, and other important indicators of job quality: Managers and supervisors, including chefs Front of the house positions, Back of the house positions, such as dishwashers and cooks H. What do the Jobs Pay? The data in Table 5 shows that the restaurant industry offers mostly low-wage jobs. According to the Bureau of Labor Statistics, the median wage for all restaurant occupations in Greater New Orleans is $7.76 an hour. Eightythree percent (83.42%) of workers in the industry are employed in jobs for which the hourly median wage is below $ People of color hold the majority of the lowest paid jobs in the restaurant industry, which is discussed in detail in Chapters III: Workers Perspectives and Chapter V: Segregation & Discrimination. 8

16 Chapter II TABLE 4. Employment and Median Wages for Food Preparation and Serving Related Occupations in Greater New Orleans, 2008 Occupation Employment share Median hourly wage All workers $7.76 Chefs and head cooks 1.43% $15.72 First-line supervisors/managers of food preparation and serving workers 7.51% $13.66 Cooks, fast food 5.66% $7.53 Cooks, institution and cafeteria 3.86% $8.57 Cooks, restaurant 7.65% $10.11 Cooks, short order 1.79% $9.28 Cooks, all other 0.44% $9.95 Food preparation workers 20.14% $7.62 Bartenders 8.84% $7.02 Combined food preparation and serving workers, including fast food 4.08% $7.55 Counter attendants, cafeteria, food concession, and coffee shop 3.05% $7.95 Waiters and waitresses 22.47% $7.27 Food servers, nonrestaurant 2.21% $8.53 Dining room and cafeteria attendants and bartender helpers 2.25% $7.53 Dishwashers 5.02% $7.22 Hosts and hostesses, restaurant, lounge, and coffee shop 3.05% $7.44 Food preparation and serving related workers, all other 0.56% $8.80 Under $10.00 per hour 83.42% Footnotes: (1) Estimates for detailed occupations do not sum to the totals because the totals include occupations not shown separately. Estimates do not include self-employed workers. (2) Annual wages have been calculated by multiplying the hourly mean wage by 2080 hours; where an hourly mean wage is not published the annual wage has been directly calculated from OES reported survey data. (3) Wages for the OES survey include base rate, cost-of-living allowances, guaranteed pay, hazardous-duty pay, incentive pay including commissions and production bonuses, tips, and on-call pay. Source: U.S. Bureau of Labor Statistics, Occupational Employment Statistics Survey for New Orleans Metairie Kenner MSA, 2008 While the number of jobs in the Greater New Orleans restaurant industry has grown, restaurant workers earnings over the past decade have not. As Figure 2 illustrates, average annual earnings in the restaurant industry have lagged behind that of the entire private sector in New Orleans. While all average annual earnings in the region have declined, restaurant workers earnings have declined at an even more rapid rate. In 2009 dollars, 2001 private sector annual earnings averaged $37,469, but only $15,435 in the restaurant industry. By 2008, private sector earnings had increased to $44,272 a year, while wages in the restaurant industry increased to only $16,870 over the same period. Thus, private sector wages increased 100% faster than real earnings in other economic sectors, despite growth in the restaurant industry during the same period. 9

17 Chapter II Figure 2: Average Annual Earnings by Industry, Greater New Orleans, Total All Industries Food Services & Drinking Places Average Annual Earnings Year Source: Bureau of Labor Statistics, Quarterly Census of Employment and Wages 24 Earnings are deflated using the CPI-U for the Southeast. In this figure, Greater New Orleans refers to Jefferson, Orleans, St. Charles, St. John the Baptist, and St. Tammany parishes. In sum, while the Greater New Orleans restaurant industry is an important and growing source of income and employment, restaurant workers earnings lag far behind those of other private sector workers in the city. The restaurant industry contributes over 44,000 jobs to the local economy, 25 but 83% of those jobs pay less than $10 per hour. Given the industry s growing reliance on immigrants and people of color, it is already marginalized communities that occupy these low-wage jobs. 10

18 C H A P T E R III Workers Perspectives

19 Chapter III C H A P T E R III Workers Perspectives The information summarized in this chapter represents a compilation of the results of 530 surveys between March and December 2008, and subsequent interviews and focus groups with 28 restaurant workers in the beginning of By speaking directly with Greater New Orleans restaurant workers, we gained more insight on the daily experiences of workers in the metropolitan region s eateries. We were also able to collect new data regarding the overall quality of their workplace experiences. Where earnings are concerned, our research results are consistent with existing data the majority of restaurant workers we spoke with reported very low wages. Most restaurant workers do not receive benefits such as employer-provided health coverage, paid sick days, or vacation days. Most restaurant workers we spoke with do not receive regular raises, promotions, or ongoing job training. More than half the restaurant workers in our study are not paid overtime in contravention of governing laws. We also received reports from some workers that they were not being paid at all for any hours they worked beyond 40 despite routinely being required to do so. A majority of workers reported health and safety hazards at their workplace, compounded by a pervasive lack of health and safety training. In addition, on the job injuries were reported by many of the workers we spoke with. Workers reported that assertions of their rights were met with verbal abuse and threats of retaliation. Workers earning low wages are less likely to receive benefits, more likely to be exposed to poor health and safety conditions, less likely to be provided with job or health and safety training, and less likely to benefit from advancement opportunities. Conversely, workers earning living wages are more likely to receive health insurance and benefits, and work in safer environments. 12

20 Chapter III A. Introduction and Methodology At least one tenth of the workers we surveyed reported earning living wages, and similar numbers reported enjoying comprehensive benefits, opportunities for career advancement, and better workplace conditions. While these workers are in the minority, their experiences reflect the reality that some restaurant employers in the industry are pursuing the high road to profitability. The employer perspectives summarized in the next chapter offer important insight as to how the conditions described in this chapter can be addressed. This study was motivated in part by the current dearth of qualitative data documenting the experiences of restaurant workers in the New Orleans metro area. In an effort to pick up where official and industry statistics leave off, the Greater New Orleans Restaurant Industry Coalition, a gathering of local academics, attorneys, community organizations, unions, and others designed a survey to capture detailed information regarding individual workers experiences beyond hour and wage data. The survey instrument explored the availability of benefits, working conditions, hiring and promotion practices, the existence of job-specific training opportunities, employer discrimination, and the nature of working conditions in the industry. Stratified random sampling methods were chosen to provide an accurate proportional representation of restaurant workers in the New Orleans metropolitan area. Stratification was used as a sampling technique to ensure that our sample was truly representative. 26 To add to the rigor of the survey design and administration, we weighted the data according to front and back of the house in full-service and limited-service restaurants to improve the precision of our estimates. Weighting was used to compensate for over- or under-sampling and for disproportionate stratification, and to ensure unbiased estimates of restaurant worker population totals. The survey was administered from March and December 2008 by staff, members, and volunteers from the Restaurant Opportunities Center of New Orleans a community-based organization with contacts among restaurant workers and access to workplaces in the industry. A total of 530 surveys were conducted face-to-face with workers throughout the New Orleans Metropolitan Statistical Area, 27 including Jefferson, Orleans, and St. Tammany Parishes. Surveys were conducted after workers shifts were completed or during breaks. We sought to capture experiences in all types of restaurants, and surveyed workers in each of the three main segments of the industry. 28 Furthermore, our sampling frame, or set of participants from which the sample was drawn, consisted only of workers employed in the industry. 29 Additionally, in order to obtain a holistic picture of the daily lives of individual restaurant workers, qualitative interviews and focus groups were conducted with a total of 28 workers to gain in-depth information about the nature of working conditions. A general interview guide approach was used to conduct the one-on-one in person interviews. The guide, developed by Dr. Manny Ness, a Brooklyn College professor with expertise in low-wage industries, contained standardized open-ended questions to ensure that the same general areas of information were collected from each interviewee. Interviewers were trained how to use the guide to conduct semi-structured, conversational interviews. 30 B. Earnings 13 I could not work as much as I would like to but because I don t work a salaried job. I have to go to work every day to make money. If I don t go to work I don t get paid. What I put in is what I get out. If I work 20 hours, that s like $200. I try to go to work as much as I can because it pays off in the long run. Because it s a small business they try not to let us have overtime because that drains them in a weird way because it s...$5 more so $16.50 every hour over 40. When you put more people in less people get paid. In my situation I try to work as much as I can. Manager, 3.5 years in the industry, Quick Service Our survey data is consistent with government and industry statistics demonstrating that restaurant work is primarily low-wage work. Eighty-seven percent (87%) of workers surveyed in our study reported earnings of less than $18.31 an hour. Nine percent (9%) of this group did not earn minimum wage even when tips were accounted for. Only 13.2% of workers surveyed reported making a living wage. A living wage affords the earner and her or his family the most basic costs of living without need for government support or poverty programs 31 and was calculated using the Economic Policy Institute s Basic Family Budget Calculator. (See side box for wage group definitions).

21 Chapter III Methodology for Definition of Wage Groups for Survey Data Analysis: Real wages were determined by either calculating workers average weekly earnings including tips and dividing by the average number of hours worked per week or, for un-tipped workers, using their hourly wage. Wage groups were then created using the Louisiana State minimum wage at the time the survey was conducted ($6.55), the Department of Health and Human Services (HHS) 2008 federal poverty line earnings for a family of three of $17,600 per year, and the Economic Policy Institute s (EPI) Basic Family Budget Calculator. The following six factors were chosen to calculate a living wage: a) Housing, b) Food, c) Transportation, d) Healthcare, e) Taxes and f) Other basic necessities. Definition of wage groups and distribution of the sample population across groups can be seen in Table 5. Table 5: Wages Earned by Restaurant Workers Less Than Federal Minimum Wage (< $6.55) 3% Below Poverty Line ($6.55 $8.45) 28.1% Low Wage ($ $18.30) 55.6% Living Wage ($18.31 and higher) 13.2% Source: New Orleans Restaurant Industry Coalition survey data The vast majority of workers in our sample (87%) reported earning low wages, and almost one-third (31%) reported earning wages below the poverty line. The impact of occupational segregation, which will be discussed further in Chapter V: Segregation & Discrimination, is substantial: even though the median wage of our entire survey population was $10.25 an hour, when workers of color earnings were taken out of our sample, the median wage rose to $12.33 an hour. Louisiana does not have a state minimum wage, but employers in Louisiana are subject to federal minimum wage laws. The earnings picture is slightly different for restaurant workers when compared to other workers due to the fact that an exception to federal minimum wage laws is made for workers who regularly receive tips. As a result, restaurant employers in the State of Louisiana are permitted to pay the federal minimum wage of $2.13 per hour to tipped workers, as long as tips make up the difference between $2.13 and the federal minimum hourly wage. If they do not, the employer must pay workers the difference. 32 In Louisiana, however, tipped workers are not guaranteed the full minimum wage for each individual hour or shift that they work. Federal regulations allow employers to average out their workers tips over a full workweek, complicating the tip tracking system and making it vulnerable to employment law violations under the Fair Labor Standards Act (FLSA) of the workers surveyed in our study reported that they were born in another country, and 15% of these workers reported that did not have legal status to work in the United States. Their actual proportion in the restaurant workforce is likely even higher given the possible reluctance of workers to report their immigration status or off the books employment. Despite the legal implications of the 1986 Immigration Reform and Control Act (IRCA), 34 which made it illegal for employers to knowingly hire or recruit immigrants who do not possess lawful work authorization and required employers to attest to their employees immigration status, many employers with whom we spoke stated that undocumented immigrants are widely employed in the industry. Various reports and news stories confirm that the restaurant industry provides an entry-point for undocumented workers, particularly because of the opportunities to earn cash by the hour even when earnings are below federally mandated minimum wages. 35 Census data is unlikely to capture the earnings of these workers. 14

22 Chapter III WHAT DOES IT MEAN TO LIVE ON A RESTAURANT WORKER S EARNINGS? According to the American Chamber of Commerce Researchers Association s (ACCRA) Cost of Living Index, which is based on the composite price of groceries, housing, utilities, transportation, health care, clothing, and entertainment, the New Orleans region cost of living is on par with the national average, making it even harder for low-income workers to make ends meet. 36 According to the National Low Income Housing Coalition (NLIHC), while the Fair Market Rent for a two-bedroom unit in the Greater New Orleans metro area is $1,030, an extremely low-income household (earning $17,940 or 30% of the Area Median Income of $59,800) can afford monthly rent of no more than $ On average, a restaurant worker earning $10.25 per hour can afford monthly rent of no more than $533 for a two-bedroom unit. For workers to afford a Fair Market level of rent and utilities, without paying more than 30% of their income on housing, their household must earn $3433 monthly or $41,200 annually. The typical restaurant worker would have to work approximately 82 hours per week in order to afford a two-bedroom unit at the area s Fair Market rent. NLIHC determined that the Housing Wage the amount a full time worker must earn per hour in order to afford a two-bedroom unit at the area s Fair Market rent in the New Orleans area. C. Benefits That s interesting that even if I had an option to get health benefits, I wouldn t be making enough to afford the health benefits. It s kind of like thanks, but what am I supposed to do? It would be easier for me to pay [for] that one visit than a monthly premium that maybe I would cash in on it s nice to have that option but if people can t afford it then what s the point? Female, 20 years in the industry, Bartender Benefits like health insurance? No, they offered me health insurance but I would have to use half of my paycheck to pay for it; that s really too expensive for a simple cook that only earns 10 dollars an hour. Male, 1 year in the industry, Line Cook My benefit is me working and getting tips Male, 3 years in the industry, Busser The majority of restaurant workers surveyed reported that they do not receive basic workplace benefits. The data in Table 6 reveals that the vast majority of workers surveyed do not have health insurance through their employers (84.5%), over half (53.2%) reported not having any type of health insurance coverage at all, and a third (32.2%) went to the emergency room without being able to pay. An overwhelming majority reported that they do not get paid sick days (88.6%) or paid vacation days (74.2%). Table 6: Job and Health Benefits Reported by Restaurant Workers Employer does not provide health insurance 84.5% Do not have any health insurance coverage 53.2% Gone to ER without being able to pay 32.3% Do not get paid sick days 88.6% Do not get paid vacation days 74.2% Have worked when sick 72.3% Source: New Orleans Restaurant Industry Coalition survey data There s a lot of things actually, I mean I ve seen broke down servers, bartenders, who just keep working because they can t afford not to and they got a sprain or whatever or pulling their back...they have some condition of some kind and they just work through it. Male, 10 years in the industry, Server The majority of the workers we interviewed reported that they were unable to get unpaid time off when they needed it, particularly when they were sick. One waiter working in the industry for over five years reported that If you call 15

23 Chapter III in sick, you lose your $40 guarantee for that week, referring to the unique guarantee his restaurant offers servers in the case that they are not able to make a sufficient amount in tips during a shift. Another server who has worked in the fine dining segment for 10 years explained that people are more likely to try and work through contagious illnesses rather than stay at home. As a result, 72.3% of the workers we surveyed reported working while sick. These numbers should be of concern to the general public because food is one of the major avenues through which communicable diseases are spread. Therefore, if workers are coming in to the job sick, it endangers the health of their co-workers, customers and the general public. I don t get vacation or sick time, unless I got hurt on the job There was an incident a guy got his hand in a mixer and had to go [to the] hospital... so no sick time for real...every day I work is a day I earn in dollars and if you leave for a month you really hurt the job, [and] they might find somebody else to take your position. -- Male, 4 years in the industry, Cook There [are] times when I call in and tell them I m sick and they still say you can t come in for a few hours? They don t care! You gonna be sneezing, over people s food and stuff like that and if you wanna put a mask on or try to cover yourself up or whatever then it s bad for the business. That s why you should have allowed me to stay home, I told ya ll I was sick! That s how it is right now [though], they just don t care. Female, 23 years in the industry, Server The significant lack of health care available to restaurant workers presents a real problem, particularly when 26.3% of workers surveyed with health care pay for it out of their own pocket. One back of the house worker reported being forced to resort to food stamps because he had to pay for a knee surgery exacerbated by working for a long period without treatment. Additional information on the impact of the industry s lack of benefits on workers, taxpayers, and the public at large can be found in the Public Cost section of Chapter VI: The Social Cost of Low-Wage Jobs. D. Dead end jobs Really ain t even no raises and promotions, your job is your set job where you work. If you come in there and you want to be a bartender, you always going to be a bartender, always. Until you done, until you get fired or you quit. You gonna be a bartender. If you a doorman, that s what you gonna be, you ain t gonna be nothing else. There ain t no promotions in that job, them managers is keeping they manager positions, they ain t going nowhere. Female, 2 years in the industry, Server Restaurant workers have few opportunities to advance in the industry (see Table 7). Regardless of occupation, restaurant type, or length of service at a restaurant, workers reported that opportunities to increase their earnings through seniority or by working their way up the industry ladder are few and far between. Sixty-nine percent (69%) of survey respondents reported that they do not receive regular raises, and 73.6% of workers responded that they had not been promoted since starting at their current place of employment. These trends held whether a worker remained in the same place of employment or sought other opportunities 72.9% of workers surveyed said they had not moved up from their last job when they took their current one. Moreover, half (53%) of workers surveyed reported that they did not receive on-the-job training needed to be promoted. Table 7: Raises and Promotions Reported by Restaurant Workers Do not receive regular raises 68.8% Have never been promoted in current job 73.6% Did not move up in position from last job to the current job 72.9% Did not receive on-going job training needed to be promoted from employer 53% Source: New Orleans Restaurant Industry Coalition survey data 16

24 Chapter III I just took this job to pay the bills, and now I m trying to get out. [My boss] mentioned that I could be promoted, except I don t have transportation. She[another server] got here two years ago and got this job as a side job and she is still doing this 2 years later. She s 18 credits shy of a B.A. in Education which would be great for her, Here in the city [they] can t find enough qualified workers to fill the jobs available,[but] she has a kid, no benefits, she s on WIC, clearly not meeting her own financial needs. Her husband is a bartender. So for whatever reason she s stuck in this situation. My biggest fear is getting stuck here, so my motivation to stay is because I need to pay bills. Female, 3 years in the industry, Host & Server The lack of movement between front and back of the house workers emerged as a recurring theme in the interviews. One host in a fine dining establishment explained that even for front of the house workers, there exists a hierarchy that locks people into certain positions: [To become a captain], there is a little bit of a glass ceiling there. I am not quite sure that I would be chosen as a captain, just because I m a female. It s rare for a woman to be a captain, and it s even rarer for females to work in the main dining room. [Even though] I ve seen it happen a couple of times, that s my goal. For immigrant workers and workers of color in the back of the house, a lack of mobility is beneficial for employers taking the low road and applying it to business. A back of the house worker who has been in the industry for five years shared the advice he has received: Speaking English is not very important. Cooking skills are more important as long as you know the names of the dishes. There are so many Latinos that it doesn t matter if you speak English. Most of the workers with whom we spoke with who had been in the industry for three years or more reported having no choice but to leave an employer in search of better opportunities at other restaurants. Not only does the constant search for a better job deny workers job stability and economic security for themselves and their families, but it also ends up costing employers in turnover-related costs. 38 These two factors lead to a no-win scenario, and greatly threaten what could be a shared economic prosperity, as discussed in greater detail in the following chapter. I was there for a month. There were some payroll disputes. They promised me $8 per hour when I started, then cut me down to $5. I was a busser, food runner, backwaiter, and a dishwasher. After that, I had to leave Male, 6 months in the industry, Busser There was a lack of opportunity [at fine dining establishment] in moving up into another position. I thought [the way I was being treated] was very wrong and very unfair at the time and I just quit. I was bussing tables for over a year after I had been running food for six months. I worked there for a long time and nothing was happening. Then all of a sudden some Anglo that was less qualified than I was got a job as a waiter and I thought what is going on here? I went up to the [manager] one night after I found out and said I m gonna quit okay, after tonight I m quitting. And I quit. Male, 33 years in the industry, Busser, Runner, Server & Bartender E. Employment and Labor Violations As mentioned in Section B above, there are no state minimum wage laws in Louisiana. Restaurant employers in the State of Louisiana are permitted to pay wages of $2.13 per hour to tipped workers, a wage that has stayed the same since In paying workers $2.13, employers rely on tips from customers to pay the difference between workers tipped hourly rate of $2.13 and the federal minimum of $6.55 per hour (at the time the survey was conducted). However, if tips do not bring the worker up to minimum wage, employers are responsible for making up the difference. While tip-pooling and tipping-out are common practices in most restaurants, it is unlawful for employers to take tips from restaurant workers. 40 Interestingly, 69.2% of restaurant workers surveyed were not aware of the correct federal minimum hourly wage for tipped workers and 88.6% did not know that $6.55 was the federal minimum hourly wage at the time the survey was conducted. Because Louisiana does not set a minimum wage specific to the state, employers must follow federal regulations as mandated by the Department of Labor. On July 24, 2009 the federal hourly minimum wage increased from $6.55 to $ Clearly, more public education, for workers and employers alike, is needed with respect to governing laws in the restaurant industry. 17

25 Chapter III This is one of the places where the guy goes to the store or goes to another restaurant and gets food they need at the other one that day..takes money out of the register to pay you, if you don t like it you can just go home...i got tired of hearing too bad if you don t like it, so I m doing less shifts there now. Over half of us get our money when we re done working, and if we don t get it when we re done working, too bad they ll get it to you when they can. Male, 17 years in the industry, Server Table 8: Employment Law Violations Reported by Restaurant Workers Experienced overtime wage violations 38.1% Worked off the clock without pay 27.8% Management took share of tips 5.6% Experienced minimum wage violations 3% Source: New Orleans Restaurant Industry Coalition survey data As illustrated by Table 8, many workers reported being paid less than minimum wage and receiving no overtime pay when they worked more than 40 hours per week, in violation of both federal and state wage and hour laws. Thirtyeight percent (38%) of all workers surveyed told us they were not paid overtime for hours worked beyond the standard 40-hour workweek. As one worker working in a fine dining establishment explained, we re all required to go in at 4 pm but not clock in at 4 because the restaurant doesn t open until 6pm. We got to clock in after the meeting and do other work, so I always worked 1.5 hours extra. While workers from fine dining reported a higher proportion of management stealing tips (18.8%) and minimum wage violations (4.6%) than the general survey population, employment violations occurred in every segment of the industry. When there s a lot of work, or rather, when it s really busy it doesn t matter if you work 10 to 20 hours and if it s busy still and you are there you can t leave; this is now your schedule. This is to say it was 5-10pm but because it s busy you [now] have to stay until 2 or 3 in the morning. Male, 2 years in the industry, Line Cook This [one fine dining establishment] would adjust the hours so that they didn t have to pay me. For every hour that you don t make [enough tips to make up the difference between the regular minimum wage and the tipped] minimum wage they are supposed to supplement your income so that you make [the regular] minimum wage, but what this restaurant would do is change my hours so that it looked like I worked less so they wouldn t have to pay me the extra money. So they would give me my tips, but they wouldn t pay me for all the hours I worked. Female, 7 years in the industry, Server Some workers we interviewed reported being paid a flat rate no matter how many hours they worked, a practice commonly referred to as shift pay. However, the Fair Labor Standards Act mandates that if workers are scheduled for a shorter shift and they end up working more than eight hours or more than 40 hours per week, employers must pay overtime. 42 A server with three years of experience in fine dining establishments in the French Quarter explained a practice that over half of all workers we interviewed also reported: when working in more than one position, an employer will split the number of hours worked into different days and weeks, in order to avoid paying overtime. 18

26 Chapter III What they do is they give you a shift, like when you first start working there. When you go in for training your first day, you don t get paid no money for that, you don t get paid hourly wages, you don t get none of your tips, you don t get nothing. That s your training day, your first day of work, that s how they treat you. And what they do is make you work on the busiest night that they can think of. And then they the type of people, that ain t giving you no lunch, you ain t getting no lunch no matter how long you working. And you can t sit down, you gotta stay on your feet and they might hire you for hours, and you gotta stand up, you cannot sit down, lean on nothing. They have you running all over the place like really slave driving. And then how they do you is they will work you extra hours, they will work you over time, but what they do is [in] every [establishment] they separate you, so you got [one establishment] there, [one] here, and they split you up and they give you a different time card for every [establishment in the same company] that you work at, and each one is separate so that you never really work overtime because you never really work in that same place overtime. It s more about what they do. And then as far as you tip-outs go, see, however many workers you might have, two people over here in pizza, three people over here working daiquiris and you got your manager sitting on his ass right here, and at the end of the night the only person who can touch the money is the manager, and he counts all the money and he splits the tips between everybody that s working there and himself, he gets a tip portion too. He s splitting the tips between 1,2,3,4, 5, 6, [so] you ain t getting nothing! - Female, 2 years in the industry, Server Several workers told us they were paid a fixed rate on a bi-weekly basis, regardless how many hours they worked, and as a result, their average earnings were always less than minimum wage. A cook who has been in the industry for 13 years explains that at a previous fine dining establishment he would get paid $100 a day, which would be broken down into 12-hour shifts even though he would work up to 18 hours for that day. Based on the hours worked per day, his hourly wage equaled $5.55 and even though as a busser and barback he was entitled to one to ten percent of the bartender s tips, it depended on what they made and how they felt. The bartenders decided to tip us out as they wanted. A bartender who has been in the industry for 5 years explains that she was promised a weekly $250 salary in cash and is still owed the money: I mean, I ve been [there] 60 hours a week average since they opened. And he owes me for last week, [yet] we wants me to continue working and he said he s not gonna pay me til next Thursday when he get the checks. Now he s gonna start paying people payroll checks, but the payroll people haven t come by yet for him to start that. These experiences illustrate the importance of qualitative studies in industries such as the restaurant industry, which are not closely regulated and rely heavily on informal employment arrangements, as many workplace practices are not reported to government agencies or industry associations. Sometimes when we work overtime they don t pay us regularly, but rather they pay us outside of the check. Another thing is called the F ; sometimes we go to work and we are not paid and we are given a policy. For example one time I earned $250 and they gave me $50. I filed a complaint and then waited. And then went to get my money from my boss who gave it to me in a check. This all took about a month that I kept going back for my check but now he has paid me all my money. Male, 2 years in the industry, Line Cook But if you do a party, it doesn t show up on anything and they cut you a check whenever. They had people in April still waiting to get paid for Mardi Gras parties! [Employer] said We ll give it to you when we give it to you and if you don t like it go somewhere else. If you don t make a big deal out of it, you may not even get it. Male, 17 years in the industry, Bartender Three percent (3%) of workers reported being paid less than the federal minimum wage, in violation of the law. In the State of Louisiana, employers may pay as little as $2.13 an hour to tipped employees, as long as they receive enough in tips to make up the difference between the tipped wage and the federal minimum wage of $6.55 per hour at the time our survey was conducted. On July 24, 2009, the federal minimum wage increased from $6.55 to $7.25 per hour, while the federal minimum wage for tipped workers was left unchanged at $2.13 per hour. 43 If tips are insufficient to bring workers up to the federal minimum wage of $6.55, however, employers are obliged to make up the difference, as it is their responsibility to make sure that all tipped employees earn at least the federal minimum wage after tips have been accounted for. 44 Nevertheless, of the workers we interviewed, several reported being paid no hourly wage at all and subsisting on tips alone, often averaging out to an hourly rate far below the legal minimum. More than a quarter (27.8%) of the workers we surveyed reported working off the clock without pay. One worker 19

27 Chapter III with a 23 year career reported that working two shifts created an error where she ended up working for free : I worked a double shift last week and when I came up in there and put my time in when I went out for lunch my time came back out, but when I came back in no receipt came out. [I didn t clock back in and worked five hours unpaid]. So I m like look where s my five hours? I was working, I was on the schedule. I ain t crazy. I ve been in this business a long time and I need to pay my bills. Other workers reported having to end their shift early and still work, oftentimes receiving no pay. When asked why they had to end their shift early and still work, these workers explained they were too close to earning overtime, yet decided to work off the clock because they needed the opportunity to earn more in tips. Finally, 5.6% of tipped workers reported that management was unlawfully taking a share of their daily tips a burden to workers who are already being paid very low wages. So I ve asked, if there s only these two people why does this percentage still hold? Shouldn t I be giving out less money? So who gets that money? That s been my question, where is that money going? And then sometimes you don t even get to see [your tips]. If I m working the door, I might not see the server report until the next day. If that happens, you re not going to get the report you re just going to get whatever money they give you. -- Male, 17 years in the industry, Host & Server A busser will be paid a higher hourly wage because they re not going to be tipped as well [They] are depending on if they are being tipped out by servers. And then the servers in New Orleans, up until recently, were getting maybe still $2.13, and then as you said some bartenders are getting $5 or $6, so there s this like who [keeps track]?. So you get all this funkiness about tip out stuff, and then people are trying to hold onto their jobs, so they got to pick their battles, right? They can t get a new job and then start arguing about money because they want to stay on, try to keep the money flowing. Male, 10 years in the industry, Server F. Health and Safety Violations In some restaurants people are doing a lot of physical labor, like I work at a three story restaurant where I haul trash cans of ice up three flights cause during business you can t use the elevator. --- So there is this go, go go! type of attitude and people wind up doing crazy stuff like pulling things or slipping on the stairs. Broken glass, people getting their hands cut, [etc]. You know, you re in a fine dining restaurant with the crispy bread and the knife slides along the bread into your finger. I ve seen that several times. Grease fires and burns in the kitchen, I ve seen a lot of those kinds of health concerns. And I think it s just, people are generally in a high risk health situation. I think I have seen a minimum of stuff that... I have seen a lot of just not healthy stuff for the worker. Male, 13 years in the industry, Server Our survey data also revealed that restaurant workplaces commonly do not employ or enforce regulations designed to ensure the health and safety of workers, in violation of the federal Occupational Safety and Health Act (OSHA). 45 Table 9: Health and Safety Violations Reported by Restaurant Workers Unsafely hot in the kitchen 23.8% Fire hazards in the restaurant 25.8% Missing mats on the floor to prevent slipping 36.8% Missing guards on cutting machines 24% Done something that put own safety at risk 29.3% Did not receive instruction or training about workplace safety 28.1% Source: New Orleans Restaurant Industry Coalition survey data As shown in Table 9, twenty-four percent (23.8%) of workers surveyed reported that it gets unsafely hot in the kitchen where they work. Significant numbers of workers reported fire hazards such as blocked doors or non-functioning 20

28 Chapter III fire extinguishers in the restaurant where they worked (25.8%), as well as an absence of guards on the cutting machines (24%) and mats on the floor to prevent slippage (36.8%). Twenty-nine percent (29.3%) reported having done something at work that put their own safety at risk. Despite the prevalence of health and safety hazards in restaurant workplaces, more than a quarter of the workers (28.1%) told us they did not receive health and safety training from their employers. Table 10: Workplace Injuries Reported by Restaurant Workers Burned while on the job 43.5% Cut while on the job 42.4% Slipped and injured while on the job 15.4% Came into contact with toxic chemicals while on the job 39.9% Have chronic pain caused or worsened by the job 16.4% Source: New Orleans Restaurant Industry Coalition survey data Table 10 demonstrates that workplace injuries are pervasive in Greater New Orleans area restaurants. 43.5% of all workers surveyed or 225 workers out of the 516 workers eligible to answer the question - had been burned on the job. Forty-two percent (42.4%) of workers surveyed had suffered work-related cuts on at least one occasion, and 39.9% had come into contact with toxic chemicals. Fifteen percent (15.4%) reported that they had slipped and injured themselves while at work. Additionally, 16.4% reported chronic pain that was caused or worsened by their job. My legs hurt at the end of the evening. Before I got this job I bought a nice pair of shoes and inserts. That s the only thing. In the past year I ve started having wrist pain. Sometimes when I grab something I can t hold it, my wrist hurts but [it s] better lately. Not a lot of heavy trays to carry or anything. Female, 3 years in the industry, Host The stairs at [fine dining employer] are hell. I don t know if all of you have been in there, it s all those little spiral staircases, that s a lot of steps; have to carry trays of food up and down, bus tubs of dishes and I have arthritis in my knees and I couldn t afford to take time off. You have to work through the pain or take the time off. Male, 6 months in the industry, Busser things happen, things break down but there is a point to where it can hurt business when you have certain things put out there. Our ventilation system went out in our kitchen in the middle of July, it s hot it s evening time, I mean it was over 90 degrees outside and they had shut the front doors because it s open air seating, I mean smoke is just piling into the dining room. I mean it s smoke from cooked meat, it s probably not gonna kill you but it s probably not great for you in excessive amounts, especially if you are working in a hot kitchen. I d go back there and I d see cooks that have towels on their heads because they re so hot. I ve come to find walking into the kitchen after 10 o clock is really an art, to not bust your ass just because everyone wants to pull mats and rinse them out so they can go home. And I have seen people fall and it hurts, I m sure. Female, 8 months in the industry, Bartender Table 11: Workplace Practices Reported by Restaurant Workers Worked when the restaurant was understaffed 86.3% Performed several jobs at once 86.1% Experienced verbal abuse from supervisors 29.4% Performed a job not trained for 41.8% Done something due to time pressure that has put own health and safety at risk 29.3% Done something due to time pressure that might have harmed the health and safety of customers Source: New Orleans Restaurant Industry Coalition survey data 14.4% 21

29 Chapter III Finally, Table 11 reveals that understaffing, which places inordinate pressure on workers, is a common industry practice. An overwhelming majority of respondents reported working when their restaurant was understaffed (86.3%), and a similar number said they have performed several jobs at once (86.1%). Forty-two percent (41.8%) responded that they have been required to perform jobs for which they had not been trained, and 29.3% of workers reported doing something that put their own safety at risk. And, as previously discussed, nearly three fourths of the workers we surveyed reported working while sick (72.3%). Such low road workplace practices not only affect workers, but can also have serious consequences for consumers. Fourteen percent (14%) of workers reported doing something that might have put the health and safety of the customer at risk as a result of time pressure. In fact, as further discussed in Chapter VI: The Social Cost of Low-Wage Jobs, survey data indicated a correlation between health and safety violations and impact on consumers. [I ve experienced] just the usual burns or cuts every now and then. Other than that nothing much. I ate something that wasn t good. The other day I was making baked potatoes at [French Quarter restaurant], and I stopped and had a steak with the potato at a different restaurant, and I felt terrible afterwards. Broke out in sweats, thought I would throw up. I think the sour cream was bad. I don t get a meal at [another French Quarter restaurant] because it s a steak and lobster house and he can t afford to feed me there. Male, 17 years in the industry, Barback, Busser, & Bartender The federal Occupational Safety and Health Act (OSHA) imposes standards for health and safety in the workplace, requiring employers to provide protection for workers in hazardous environments and to keep records of all workplace injuries and accidents. OSHA covers toxic chemical use the statute requires gloves, for example, for dishwashers and kitchen cleaners who use very heavy toxic chemicals and temperature of work environments, including excessively hot kitchens. While there is no mandatory requirement that employees be provided with specific health and safety training, such training is effectively necessary to ensure compliance with OSHA and workers compensation law. OSHA in Greater New Orleans is spending less than five percent of its resources on health protection, and some point to this fact as a reason for the fact that there are generally higher rates of accidents and injuries in the New Orleans region than in other OSHA regions. 46 In addition, employers in the State of Louisiana must secure workers compensation insurance for every employee. Louisiana Workers Compensation law also stipulates that, provided the employer is informed of any workplace accident within 30 days, workers related medical expenses will be fully covered. Workers are also unable to work due to a workplace injury, and fixed compensation for any permanent disability. 47 H. Hurricane Impact on Restaurant Workers I find it s worse after Katrina, like before Katrina I was pretty much well, just was working, I was okay, stability was there, everything was good, management was great. Now it s like everybody s just like dogs, get in where it s at you know like look, you want a job, people struggle, either you gonna work this place or not; you in or are you out? Female, 23 years in the industry, Server In 2005, Hurricane Katrina severely damaged the New Orleans area, flooded 80% of New Orleans, devastated the local economy and displaced more than one million people, most of whom were low-wage workers of color. 48 According to the Louisiana Department of Health, 1,464 people died, and hundreds of thousands of residents were either unable to return or missing. 49 Perhaps the most devastating effect from Katrina on New Orleans was the change immediately after the storm hit, as shown in Table 12. While the metropolitan region was always majority white, it still experienced tremendous change; perhaps the most notable changes were the declines in the African- American population from 36.6% of the population to 21.7% of the population, while whites increased from 59.3% of the population to 73% of the population. 22

30 Chapter III TABLE 12: Profile of General Demographic Characters in Greater New Orleans Just Before and After Hurricane Katrina General Demographic Characteristics January through August 2005 September through December 2005 Total population 1,190, ,830 Race White 59.30% 73.00% Black or African American 36.60% 21.70% Hispanic or Latino (of any race) 5.80% 6.20% Source: U.S. Bureau of the Census, American Community Survey Gulf Coast Area Data Profiles, Pre-Katrina, accommodation and food services was the third largest industry in one of the regions hardest hit by the storm, the Lower 9 th Ward, second only to the health care and retail trade industries. 50 The French Quarter had the largest concentration of restaurant employees and nearly one out of four (23.7%) jobs available were in the New Orleans tourism and restaurant industry sectors. Since Hurricane Katrina, the New Orleans economy has recovered dramatically, and the restaurant industry in particular claims more establishments post-hurricane than pre-hurricane. 51 Numerous studies have shown that socio-economic status plays an important role during the recovery from a disaster. 52 Limited access to income and transportation are significant barriers to a resident s ability to respond to impending hurricane threats and to recover after disaster strikes. Interviews with restaurant workers indicate that during Katrina, many of them could not leave and had to stay in New Orleans due to, as one back of the house worker said, a lack of funds. Even though more than 200,000 residents evacuated for Hurricane Gustav in 2008 making it the largest evacuation in Louisiana history, several restaurant workers we interviewed stayed. A busser from Mexico who has been in the industry for eight years explained that when an evacuation order is issued, he prefers to stay because I can [easily] find work. In fact, several employers that we interviewed explained that they often had difficulty finding experienced workers to hire during and after mandatory evacuations post-katrina, even though they remained open for business. Despite the significant decline in economic activity throughout the country, the New Orleans economy has done relatively well, particularly because of its high service-industry composition. Low foreclosure rates and ongoing rebuilding activities are attracting more people, jobs, and investments. 53 The New Orleans s economy is growing, facing an increase in the cost of living and a decline in the rate of returning residents. Unfortunately, restaurant workers wages and working conditions have not similarly improved. Results from our survey data indicate that 56% of all workers surveyed reported being affected by Hurricane Katrina. However, since we were only able to survey restaurant workers in 2008, we were only able to survey those who returned to the region after Katrina. Therefore, the number of restaurant workers actually impacted is probably much higher. Unfortunately, many good jobs were lost in the storm. Of the workers we surveyed, 68.4% that made a living wage ($18.30 per hour) reported that their jobs were affected by having to evacuate for Katrina. One of the major issues that emerged in worker interviews was the fact that workers would return from a mandatory evacuation during any of the recent hurricanes Katrina, Gustav, or Rita to find that they had been replaced at their restaurant workplace, and had thus lost their job. With Gustav I was working offshore, I was actually home at that moment. [When] we evacuated I had to call in every day to a guy that I couldn t reach because he lived in Houma, so when everybody started coming back we all went back to work, took 3 weeks. It took that long because [the] Houma guy was unreachable. [I] didn t get any pay at all for these 3 weeks. No compensation. [I] went to Arkansas and [had] about $1000 in evacuation expenses. We were out 3-4 days then migrated back. [I] lost about $5,000 in this experience. [It took me] about a month [to recover my financial loss]. We got food stamps. That was it I think - $600 more or less between 2 months. Manager, 13 years in the industry, Quick Service 23

31 Chapter III Many Bad Jobs, Few Good Jobs [Fine dining establishment] was great. I was a server there. Everything went exactly how I thought in my mind how a restaurant should go. I loved working there. I started as a bartender and then became a server because I could make more money. The company was great as well. But when I worked for them we were part of a union. Male, 18 years in the industry, Server Analysis of our data revealed the existence of not only the low road practices described above, but also of significant associations between workers earnings, benefits and workplace conditions. Unfortunately, since many of the jobs in the restaurant industry are long-term, these conditions cannot be dismissed. Workers surveyed reported working in one restaurant for an average of two years, and one out of four workers surveyed worked in the one restaurant for three years or more. Half (53.3%) of the workers that reported working in the same restaurant for six or more years were workers of color. Additionally, there was a significant relationship between workers that reported receiving promotions and the length of time they stayed working in one restaurant. Fifty-six percent (56%) of workers who stayed in their restaurant for six or more years received a promotion, while only 25.2% of workers who worked between one and three years in the same restaurant received a promotion. When combined with findings from the interviews, these statistics indicate that many of the workers are quitting their jobs to find others that provide better opportunities and higher wages. The median hourly wage reported by workers in one restaurant for three or more years was $11.54, compared to $8.50 for workers in the same location for only one year or less. Of the 530 workers we surveyed, the vast majority reported working 40-hours per week (74.1%), year-round (97.1%), and for more than one year in one restaurant (72.7%). Clearly, most workers make a career out of the restaurant industry, and several workers explained that turnover rates are high because they are constantly seeking better jobs. One worker who has worked front of the house positions in the French Quarter for 17 years suggests that the industry should offer incentive [promotions] right off the bat, [then] they would get quality, longer term people. The longer [people] would stay, the more serious they would be. They wouldn t be getting people that are just coming in and out [of different restaurants]. So I left there in 1997, and I have been at [family style establishment] since then. After jumping around the city I found my niche. Here is a guy that actually gives a damn about his employees, he takes care of them. This guy, he s not perfect but he puts his money where his mouth is. He has a good 401k plan, he s got a good insurance program for people who ve been there the longest. He takes care of people who don t want to be on his insurance plan, he ll set you up on another one that is free (higher deductibles but is free) You ve also got dental...you can talk to the managers and don t feel like you are going to go in front of the tribunal...every place it s not perfect, but compared to my experience in other places in this town. I have to say that for better or for worse I ve been there for over 12 years. Male, 33 years in the industry, Busser, Runner, Server & Bartender Our research shows that when workers receive low wages and experience a lack of promotions and benefits, they frequently encounter a large number of additional poor workplace practices, creating an industry of many bad jobs and few good jobs. Specifically, our data demonstrates that workers in low wage positions are: Less likely to receive regular raises and training needed to advance. Conversely, workers in living wage jobs are more likely to be promoted when they move from one job to another than workers earning wages below the poverty line. Less likely to receive important workplace benefits, such as health insurance, paid sick and vacation days. More vulnerable to violations of employment laws, especially overtime pay violations. More likely to have been forced to do something that has put their own safety at risk. Workers with living wage jobs were less likely to be subjected to working conditions that put them or the consumer at risk than workers earning lower wages. More likely to have done something under time pressure that might have harmed the health and safety of the consumer. 24

32 Chapter III While the number of jobs available in the restaurant industry is growing, our survey data and interviews with workers demonstrate that the industry is plagued by a number of serious problems. Presently, most of the jobs being generated by the industry are bad jobs characterized by low wages, few benefits, few options for upward mobility and illegal workplace conditions. According to workers testimonies and the results from our survey data, good jobs, those with higher wages, benefits and somewhat less onerous working conditions, are few and far between. Such jobs do exist, thereby demonstrating that it is possible to pay workers a living wage and remain in business. Table 13: Conditions Reported by Restaurant Workers, by Wage Groups Conditions Reported by Restaurant Workers, by Wage Group Low wage Living Wage Do not get regular raises 70% 61.9% Have done a job not trained for 44.4% 37.9% Have not moved up in position from last place of employment to current 69.6% 67.7% Do not receive paid sick days 88.1% 75% Do not receive paid vacation days 72.8% 55.3% Do not have health insurance 58% 40.9% Experienced overtime violations 38.6% 30.6% Have done something due to time pressure that might have harmed the health and safety of the customer Source: New Orleans Restaurant Industry Coalition survey data 15.4% 15.4% Van, a New Orleans native, graduated from Xavier University in New Orleans with a degree in social welfare. He joined the Air Force, and while enlisted he moonlighted as a waiter in various restaurants. It was then he Van found his passion to serve. After the Air Force, he found himself in Las Vegas, Nevada. Here Van started working as a cabinet maker and within a year he had started his own cabinet-making company with a friend. The cabinet industry was good to Van for 25 years. On August 29, 2005, Hurricane Katrina hit New Orleans, nearly destroying the city that Van once called home. It was then he decided to come back to his birth place to help in the rebuilding process. Van sold his half of the cabinet business to head home to help in the rebuilding process. Once back on the ground in the Crescent City, Van started working again in his passion. Not long after beginning working as a fine dining waiter, Van had a job as a banquet server for a world wide hotel chain. From there he worked a couple of other fine dining restaurants. As your server, Van s personality is so friendly you feel as if you ve known him all your life. When you ask him how he is doing, he will say, I am Van-tastic! It is this type of personality that keeps him with repeat customers over and over again. It was not until he was hired at a fine dining Italian restaurant in the French Quarter, which ignited a fire deep within his soul. The many years living out west did little to prepare him for what he would soon encounter. Van s, passion for serving was tested when he was working as a floor manager at a fine dining restaurant in the French Quarter. Everything was going well until the owners decided that the manager was not Italian enough. Within a couple of weeks, a new manager was hired, Van was demoted to a regular server and his hours where cut. In addition to not receiving his full share of tips from management, Van was asked to show up every day at 4pm, but would not be paid until the first customer arrived for dinner; in this way, Van would work at least one hour per day without being paid. Within another couple of weeks, Van as moved from the 1 st floor dining room to the 2 nd and 3 rd floor dining room which was used as an overflow for when the restaurant gets crowded. On the 2 nd and 3 rd floor Van found himself with servers of color, where the white workers were allowed to work the first floor, where the earning potential is 3 times what it was for workers of color. In total, between tip misappropriation, not being paid for his first hour of work every day, and losing money for being moved upstairs, Van was owed tens of thousands of dollars by the restaurant. It was then that Van decided to talk with the workers of color to confront the new manager about his scheduling practices. The fear of losing their jobs was so strong that none of them would voice their concerns. Ultimately, Van confronted the his new manager about being forced to work on the 2 nd & 3 rd floors., The manager told him, I choose who works on what floors and no one else can tell him who to put where. The manager also added, I can fire you today and have 10 people who look just like you that will be glad to work on any floor no matter what floor I choose to put them on. Shortly, after this Van s complaints, his shifts were cut even more, for every $100 in tips, the house would take 20% and he was always scheduled to the 2rd & 3 rd floors exclusively. Soon after Van found the safe haven of the Restaurant Opportunities Center of New Orleans and joined a campaign for workplace justice in his former restaurant. 25

33 C H A P T E R IV Employers Perspectives

34 Chapter IV C H A P T E R IV Employers Perspectives Our interviews with employers in New Orleans restaurant industry proved to be a rich source of information regarding the constraints under which they operate, thus leading them to engage in the practices described by workers in Chapter III: Workers Perspectives - often despite their best intentions and their expressed belief that restaurant workers are critical to their success. Our interviews with employers highlighted the principles and approaches adopted by employers pursuing the high road those who manage to maintain successful businesses while ensuring that their workers earn a living wage and are guaranteed workplace benefits and safe work environments. As such, the perspectives summarized in this chapter can serve to guide further study of the industry, and, perhaps most importantly, lay the groundwork for initiatives developed in partnership by restaurant workers and employers. Our interviews with employers revealed that: Market volatility brought about by factors beyond employers control such as hurricanes, economic downturns, and changing tastes require significant flexibility on the part of restaurant employers. Worker productivity and low employee turnover are both important to profitability. Workplace practices intended to increase productivity, such as understaffing and longer, more unpredictable hours, can have the effect of increasing employee turnover, creating a dilemma that many employers face. The majority (52%) of New Orleans restaurant employers interviewed stated preference for the high road, even while electing to take the low road to profitability. While employers recognized workers dependence on wages and overtime to earn enough to meet basic needs, they also reported a policy of keeping wages low and overtime pay to a minimum. Many employers stated that they would like to offer their workers health insurance, but maintain that it is almost impossible to do so due to prohibitive costs. It is possible to achieve profitability by taking the high road and paying living wages, providing benefits, and maintaining a safe working environment when there is a non-negotiable commitment to doing so. However, employers taking the low road undermine restaurants following the high road approach. 27

35 Chapter IV A. Introduction and Methodology In order to obtain a better understanding of factors that drive workplace practices, the New Orleans Restaurant Industry Coalition interviewed restaurant employers throughout the Greater New Orleans area. With the assistance of students and faculty from Tulane University and other Coalition partners, we conducted in-depth interviews with 29 restaurant employers, including owners and managers, from November 2008 to July Employers were selected for interviews in a manner designed to gather data reflective of the distribution of the different segments - fine dining, casual/family style, fast food/quick serve and sizes of New Orleans restaurants. Interviews included questions regarding trends in the industry over time, factors affecting business practices, strategies for running a profitable business, workplace practices, and the role of the informal economy in the Greater New Orleans restaurant industry. Overwhelmingly, restaurant employers we interviewed recognized the important role that workers play in the vitality of the industry and the success of their businesses. The vast majority of employers described their workplace policies as supportive of workers and their development. However, when employer and worker responses to our surveys are juxtaposed, a more complex picture emerges. Both worker surveys and employer interviews confirm that some employers are paying living wages, providing comprehensive benefits, and ensuring healthy work conditions while successfully running a profitable business. Indeed, 13.2% of workers we spoke with reported being paid a living wage by their employers, and a similar share reported receiving workplace benefits. These employers, however, are the exception, rather than the rule. Employers also recognized that the low road to profitability - paying low wages, engaging in wage and hour violations, and cutting corners on health and safety, - is the path more often followed in the New Orleans restaurant industry. While there are surely some bad employers who operate only for their own profit, at the expense of their workers, what appears to be more common is that employers espouse supportive workplace policies in theory, but do not implement them in practice. This disconnect can be largely attributed to lack of good management, absence of industry incentives rewarding good employment practices in the industry, and ineffective employment law enforcement mechanisms. Additionally, employers would clearly benefit from better guidance from the industry as a whole, including more education regarding their legal obligations, and enforcement of these laws. Although the workers are the ones who lose out in the short term as a result of low road workplace practices, interviews with employers suggest that the industry as a whole loses out in the long run. 28

36 Chapter IV TABLE 14. New Orleans Employer Interview Survey Sample by Attributes Industry Segment Number of Employers (%) Fine-Dining 8 (28%) Family Style/Casual Dining 16 (55%) Quick Service 5 (17%) Total 29 (100%) Position Owner 18 (62%) Manager/General Manager 11 (38%) Total 29 (100%) Gender Male 22 (76%) Female 7 (24%) Total 29 (100%) Length of time in industry Less than 1 year 1 (3%) 1 3 years 2 (7%) 3 6 years 6 (21%) 6 10 years 8 (28%) More than 10 years 12 (41%) Total 29 (100%) Source: New Orleans Restaurant Industry Coalition interview data B. External Factors Affecting Workplace Practices In order to better understand the tensions and contradictions in the restaurant industry affecting employers and workers alike, it is important to consider some of the most salient external pressures on restaurant businesses in the local context. Employers we interviewed referred to various factors that impact their business, workplace, and employment practices, such as customer demand for value and stiff competition in spite of the economic downturn. ECONOMIC RECOVERY AND DOWNGRADING IN THE INDUSTRY I don t think the recession has affected us, it probably will makes us busier in the long run. I think though that is why they are becoming more strict on overtime because they are watching their dollar. Manager, 10 years in the industry, Fast Food National Chain While almost all employers interviewed discussed the economic crisis as affecting the industry, they also said their own businesses were not substantially affected. In fact, despite the general perception that other restaurants were suffering, and statements that other restaurants have had to reduce prices and downgrade to meet consumer demand, 18 (62%) of the employers we interviewed noted that they were not having to do so themselves, and that their businesses were booming. We have not been affected. I attribute that to our business style. We are always looking for new markets. You know, there is a lot of competition in the restaurant industry in New Orleans. There is also a lot of opportunity. Manager, 10 years in the industry, Fine Dining 29

37 Chapter IV My progress has not been affected yet. Let me knock on some wood here. We have been lucky and we are in a great spot. We get the conventioneers, the tourists, the gamblers and the locals so kind of get business from everywhere. Owner, 14 years in the industry, Fine Dining These seemingly contradictory observations reflect national trends. While the industry is generally perceived to be declining, the restaurant industry lost only one-quarter of the jobs that the rest of the economy lost from March 2008 to December Furthermore, while most other sectors continue to decline or lag, the restaurant industry has already begun to post growth as of July Certain segments of the industry, such as fast food and liquor sales, have been growing throughout the crisis. Many employers reported that their success has been due to an increase in their customer base. Several employers reported that by making sure the customer is always right, by providing a friendly atmosphere, and by having a positive staff, they were able to cater to the needs of every customer coming through the door. By focusing on training their staff and maintaining a positive work environment, these employers gain repeat customers who frequent their establishments more often. 90% of my customers are from out of town, the tourists. Here in downtown in this area. [Things that make my business successful are] the food, quality of the food, the cleanliness of the restaurant, and the third thing is customer service. So if you re missing the customer service, you lost a third of the business. I mean customer service is a very important issue. One time I told my employee, Who pays you? He said You. I said, No the customer pays you. The restaurants are open for customers to come to eat and they spend money, so give them the service they want or they are not coming back. So it s very important to give them really good service...customer service for anything, you make them feel good, welcome, make them feel happy about the food. Any complaint you have to work on the complaint, they cannot leave through the door if they re not satisfied. Customer service is a huge issue, very important. Owner, 7 years in the industry, Family Style Employers repeatedly emphasized the increase in liquor sales, which has helped them stay profitable during slow economic times. Historically, even during a recession, bars and restaurants that serve alcohol remain popular and experience increases in profit. 56 Several employers reported revamping the menu by reducing portion sizes, lowering prices of food items, and including more drinks as that is where they derive most of their revenues. Economists report that alcohol is a counter-cyclical asset, a good that defies economic trends. 57 We are kind of a hybrid. You can come in and have a filet and a glass of red wine that at [a fine dining establishment] you would probably pay forty bucks for, here you will pay twenty bucks for. So we are the alternative, and we are a step up from fast food. So we are kind of in our own little niche, which makes us, well that was our intent, we are doing well. Specials are helping. With the economy we started running specials and lowered prices. At the beginning, the economy was affecting us, we were sloping, but the value priced meals and drink specials have helped us. Manager, 8 years in the industry, Family Style THE HURRICANE THREAT & SUBSEQUENT EFFECTS While Hurricane Katrina may be the most memorable storm in New Orleans history, the threat of hurricanes is a reoccurring reality throughout the State of Louisiana. Large portions of Orleans, St. Bernard, and Jefferson parishes are currently below sea level, and continue to sink. 58 Historically, 18% of all hurricanes on the American Atlanta Coast have hit the state of Louisiana. 59 Additionally, 18 of the 92 major hurricanes with category 3 or above on the Saffir-Simpson Hurricane Scale have struck the state. 60 The Saffir-Simpson Hurricane Scale measures hurricanes by wind speeds and the types of damage on a scale from 1 to 5. Hurricanes Audrey (1957), Hilda (1964), Camille (1969), Andrew (1992), Katrina (2005), Gustav (2008), and Ike (2008) are historical examples that have caused extreme and catastrophic damage in Southeastern Louisiana at categories 4 and Several researchers, however, have pointed out the limitations of the Saffir-Simpson Hurricane Scale, particularly because it gives the perception that hurricanes in the same category have the same effect; and clearly they do not

38 Chapter IV New Orleans is like an empty room right now, and if you put some quality pieces in that room than the whole room is going to glow. But, if you have these vacant places and no one wants to take a chance then the city is going to be in a stalemate for the next ten years talking about anniversaries of Katrina. We need to move forward. Owner, 20 years in the industry, Family Style There is a lot of anxiety with things like hurricanes every summer and it makes it hard for people to focus on their jobs when they may have to leave. You know we had employees commuting after Katrina, spending as much money to get here as they were making. It s tough. Manager, 10 years in the industry, Fine Dining One of the most pervasive issues employers constantly face in New Orleans is how they will respond to a major hurricane. In terms of hurricane impact, New Orleans is the most vulnerable major city on the Gulf Coast. Hurricane Katrina, for example, devastated the local economy with damages exceeding $200 billion. 63 Many businesses closed and several industries such as shipping, oil and gas extraction, mining, and port operations (mining, transportation, warehousing) have not been able to recover. 64 The restaurant industry, on the other hand, is the one aspect of the tourism industry that has grown after Katrina and is still booming. We didn t flood [when the storm hit]. We were closed until the third week of October and we were one of the first restaurants to open up. We came back in September, we didn t have any damage. As soon as we had water, electricity and gas we opened up. We had three employees come back out of thirty. We actually had the best two years in our history after we opened up after the storm. Owner, 9 years in the industry, Fine Dining Last year was even worse. You can tell when you look outside here. It no longer looks like a city. It looks like a village Gustav was not the problem. It was Katrina. People still haven t come back. Owner, 12 years in the industry, Family Style Several employers explained that, for a few days after Hurricane Katrina, labor costs skyrocketed. As one fine dining employer explained We had hardly any business three or four days before the storm, everyone was freaking out. And then, for two to three weeks after the storm we had hardly any business. It was really devastating we had workers, but people were not eating out. In order to keep his workers during this time, he had to increase hourly wages by four dollars for each employee. Another employer spoke to how the high wages increased the skilled applicant pool and also made him more competitive by hiring the best workers and maintaining a consistent dining experience, No matter how the economy goes up, you keep your prices the same. I think that is why after Katrina, even though there were a lot of new restaurants, many of them failed. This is because they were not thinking about what the customer wants: good service and quality food at a reasonable price. We had an abundance of restaurants that opened up after Katrina that were given SBA s. Maybe people that weren t in the business before but it had been a life-long dream. I think that hurt the businesses that stayed and opened up quickly after the storm. Another thing that I think was unfair were that there were a lot of big restaurants that did not come back until convention season kicked in. And now, they are taking away business from those that stood by the community and got opened up. Owner, 9 years in the industry, Family Style A small labor pool, however, and high wages did not last long after Katrina, as can be seen by the current median wage of $7.76, 65 and all of the wages and working conditions reported in Chapter III: Workers Perspectives. An owner of a quick service establishment reported that in closing for three days for Gustav his workers felt the largest impact in their pockets because insurance picked up the tab. You know, business interruption insurance. The insurance companies they start paying on the second day we re closed, but workers they lose their wage. 19 (66%) of the employers we interviewed reported difficulties in hiring workers after an evacuation, particularly because they had not returned. Furthermore, all 19 employers reported that they temporarily offered workers several dollars more than the federal minimum so that they could stay open for business. 31

39 Chapter IV [We closed for Gustav] for four days. A lot of our crew members were calling us wanting to come back. I was still out of town and they were calling me. So we came back and opened up as soon as we could. Those that came right back, they gave them five dollars extra an hour. But some people evacuated with families and they couldn t come back, which is hard. But for those that got back, they got a little extra. Manager, 8 years in the industry, Fast Food National Chain Employers difficulty in re-opening after a Hurricane and finding a labor pool both speak to the fact that workers and employers might both benefit from employers not re-opening before a mandatory evacuation order is lifted, and allowing their employees a grace period to return from a mandatory evacuation before replacing them. These employees would maintain their previous wage rate, and employers would therefore not experience an artificial and temporary increase in labor costs. [Our fine dining establishment] opened in December of 2005, right after Katrina. So we just had our third birthday and she has been here since our very first day of training. We had about 48 people hired before Katrina and we were scheduled to open in September and three of the 48 came back after Katrina and helped us get open. Of those, they didn t last a month. It was a mixed blessing because we were really short staffed so we were probably not able to give real great quality service and on top of that we were a new restaurant, so people didn t know what they were doing. We had nights where we turned away guests, you know, for the first few months. Had we had a full staff we would have been able to. There were nights we did not have a dishwasher. Before the storm we were hiring people for the dish-pit at $7.00 an hour, then we were having to pay $9.50 and even paid up to $11.00 an hour for a dishwasher after the storm. Now it has subsided, the wage rates have gone down. Before the storm we had over 200 applications for 48 positions, after the storm if you came in and your heart was beating I offered you a job. So we had really low quality people for a long time. Now, I will put an ad in the paper and maybe get twenty applications, and hire four or five and be a little more selective. I thought New Orleans was a dying city before I put the restaurant here and that is a term I used before Katrina. Most of the industries are gone, you know we have shipping and tourism. And no one is going to locate here, with the quality of workers and the culture here has deteriorating to the point where people don t want to work. Manager, 9 years in the industry, Fine Dining C. Strategies for Profit To deal with many of the external pressures outlined above, employers generally agree that one of the most important elements of maintaining a profit is human capital. In fact, most employers in our sample agreed that reducing employee turnover and increasing employee productivity were both critical to maintaining profitability. MINIMIZING TURNOVER Absolutely, turnover affects every level of the business, certain customers expect employees to be there certain nights and when they re not there it affects things. General Manager, 28 years in the industry, Fine Dining Establishment of a loyal customer base and personable service was cited by employers as critical to promoting businesses and ensuring consistency in profit. Consistency and quality of staffing is equally important to the employers we spoke with, who told us that keeping staff turnover low was critical to the success of their business. Most employers agreed that turnover is expensive and destabilizing to a restaurant workplace, particularly because the costs of recruiting, hiring, and training replacements go beyond the dollar and affect productivity and customer satisfaction: Well, I am not the chef, he is training them, but yeah training is costly. It always is when you bring in new people but you have to spend time with them. Owner, 14 years in the industry, Fine Dining, I believe that any person can be trained to be better, more efficient. But you have to be willing to devote that time to them. We are lucky because most of our servers understand the style of restaurant we are, and the style of service they should provide. Manager, 10 years in the industry, Fine dining 32

40 Chapter IV Employee turnover rates in the restaurant industry often exceed 90% per year. Such high levels of turnover impose both direct and indirect costs on businesses. Direct costs include the time and money required to find, hire, and train replacement workers. Indirect costs include declines in productivity and quality of service causes by understaffing during the time it takes to find replacement workers, and by the inexperience of new workers. Previous research suggests that dissatisfaction with compensation is a major cause of restaurant employee turnover. 66 Employers recognized the importance of keeping employees happy in order to decrease employee turnover, thereby fostering a satisfied and loyal customer base. Some of the strategies mentioned by employers as important to promoting good conditions for workers included training, promoting from within, paying sustainable wages and providing other perks ranging from workplace benefits and gym memberships to staff outings. In addition, many employers cited the overall importance of creating a good work environment and a sense of family. We offer some nice benefits. You know, paid vacations, health insurance, and we do meal comps and things like that. I have employees that have been here for eight years, four years. Owner, 12 years in the industry, Family style My dishwasher I hired right after Katrina and he is the best employee I have had in my entire life. Owner, 17 years in the industry, Family Style It is, it s like a family, everybody knows everyone. Owner, 8 years in the industry, Fast Food Franchise WORKER PRODUCTIVITY I mean, when my employees go to the doctor I want them to get a T-shirt and balloons when they leave... Owner, 11 years in the industry, Family style Employers reported that worker productivity is critical to running an effective and profitable business. However, there are differing theories regarding how to best maximize productivity. Some employers believe that training and investing in workers is best. On the other hand, some think that hiring fewer workers to perform several tasks is the most efficient way to move production. Fifteen out of 29 (52%) Greater New Orleans employers interviewed, however, echoed the belief that investing in workers in terms of wages, working conditions, training, advancement opportunities, and more is the most effective way to keep workers happy and productive. Well, labor is the most expensive thing. Like, for example, maybe forty percent of my expenses go to labor and thirty percent to food. The rest is profit. But labor, to get good labor, it is really high. Owner, 10 years in the industry, Quick Service I have to say we had a very dedicated group of employees and when you treat employees fairly, you make the environment dynamic, fun, you give them benefits and they make very good money, it s easier for them to be motivated to come to work. They make anywhere to 45-80K a year. We had some waiters making 80 grand. General Manager, 28 years in the industry, Fine dining D. Contradictions in Theory and Practice Litigation is a big issue for the restaurant industry. It s one that the National Restaurant Association has worked on for years and always will. John Gay, senior vice president of government affairs and public policy for the National Restaurant Association67 You know we all have to make ends meet somehow but going through the wrong channels just hurts everyone in the end. I think these owners should be made to work in their employees conditions. That is 33

41 Chapter IV a big problem too, most of the people committing these crimes are hands off or they make sure somehow they don t know what is going on. Owner, 5 years in the industry, Family Style While some employers are committed to pursuing the high road to profitability these employers are unfairly undercut by those who choose to take the low road to short-term and unsustainable gain. In some cases, this approach is related to management and business skills; in others, it comes down to a lack of enforcement, support, and rewards promoting good workplace practices. What becomes clear, however, is that low road practices can be counter-productive, ultimately having negative impacts on worker productivity and employee turnover. WAGES AND OVERTIME Food cost is high. I know. That is why I have to fight to keep labor costs low. Owner, 40 years in the industry, Fine Dining Although some employers expressed understanding of the importance of paying good wages to keep staff happy and productive, the majority of workers in the area struggle under low wages, and do not receive overtime pay. (see Chapter III: Workers Perspectives). Several Greater New Orleans restaurant owners we interviewed recognized this contradiction. I am very up front with people. I ask them what they want to make when they are hired. If someone says five or six hundred a week, I say this is not for them. If they are looking to make three or four hundred, okay. Owner, 9 years in the industry, Family Style On the high road, companies compete not by paying the lowest wages but by offering the highest quality and value and innovation. John J. Sweeney, Former President AFL-CIO and President of the AFL-CIO Working for America Institute s Board of Directors 68 Moreover, 14 employers (48%) reported that labor costs are the first to be cut when profits are low, particularly given that other costs, such as rent, may be non-negotiable. Such a practice undermines the security and longevity that is gained through consistent investment in workers wages. Twelve employers (41%), on the other hand, discussed various management strategies to avoid labor cuts, including establishing payment plans for distributors and tax payments, offering smaller portions, or reducing hours rather than laying workers off completely. Although several employers reported lower-wage workers dependence on overtime wages to earn enough to get by, many employers also reported a policy of keeping overtime to a minimum. Some employers discussed creative strategies to avoid paying overtime altogether, such as paying slightly higher hourly wages overall, but not time and a half on the overtime hours, or paying by the shift or week. Many employers reported that they aspire to replicate the systematization and standardization characterizing chains and fast food restaurants, such as structured employee review policies and regular raises. However, the majority of non-chain employers said that they gave workers occasional raises based on perceived merit rather than conducting regular salary reviews. One notable exception was a fine dining employer who has been in business for over 30 years who reported that he commits more than one third of costs towards labor and still manages to provide raises to his staff. As a result doesn t, he doesn t have anyone working at minimum wage. You couldn t get a dead body out of the graveyard to work for that little and his turnover is low in both back of the house and front of the house positions. Without the validation provided by regular reviews and raises, our research indicates that workers will invariably leave in search of jobs with better opportunities. Basically I did not give two weeks notice at many of these places I left. At [fine dining establishment in French Quarter], I was demeaned and insulted by a manager in public for no reason. I had already been reprimanded previously and when the second manager came with the intention of humiliating me when already the point was made, it came down on me really badly. I decided I had no business stay- 34

42 Chapter IV ing here, [they] had crossed the line. I have already been denied my promotion here, been lied to many times. [At another fine dining establishment] they told me I would be promoted in six months. I ran food for 6 months, and was then promoted onto the floor [as a busser]. At [this place] I was bussing tables for over a year, and all I got were a bunch of stories [no promotion and no raise]. Male, 33 years in the industry, various front of the house positions in all three segments When asked it if was possible to pay a living wage and still make a profit, many employers felt it was difficult, but not impossible. Commitment to doing so and an acknowledgement that it was a non-negotiable overhead were determinative of whether or not better wages would be paid. The examples of successful employers who have demonstrated such a commitment show that including labor costs into operating costs from the outset and providing living wages and benefits to workers can be consistent with success in the restaurant industry. I have some [employees] making $8 an hour. And I have some that make $15 an hour. My worst competition is the guy who pays $6 an hour. Here s the problem: I pay you what I get back. Owner, 12 years in the industry, Quick Service BENEFITS We haven t had the ability to provide a good plan for our employees. Manager, 3 years in the industry, Family Style Restaurant employers overwhelmingly reported that it was impossible for them to provide health insurance benefits to their employees with the exception of chain/franchise establishments. Many employers cited prohibitive costs and administrative burdens as the most significant obstacles to offering benefit packages. When asked if they would be interested in a plan specifically geared to restaurant businesses covering multiple employees, and particularly smaller businesses, a large majority of employers we interviewed indicated that they would be. [We don t provide healthcare]. It is something that we have tried to do in the past but unfortunately we cannot afford to do that right now. If we had more employees interested we could offer them insurance pre-taxed right out of their checks but you have to have several people want to sign up, and so far no one wants to see that money taken from their checks. Healthcare is so expensive. Manager, 6 years in the industry, Family Style We offer healthcare packages to our full-time employees. We pay a percentage of their package. Even though we don t offer 401K for managers, we offer some nice benefits. You know, paid vacations, health insurance, and we do comp meals and things like that. Owner, 9 years in the industry, Family Style Multiple-restaurant owners and restaurant chains are able to provide worker health benefits because they are able to negotiate good rates based on volume. Small, single-location businesses simply do not have the institutional size and strength necessary to absorb the costs associated with providing benefits to a smaller number of employees. 69 Chains and franchises had the most standardized policies and practices with regards to benefits, including sick and vacation days. Few other employers reported offering these benefits. TRAINING Our turnover is high because it s just the way of the business, and maybe it s also the type of restaurant. Training is not expensive though. The training we do is just talking and showing people what to do so it s not like a training program. I mean, the new manager gets to train them but it s not difficult. General Manager, 5 years in the industry, Family Style Training restaurant workers is important for health and safety reasons, and to enhance worker productivity. Training is also an investment in workers as a means to promote mobility and longevity in the workforce. The benefits of 35

43 Chapter IV making such an investment include a well-trained staff, low turnover rates, and ultimately lower costs over the long run. There is, however, a great deal of variation across the industry in terms of what training is available to restaurant workers across the industry. Some employers expressed an appreciation for the need for training both to help a worker perform their job and to encourage mobility. Others fell short on training workers in the front of the house and not providing training to back of the house workers. You know, it is hard to move the bussers and hostesses to waiter, because there is very little opportunity for that. Manager, 10 years in the industry, Fine Dining [Servers] pretty much stay [servers]. Or they can move to bartender, but it is not really a promotion because they make the same money. Owner, 3 months in the industry, Family Style Of the fine-dining and casual non-chain restaurant employers who discussed training during our interviews, only three mentioned training back of the house staff. Data from worker surveys and interviews with workers, demonstrate that, contrary to popular perception, there is actually greater longevity in tenure among back of the house employees. One fine dining employer, who has been in the industry for 7 years, explained that he actively promotes within the kitchen. An owner of a family style establishment who has been in the industry for 17 years explained that positions like busboys turnover a lot, a qualitative example of a long-standing issue in the restaurant industry: higher turnover in the front of the house. 70 Nonetheless, our data also indicates that workers in the back of the house are much less likely to be promoted. I definitely think minimum wage should be increased. I think they deserve more! [Restaurant workers] deserve more because I think the type of work they do is difficult. It goes back to personality. You know, you re dealing with different people with different personalities. But at the same time if you choose to become a waiter or work in a restaurant or a bar and you understand you have to work, so if you accept 2.13, that s up to you. But I know I wouldn t do that. I personally wouldn t do it. I think I d be in there by myself because I don t think anybody (else) would work for 2 dollars and 13 cents plus tips. Owner, 3 years in the industry, Quick Service E. Conclusion: The High Road is Possible You know we all have to make ends meet somehow but going through the wrong channels just hurts everyone in the end. I think these owners should be made to work in their employees conditions. That is a big problem too, most of the people committing these crimes are hands off or they make sure somehow they don t know what is going on. Owner, 5 years in the industry, Casual Dining Low road practices ultimately have cost implications for businesses as a result of constant turnover as workers leave to find better paying jobs with better workplace conditions. Turnover has been shown to negatively impact productivity and profitability. 71 Some employers reported that low road practices implemented by their competitors, such as minimum wage and overtime violations, had the effect of undercutting them. high road employers lose business to those pursuing the low road as the latter benefit from unfair competition by violating the rights of workers. This ultimately damages the industry as a whole, and the public at large by pushing industry wages down even further, harming the very workers on whom their profitability depends, and spawning the proliferation of low road practices across the industry. The end result, as further explored in Chapter VI: The Social Cost of Low-Wage Jobs, is an increase in hidden costs to the public. Further study in this area is also needed, particularly regarding the impact of low road practices on the proliferation of low-wage jobs and on employers pursuing the high road. Insights from empirical investigations for solutions to these problems are needed to help the Greater New Orleans restaurant industry realize its full potential as a source of both revenue and employment to the Greater New Orleans metropolitan area. 36

44 Chapter IV Employer Perspectives Profile: Owner Boswell Atkinson So what is the best thing about having a restaurant in New Orleans? For extremely good food at a reasonable price, Boswell s Jamaican Restaurant is hard to beat! Originally opened in 1998 at 240 S. Broad Street, Boswell s is New Orleans answer to Jamaican style cooking. In the aftermath of Hurricane Katrina in 2005, the restaurant was forced to relocate to its now current location at 3521 Tulane Avenue in Mid-City. Mr. Atkinson is an example of what it means to practice good business, and believes what is good for the community is ultimately good for business and the ongoing success of his restaurant. What made you decide to open your own restaurant in New Orleans, being from Jamaica? I saw the need for a real, authentic Jamaican restaurant in New Orleans. The cuisine is similar to that of Jamaica, we both use lots of spices, make tasty food, seemed like a good fit! Initially a dear friend of mine who was originally a silent partner loaned me the money along with my Mom to start this restaurant. Personally, I love to see the look on somebody s face when they ve tasted my cooking! It reminds me of a story of one of my first customers, this woman who one time brought her son to the restaurant for the first time. After perusing the menu, he didn t see anything he recognized, then his mom said, okay, I ll just have to take him to Subway. Now I said, hold on a little, I ve got something for him, how about some Jerked Chicken Leg? When I brought it out, he looked it over a number of times, until he finally got the courage up to try it and then he said, what can I have with this? I gave him some fries and he has loved our jerked chicken ever since. Some Setbacks Couldn t be Helped I lost everything after Hurricane Katrina, but I was lucky enough to secure a loan, bought this building we re in today, and all the equipment. Before I was renting, and I had no insurance so I had to begin again from scratch. I guess the one good thing that came out of the storm is that we own the restaurant now. What does the future hold for Boswell s? Looking ahead and being really optimistic about the future, we ll have Boswell Jamaican Restaurants all over the country! I wouldn t mind us having one on the Westbank, maybe one also in the French Quarter. Also when asked about making workers part owners in his restaurant one day once the restaurant is on solid financial footing, Boswell says, If there s profit I m definitely willing to share. I m open to sharing the wealth with those who have worked by my side and contributed to the growth of our restaurant. And training programs to help workers enter the industry? I was all for it, helping people get skills that will get them good paying jobs. I wanted to do something for the community by offering a cooking class here. Through his commitment to his restaurant, to his staff, and to helping organizations like the Restaurant Opportunities Center of New Orleans train restaurant workers to advance to living-wage jobs in the industry, Mr. Atkinson has demonstrated that taking the high road is a road well worth taking. 37

45 C H A P T E R V Segregation & Discrimination

46 Chapter V C H A P T E R V Segregation & Discrimination Our interviews with both workers and employers show that the experiences of restaurant workers across the industry are not uniform. Across various types of restaurants and employers, there is a stark division between the treatment and experiences of the workers in front of the house positions, and those who work in the back of the house. Additionally, factors such as gender, race, ethnicity, national origin, and immigration status have a significant impact on the nature and quality of the experiences of restaurant workers. Our research indicates that: Jobs in the restaurant industry are divided between those in the front of the house and those in the back of the house. Earnings, benefits and workplace conditions differ considerably between the two. White and U.S. born workers are employed primarily in front of the house positions, while the vast majority of immigrant restaurant workers are found in the back of the house. As a result, the impacts of poor working conditions in the back of the house fall disproportionately on workers of color. Race appears to be correlated with wages and upward mobility in the restaurant industry. Some employers discriminate in hiring and promotion practices. Several workers reported experiencing verbal abuse based on race, gender, language, or sexual orientation. They also reported being disciplined more often or more severely based on their race, gender, or sexual orientation. The informal economy is important to the restaurant industry. According to employers, undocumented workers are found in significant numbers in the industry because they are more likely to work for lower wages and under worse conditions. 39

47 Chapter V A. Introduction The nature and quality of restaurant work in Greater New Orleans depends on various factors, including the type of restaurant, its location, and the employer. It also depends on the type of job and the value the employer places on the work performed. Our worker and employer data indicate that wages and working conditions also depend on a worker s race, gender, national origin, and immigration status. Our research suggests that occupational segregation and discrimination, both direct and indirect, is evident in the Greater New Orleans restaurant industry. Historical discrimination, residential segregation, recurring hurricane effects, and current discrimination in the industry mean that, in large majority, those with living-wage jobs are disproportionately white, and those with low-wage jobs are disproportionately immigrants and people of color. While the public at large is generally most familiar with direct forms of discrimination, indirect discrimination which occurs when seemingly neutral policies have a disproportionate impact on a particular group is more prevalent, insidious, and difficult to remedy. Because workers experiences of discrimination were not the primary focus of this study, our surveys and interviews provide only a glimpse into these issues. The New Orleans Restaurant Industry Coalition plans to conduct additional research in this area in the coming year, and strongly encourages both industry and worker analysts and advocates to pay greater attention to these issues. B. Segregation by Occupational Structure & Industry Segment in Greater New Orleans restaurants We have mostly white but also black and Latino employees. Mostly white in the front of the house because that is who applies. Back of the house it is mixed. Owner, 1 year in the industry, Family Style What I ve seen particularly in New Orleans is the bartenders are in a kind of war of attrition with the servers. And the front of the house is in a war of attrition with the back of the house and the people, the guys cooking in the line, they ll be working they re asses off in a hot kitchen and getting burned and you know having to deal with all the dirty work but yet not making as much money as the pretty people on the floor. The pretty [are] often [a] certain gender, certain ethnicity on the floor Male, 10 years in the industry, Server Jobs in the restaurant industry essentially fall into one of three categories: front of house workers, back of the house workers, and managerial and supervisory positions. Our research indicates that workers positions within this hierarchy determine their earnings, benefits, opportunities for training and advancement, and working conditions (see Table 15). Front of the house workers generally earn higher wages and have greater opportunities to increase their earnings through tips. As indicated by the data in Table 15, 24.5% of all front of the house workers reported a living wage (more than $18.31 per hour) compared to only 2.1% of back of the house workers. Additionally, more back of the house workers are subject to unsafe working conditions where they put both themselves and the public at large at risk in greater proportions than front of the house workers. They are also less likely to be afforded benefits such as health insurance and sick and vacation days, or receive health and safety training. Yet, they experience a greater percentage of unsafe working conditions and workplace injuries, such as exposure to toxic chemicals (41.2%), cuts (42.2%), and burns (50%). There are, of course, some differences in wages and work quality among positions within each side of the house (see Table 15). For example, although both occupations would be classified as front of the house positions, compensation and working conditions differ considerably between bussers and servers. Of the 15 workers surveyed who reported earning less than minimum wage, 1 was a dishwasher, 4 were line cooks, and the remaining workers ranged in front the house positions, with 5 of them working as servers. However, our analysis found the starkest disparities between front and back of the house positions. The median hourly wage reported by front of the house workers was $13.56, while back of the house workers averaged $9 per hour. 40

48 Chapter V TABLE 15: Differences in Job Quality by Restaurant Job Type Front of the house jobs Back of the house jobs Wages Less than min wage 5% 3.5% Under poverty line 13.5% 26.6% Low wage 57% 67.8% Living wage 24.5% 2.1% Total 100% 100% Race African American Workers 21.8% 62.5% White Workers 58.3% 21.7% Latino/Hispanic Workers 9.7% 10.5% Asian Workers 4.9% 1.3% Other Workers 5.3% 4% Total 100% 100% Workplace Conditions Do not have health insurance 46.3% 66% Did not receive on-going job training from employer 52.9% 53% Unsafely hot in the kitchen 20.9% 32.2% Did not receive health and safety training 28.8% 32.5% Have done something that put own safety at risk 21.4% 33.1% Have done something due to time pressure that might have harmed the health and safety of customers 13.4% 16.4% Workplace Injuries Have been burned while on the job 34.3% 50% Have been cut while on the job 40.3% 42.2% Have come into contact with toxic chemicals 26.4% 41.2% Source: New Orleans Restaurant Industry Coalition survey data Definitely there are Hispanics working back there, and it s interesting because they are the ones in the back, they re the ones doing the hard work and this is a Spanish restaurant, well Mexican restaurant, but there wasn t a single Mexican or Hispanic server. All Caucasian, all college kids, all white, uppity on top of that. But everyone in the back, that sweet old lady doing the tortillas, they re the ones, and to them it s almost like a favor, you know, be grateful we even give you this job kind of thing so they kind of took a lot of abuse in like verbal, and a lot of racial slurs. I ve always seen the dishwashers [are] always a minority. Usually people in the background are minorities, and usually you can tell not well-educated and potentially recently immigrated or something like that. That s been the norm for me. Female, 20 years in the industry, Bartender [The] majority of workers in the front are white. You might have two people or three people on the floor that s black, but the majority s white bartenders all white, and one black female as a bartender. Everybody in the kitchen, ain t no white, all black. Female, 23 years in the industry, Line Cook 41

49 Chapter V Front of the House Workers Back of the House Workers TABLE 16: Race Breakdown by Restaurant Job Type African-American Workers White Workers Latino/Hispanic Workers Asian Workers All Workers 32.1% 78.4% 55.6% 83.3% 57.4% 67.9% 21.6% 44.4% 16.7% 42.6% Total 100% 100% 100% 100% 100% Source: New Orleans Restaurant Industry Coalition survey data As indicated in Table 16, our survey data shows similar concentrations of white workers in front-of-house positions, and workers of color in back-of house positions. Seventy-eight percent (78.4%) of all white workers surveyed worked in the front of the house, while 55.5% of all Latino workers, and only 32.1% of all African-American workers worked in the front. Within fine-dining restaurants, these differentials are even more striking. Over half (57.1%) of jobs in the fine dining segment were occupied by whites. Clearly, preference for white workers in the front factors into employers hiring decisions: 58.3% of front of house workers in fine dining were white, even though their representation in our survey sample was 38.3% (see Table 15). Of the 28 African-American workers surveyed working in the fine-dining segment, sixteen (57.1%) worked in the back of house. Additionally, six of the thirteen Latino workers in fine-dining establishments surveyed reported working in the back of the house. Our findings of discrimination in the restaurant industry are consistent with research on the City of New Orleans and on other cities across the country, that have demonstrated much higher levels of discrimination in service industry occupations that involve high levels of face-to-face interactions with customers. This face-to-face interaction of course is at the heart of the work that front of the house restaurant workers perform. 72 In the front of the house I rarely see people like myself. I kind of know from both perspectives being a patron and working that there s some Hispanic people, it depends on the place. But at [fine dining establishments in the French Quarter], you can be as smart as this book right here but they won t hire people like me for certain positions. Female, 13 years in the industry, Server I have these skills and this experience that that range of restaurant is looking for... One thing I think that s helped me is if they are a restaurant like so many who has the pattern of hiring mostly women or mostly... white males for a certain job if they can find the one token minority that can do the job well and make them look like they re not racist and they re not classist then that might help me too. I ve felt that before. Male, 11 years in the industry, has worked every position in all three segments of the industry Additionally, back of the house workers reported more frequently than front of the house employees that they had been injured on the job. While these results can be explained in part by the greater health and safety hazards associated with positions requiring use of sharp instruments and work near hot ovens or with toxic chemicals, they also appear to be related to workplace practices. Despite the fact that they work in more dangerous environments, a greater number of back of the house workers (32.5%) reported that they did not receive health and safety training than front of the house workers (see Table 15). SEGREGATION BY SEGMENT So we live in a country where that is predominantly like the Euro-centric white standard way of being and so even in New Orleans, which has been a predominantly black city... there s been this since colonial times, well established sort of totem pole of who works in the service industry the... I find a lot of in fine dining there is a preponderance of males working the floor, so the more you up to like quality, high quality, you notice if you go into those restaurants it s male dominated it s also usually European 42

50 Chapter V American males. Because this place is a predominantly person of color, what they call minority majority city, it s hard to totally avoid that but still there is a set of restaurants which I have observed are like the white restaurants and they basically just don t hire anybody of color... The other restaurant[s] just hire whoever, who can do the job but it still kind of favors folks based on these kinds of advantages they may have. So the people who work their way to the top of the totem pole more often are male, more often are white. Male, over 10 years in the industry, Server Well, I don t have any black people working here. They never came to apply. The black people have their thing and the white people have their thing. It is strange. Owner, 40 years in the industry, Fine Dining While all restaurants are in the business of serving their guests a meal, factors such as ambience, type of service, and type of targeted patrons segment the industry into three categories which vary markedly with respect to wages, working conditions, and workforce composition. In this report, we categorize those segments as quick-service or fast-food, family-style and franchise, and fine-dining or tablecloth. The industry has the potential to provide living-wage jobs, particularly in the fine-dining segment of the industry. From our survey data, the most significant difference between the segments was wage. The median wage differential reported by workers was approximately two dollars per segment. Fine-dining workers averaged $13.40 per hour, while workers in family-style establishments averaged $12 per hour and workers in quick-service averaged $8.50 per hour. 17 fine-dining restaurant workers surveyed in New Orleans fine-dining restaurants reported earnings of $50,000 up to $137,800 annually. It is the $40 price point per meal at these establishments, along with higher tips, that offers employment with higher earnings than the other two segments of the industry. Our data indicates that race is also a mediating factor in gaining employment in particular segments. Over half (57.1%) of the survey respondents working in the fine-dining segment were white. Of all African Americans workers surveyed, 58.7% were concentrated in quick-service jobs earning a median wage of $8.50 per hour. C. Racial Disparities in Wages & Working Conditions Every day I m on Craigslist and I ll see something like today and then I ll go down there and they ll be like oh yeah we were talking about hiring people but we re not sure, so I m like why is this even on Craigslist! I know there are certain places I won t even attempt to go in most people working there are like 22 not saying I look old but they know I m more mature, or I m not someone who will show my goodies. Maybe they know they can t take advantage, maybe a younger woman they could, that could be a factor. I won t even waste my time going to Metairie, I know they won t hire people like me there. I don t see anybody that looks like me working in Metairie, all I see is young white kids I don t see anybody that looks like me. Female, 12 years in the industry, Server I ve worked in a few different regions of the country and what I have found is depending on that region, the bottom of the totem pole varies slightly. So if you are in the Southwest it s almost always Latinos washing the dishes, taking out the trash, and stuff like that, Latinos. And then in the black belt south, it s almost always male and mostly male and then also in the black belt south you see a lot of younger black males doing that work and sometimes older black males doing the back of the house labor. And then I find there is also some, and then as you move down the line towards the interfacing with the customer, the whiter [and] more educated people will tend to be and probably from a background of some kind of privilege, i.e. education or maybe they are middle class or something like that. And I say that to say that I think sometimes that it s their cultural background more so then it s their literal pedigree, so they may not have a college degree and they may not be from a wealthy family but they come from a cultural background that a restaurant owner feels is appropriate to interface with their clientele. Male, 10 years in the industry, Server 43

51 Chapter V As described above, the restaurant industry in the Greater New Orleans metro area is segregated by position and segment, and this segregation occurs mainly along racial lines. Workers of color reported lower median wages and higher rates of employment law violations and lack of access to benefits than white workers. Whites in our survey reported a median hourly wage of $12.33, while African Americans reported a median wage of $8.50 per hour. Findings from workers surveyed indicate that 54% of those who reported working off the clock without pay were workers of color and 60.3% of those who reported working more than 40 hours per week without overtime pay were workers of color. Neither Census and other government data nor our survey data can completely represent the reality of occupational segregation for restaurant workers by race, for a variety of reasons. One reason that Census data has limitations with regard to immigrant populations is that immigrants are less likely to speak to government surveyors for reasons of language barrier and fear. However, Census data are also limited with regard to non-immigrant low-income populations, which are generally undocumented for a plethora of reasons, including lack of access to telephone and other means of communication, lack of stability of address, and more. Further research into how discrimination based on race, ethnicity, and immigration status affects Latino and African- American workers is clearly needed particularly given that segregation is not obvious to the single worker, and discrimination can be subtle. These experiences do not appear to be adequately addressed by current government data. D. Discrimination in Hiring and Promotion The other thing I notice... in other kinds of jobs like cocktail serving is that it s usually females and very often for hostess or greeting people at the door it s females and very often you get the feeling that it s folks who fit into some idea of slenderness or who are pretty. You feel like they re being hired for what they look like and those jobs are being staffed for what the people look like and because of that gender. And so it goes depending on the level or kind of restaurant, or the kind of bar, you ll see this pattern of who gets hired for what. Male, 18 years in the industry, Server [The owner of this fine dining establishment] hires some of the most ditzy people but because she thinks that they re an attractive looking person that it s gonna bring in money. It might bring in people but they re probably not going to come back when they have someone that s dumb serving them, you know? Female, 20 years in the industry, Bartender 44

52 Chapter V JOB ADS FOUND ON NEW ORLEANS INTERNET BULLETIN BOARD ON CRAIGSLIST Cocktail Waitresses Now is the time for you to capitalize on our openings to become part of a great team of individuals. If you want to join in and have the most profitable and fun experience in the industry please reply to the above address with picture, resume, and letter of intent ASAP. We are looking to finalize candidate selection by end of this week or early next, so if you haven t attended one of our interview sessions yet consider applying. Applications will also be taken in person, however, due to limited time constraints placed on our management, all interviews will be scheduled and priority will be given to those who apply online with the correct materials. Requirements are analytical reasoning and problem solving capabilities, ability to multi-task and prioritize tasks on the fly, follow guidelines and rules extremely well, and give repeatedly great customer service through outstanding sociable personality. This is an aesthetically based business and as such we have found that sharing with us and our customers in this sense of aesthetic qualities is the best dynamic possible for success. Our season is almost upon us and the monetary rewards can be immense for our waitresses, come and join our team while there are still openings. Part Time Bartender $75 shift pay + tips (Lakeview) Lakeview restaurant expanding Sunday service needs a part time female bartender for 1 double shift per week every Sunday through football season. This shift starts at 8 AM and runs until closing every Sunday. Shift starts Sunday Sept 13 and training will be Friday Sept 11 and Sat Sept 12. Please apply in person. Do not reply by . Female Bartenders New Restaurant by the Lakefront hiring female bartenders for day and evening shifts. This will be part time work (2-3 shifts per week / mainly day shifts ) Applicants must be have a clean appearance and bartending skills Personality a must! Ages between 21 to 30 only. Knowledge of Posi-Touch system a plus. Our interviews with employers revealed that they actively seek attractive individuals for better paying, better quality front of house restaurant jobs. Half of the employers we spoke with told us that attractiveness, personality, and ability to interface well with clientele were priorities when hiring for positions in the front of the house. A matched pairs audit testing study of discrimination in New York City s restaurant industry indicated that measures of attractiveness include race, national origin, and skin color, 73 all legally prohibited forms of employment discrimination under federal law. 74 As a result, discrimination in hiring for front of house positions, however unconscious, likely contributes to the racial disparities between those employed in the front of the house and those working in back of the house positions. I wish I could [get] a hold of some Spanish people, because they work. In Florida, I had a Spanish girl in the kitchen. I never had to worry about her. If she was sick, she had someone take her place. It was great! She didn t want to lose that job. I haven t been able to connect with the Spanish community for some reason. I mean, we opened just before Katrina. There was so much work outside, you know, in construction and landscaping. We never had any Spanish person come and apply. I would hire them on the spot for the kitchen. But now they are all gonna move back to Texas because that is where the work is. Owner, 35 years in the industry, Fine Dining Conversely, when hiring for back of the house jobs, work ethic was the characteristic most commonly cited as important by the employers with whom we spoke. Further inquiry revealed that employers perceptions of an employee s work ethic generally related to willingness to work long hours for low wages, perform tasks that others were not willing to, and work under poor working conditions. The fact that back of the house workers are largely workers of color and immigrants suggests that employers hiring decisions with respect to back of house positions are based, even subconsciously, on racial perceptions of who possesses the type of work ethic they are referring to. After the storm we hired a lot of immigrants to work in the kitchen. And we had a pair of stellar dishwashers but one day they disappeared. Owner, 20 years in the industry, Fine Dining My dishwasher is an immigrant who came right after Katrina. He doesn t speak English and it doesn t matter. He is wonderful. Owner, 17 years in the industry, Family Style 45

53 Chapter V When asked about demographic breakdown of employees in front and back of house positions, several employers responded that they hired those who applied. While they were aware that front of house workers are predominantly white and back of house staff are overwhelmingly people of color, they maintained that any disparities were a result of the fact that blacks and other people of color apply primarily for back of the house positions. The one thing that is happening is that it is a lot of people coming in without documentation. I know they want to work, but I can t take that chance. But the one thing that is lacking in the [Lower Ninth Ward] community is that people are not being trained how to come and get a job. Owner, 7 years in the industry, Family Style Our data indicate that the stark differences in job quality between front of house and back of house positions are compounded by a general lack of mobility between the two types of positions. In fact, many workers described a glass ceiling between the back of house and front of house positions, which was extremely difficult to break through. Of all workers surveyed who never received a promotion, more than three-fourths (76.7%) were workers of color. As a result, once hired in back of house positions, workers are essentially trapped in the back of the house positions receiving low-wages. On the other hand, workers told us that promotion from front of house positions to supervisory or managerial positions was relatively common. It is interesting to note that bartenders surveyed reported an average of $19.56 per hour compared to $13.91 per hour managers reported. Table 17: Barriers to Promotions Reported by Restaurant Workers Responded that in the past 12 months they or a co-worker had been passed over for a promotion 16.2% Of those who reported being passed over for a promotion Reported that race was a factor 33.3% Reported that gender was a factor 16.6% Source: New Orleans Restaurant Industry Coalition survey data E. Verbal Abuse and Discipline Based on Race, Gender, and Sexual Orientation Sometimes I have seen some bad waiters say like f*ing mexican you know? Male, 2 years in the industry, Line Cook The relationship with the waiters versus the actual cook staff was very obvious, because a lot of them are Hispanic cooking in the back. There was one particular, they had this woman out in the back area and she s making these handmade tortillas straight from the rolls of flour and I loved her, she was this sweet old Hispanic woman who didn t speak any English. But the waiters and waitresses were very unfair, very rude to her, you know, treated her poorly because they would yell Hurry up! because she didn t speak any English, and Management never did anything about it. Female, 20 years in the industry, Server Workers we surveyed reported frequent verbal abuse (see Table 18). More than one-third of the workers reporting such abuse believed that the verbal abuse to which they or a co-worker had been subjected was motivated by race, gender, language or sexual orientation. Table 18: Verbal Abuse Reported by Restaurant Workers Responded that in the past 12 months they or a co-worker had experienced verbal abuse 29.4% Of those who reported experiencing verbal abuse Reported that race was a factor 33.6% Reported that gender was a factor 22% Reported that language was a factor 15.1% Reported that sexual orientation was a factor 14% Source: New Orleans Restaurant Industry Coalition 46

54 Chapter V Similarly, among restaurant employees who believed they or a co-worker had been disciplined more often or more severely than other workers within the past year, 12.1% cited race, gender or age as the reason (see Table 19). Table 19: Discipline Reported by Restaurant Workers Responded that in the past 12 months they or a co-worker had been disciplined more often or severely than others 12.1% Of those who reported more frequent or severe discipline Reported that race was a factor 6.5% Reported that gender was a factor 3.3% Reported that age was a factor 2.8% Source: New Orleans Restaurant Industry Coalition F. Gender Discrimination Yeah our society is sexist so there are incentives and coercion for us to practice sexism, in both our hiring practices and how we set our businesses up. Male, 15 years in the industry, Server We have people that have gotten raises since they have been here so long, but there are some people that make seven dollars and do better work than say someone making nine dollars. I got a girl back there right now who should be a manager she just doesn t have the time because she is young, but she could run the ship. She is better than anyone here and she is making seven dollars. Manager, 8 years in the industry, Quick Service The floor manager smacking my ass, and grinding on me and grabbing me when I tell him stop it! and he still don t stop and nobody says nothing. It s just next thing you hear, nobody say nothing, nobody heard nothing, ain t no problem. Cursing, in there, always constantly cursing and screaming, people talking about this that and the other like next waitress, or the bartender, or you know, the floor manager is just going clean off in front of all kinds of customers. I see our floor manager grabbing on everybody s ass, talking bout how [we d sleep together] outside of work and this that and the other. Female, 2 years in the industry, Server Eight percent (8%) of respondents surveyed reported experiencing sexual harassment. However, information we collected in longer worker interviews indicate that gender discrimination in general was very under-reported in our survey sample. Many women we interviewed commented on expectations to respond to sexual advancements, and the high level of flirting required of them on the job. One female server explained that a manager actually fired me because I didn t respond to his advances. I wouldn t take his crap. Of respondents reporting experiences of sexual harassment, a few felt it was based on sexual orientation. A bartender in the industry who has been in the industry for six years explains that sexual harassment is a horrible problem in the French Quarter. Women do not get any respect. Men are put through the same thing as women. If you even say anything to anyone you are immediately losing your job, and coming here was my first experience with sexual harassment. Women workers we interviewed often described the back of the house as a place where explicit sexual comments could be made and even physical contact in inappropriate ways. 75 Like always, I joke with the girls, I want to marry you so you will stay with me, because we spend a lot of money to train the girls. Owner, 10 years in the industry, Quick-Service I feel like there is a normality to sexual harassment in the workplace Male, 5 years in the industry, Server & Bartender Many of the women interviewed explained that restaurants frequently exclude women from certain positions, and instead concentrated them in particular positions at particular establishments. Women of color were also highly 47

55 Chapter V concentrated in the quick serve segment of the industry. Seventy percent (70.3%) of all black women surveyed held jobs in the quick service segment, where the average hourly wage is $8.50. Our data also indicated that women (73.3%) also experienced more employment law violations than men (26.7%), particularly as it related to being paid less than the minimum wage of $6.55 per hour. There were some women who worked in fine dining, but more than half (55.3%) were men. The managers I know are mainly men. I would say that I know 85% men owners and managers. As owners, 100% I know were men but they had like in [a fine dining French Quarter establishment] the food and beverage manager was a man but the actual restaurant manager was female, but overwhelmingly it s been men. Male, 17 years in the industry, Barback, Bartender & Server I felt that s when it is important to take advantage of the legalities of the law, because that is when, when it s starts getting comfortable and it s because it s a person in authority and you feel uncomfortable to address it that s when it becomes abusive. To me, when they re taking advantage of something they shouldn t be, that s what they re betting on. Female, 20 years in the industry, Server & Bartender Oh I think he s a little overdone I mean there s a little bit of sexual harassment but not to the point where you have the owner sittin behind your bar five hours like constantly talking about how they want to [sleep with you]. Yeah, I ve never worked anywhere where a manager or an owner sat behind the bar for 5 hours out of an 8 hour shift, so I think he s a little on the extreme side of the sexual harassment thing maybe because he s Italian, but I feel like there is a normality to sexual harassment in the workplace. He s just a little above and beyond the rest. Female, 3 years in the industry, Bartender Additional quantitative and qualitative analysis of women s experiences in the industry, and particularly those of women of color and immigrant women, is clearly needed. The New Orleans Restaurant Industry Coalition plans to further examine the role of gender in an upcoming in-depth study of discrimination in the Greater New Orleans restaurant industry. Dee If you get the wrong boss, the sky s pretty much the limit in what they will try and get away with. One of the things that upset me the most was when I started working at this one restaurant, and one of the owners would tell me that I could just go to the back and give him a lap dance for money. It really upset me that he thought he could treat me that way! He would always suggest things, offer me free meals if I would do stuff for him. He also liked to give me hugs, but these weren t nice hugs, they were his opportunity to grope me. He would always hold me too long, even kiss my head! But when my boyfriend was around he would act normal. He basically would try his hardest to sleep with me, and he was old enough to be my Dad! And since he was the boss, it wasn t like I could report him to anyone. It would also get worse depending on the drugs. The more he took, the more brazen he would get with his comments and behavior. I ultimately left that job because of all of this harassment and because he wasn t paying me, either. When I first started working at this restaurant, I noticed that I would always get the smaller tables, and make a half or even a third of what everyone else was making. The guys basically would get all the big tables. One guy once told me, oh my guy likes you, go keep him company for me. So I went over there, talked to his table, and in the end the guy left a $40 tip and my co-worker didn t give me any part of it. This wasn t uncommon. G. Disparities in Wages & Working Conditions Based on Immigration Status And after the storm, all these out of state people came in and took their jobs you know, as well as Mexican workers. I think this work is cheaper and so people want to keep them. Even the contractors, they have foreign people, and you know they pay them less or they don t pay them at all sometimes. Owner, 30 years in the industry, Family Style New Orleans After Hurricane Katrina, with much of the African American population displaced, a small labor pool resulted in a large influx of immigrant workers into the region, willing to work for lower wages. Immigrant workers in New Orleans are more vulnerable to exploitation due to language barriers, lack of information about their rights, and fear 48

56 Chapter V of detention or deportation. Immigrant restaurant workers in our sample reported higher rates of employment law violations than U.S. born workers. More than half (58.6%) of immigrant workers experienced overtime violations, 49.2% worked hours off the clock without receiving pay, 7.5% of immigrant workers experienced minimum wage violations, and 12.5% of immigrant workers reported that management stole a portion of their tips a percentage rate that was three times the rate of U.S. born workers. However, federal law states that all workers have the right to minimum wage and overtime protections, regardless of status. 76 Of course, 120% [of my workers are] undocumented. I have some girls that do not know what documents are. I had a girl that was eighteen, that didn t even know what money was! She worked for me like six months. Owner, 12 years in the industry, Quick Service We had a few immigrant workers right after Hurricane Katrina. We didn t ask for their documents. We needed the work and we were happy to have them. Sometimes it is hard to find people who want to wash dishes around here. Manager, 6 years in the industry, Family Style Immigrant workers also reported a higher rate of health and safety violations than U.S.-born workers. Half of all immigrant workers reported working in restaurants with guards missing on cutting machines, and 44.6% of immigrant workers reported doing something that put their own safety at risk a percentage rate that was double the rate of U.S. born workers. A 2006 study by researchers at Tulane University and the University of California, Berkeley determined that there are as many as 10,000 to 14,000 undocumented immigrants, many from Mexico, currently residing in New Orleans. 77 Janet Murguía, president and chief executive officer of the National Council of La Raza, stated that there could be up to 120,000 Latino workers in New Orleans. In June 2007, one study stated that the Latino population had risen from 15,000, pre-katrina, to over 50,

57 Chapter V Being An Immigrant in the Restaurant Industry I came to the United States just over 5 years ago, and those first years I worked doing various things like carpentry work, construction, moving furniture, and landscaping. I started first in Atlanta, then moved to New Orleans because of a job offer. I didn t have work at the time, so I came to an employment agency in Atlanta that set up a job for me in a Chinese restaurant outside of New Orleans. For the last two and a half years I have been working in different restaurants, this last one was a Chinese restaurant. I was there for over one year. They had me work all over the restaurant while I was there. I worked the grill and also worked in the front. When no one was able to work up front and there weren t a lot of customers, they had me work up front instead. Other than that, I made all the meats on the grill in the back. I would also clean all the dishes, wash the windows and the tables every day before we closed. They gave me $1,300 a month. All of this was in cash. I worked around hours a day, every day. You have to wait a month until they pay you, too. For example if you started on the first of January you would have to wait until like the 5 th or 6 th of February, and even sometimes then they wouldn t pay you. And then you mention it and they would act like they completely forgot. Insurance or benefits? Nothing like that, they don t have anything like that. For example if you cut yourself, they always said hey we re going to take you to the hospital later, in a few hours because right now we are busy and we can t. They are not going to take you to the hospital, they ll just tell you to go if you can t work and they ll get someone else to work for you! They didn t have anything at the restaurant either, like bandages if you were bleeding. You just wash your hand, wash off the blood, put a dirty towel over your hand and then you just go back to work like normal, like nothing has happened. This friend who had a big cut once, he didn t come to work that morning but he came later the same day [to work] even though he was still badly injured. The six of us all lived in an apartment together, but it had two bedrooms, a living room, a kitchen, and one and a half bathrooms. Eight of us all together. They didn t necessarily say anything to us if we left the apartment, but they would tell the managers what we were doing if we did anything. They thought that because they gave us a room where we all lived, that they could do whatever they wanted with us. They decided everything. After working 12 hours without breaks or anything, meanwhile they could do whatever they wanted: smoking outside, even inside, talking on the phone, but we were not allowed to do anything. They controlled every aspect of our lives. They would wake us up 9:30am, we got dressed and we all got in their van and they would take us directly to work at the restaurant. We would arrive at about 10:30am after picking everyone up, and get ready to open the restaurant. We would then end work about 10:30pm or sometimes later, and then we had to get everything cleaned and be ready for tomorrow, take out all of the trash, and then we would all get back in the van and be taken back to our apartment. It was like we were all sheep, because they would also tell us as we got out of the van that we shouldn t go anywhere, that if we needed anything we should call them and let them know. They were always around the complex, and if they saw you out they would tell you to go back inside. We all lived in the same building of apartments, so we couldn t get away. They wanted us hidden and always nearby. The agency [in Atlanta] promised me many things: they would pay me well, the managers would treat me well, that I would have opportunities to move up in the restaurant. But it wasn t like that at all. Instead there was discrimination. It was like slavery. They really didn t care about us, didn t care if we ate or didn t ate, if we were cold, if our backs hurt. They think that you are a machine that works and works and works, one hour after the other after the other, that you are not human! They paid us badly, very little pay for our work. It was a salary that was way below, less than half what the law says we should be paid. We worked many hours and never had a day off. I was working every day literally until I quit. I worked there for 15 months. I just left there a couple of weeks ago when one of my friends in Atlanta called me and said he had a job for me if I wanted to come back. Given the circumstances I was working under, I decided to take it. I just could not take it at the restaurant anymore. I was very depressed, my friends would say that I had become very sad, very tired all the time. Of course I was like that after over a year of being worked like that! We need that somebody regulates restaurants like this, make sure that they are abiding by the law. That someone makes sure that we have rights, that we can eat, that we can have time off, days off, vacations even. What we need is that we come together so that they pay attention to this and realize that we won t take it. That is the only way we can have things change. We will need to come together, workers exploited and discriminated against, talk and unite and together change things. That is what I think we need. Everyone was afraid at my restaurant, but we ve got to stop being afraid and say what s happening. Francisco, Latino immigrant 50

58 C H A P T E R VI The Social Cost of Low-Wage Jobs

59 Chapter VI C H A P T E R VI The Social Cost of Low-Wage Jobs Absent from much of the data and discourse regarding the restaurant industry is an assessment of the cost to consumers and taxpayers alike of low-wage jobs with few benefits and poor working conditions. While hidden, these costs are significant, ranging from increased public health risks to public subsidies to employers pursuing low road practices through social safety programs employed by some restaurant workers to make ends meet. A key finding of our research is that whenever restaurant workers and employers are hurt, so are we all: Low road workplace practices ultimately harm not only workers but restaurant consumers, employers pursuing the high road, and the public. Restaurant employers who violate labor and employment laws are also more likely to violate health and safety standards in the workplace. Violations of employment and health and safety laws place consumers at risk and endanger the public health. Failure to provide health insurance and paid sick days to restaurant workers can lead many to delay seeking primary or preventative medical care, ultimately increasing health care risks to workers and consumers, and contributing to increased health care costs. Poor health and safety conditions in restaurant workplaces, combined with low wages and lack of employment-based health insurance, increase costs of providing emergency care to uninsured individuals at public hospitals, thereby ultimately decreasing the availability of free health care services for those in need. Low wages and lack of job security among restaurant workers lead to increased reliance on unemployment insurance and social assistance programs such as welfare and housing and child care subsidies. 52

60 Chapter VI A. Introduction The proliferation of low-wage jobs has an impact on public budgets and the availability of public services. Those earning minimum wage would qualify for and would need to rely on a number of government programs in order to make ends meet. Hidden Costs: The Public Cost-Wage Jobs in San Diego 79 The low road workplace practices described in this report have impacts beyond those affecting members of our communities who are employed in the city s restaurant industry. Predictably, they affect the quality of the food we eat when we dine out at an eating establishment in the Greater New Orleans metro region. In some cases, they can lead to increased risks to public health. They also have more far-ranging and more hidden effects on the local economy, social safety net, and ultimately, the local taxpayer. Restaurant employers who violate labor and employment laws are also more likely to violate health and safety standards in the workplace. These low road employers put the safety of the public at risk by overworking their employees, pushing them to cut corners, requiring them to do jobs they have not been trained for, failing to provide basic health and safety training, and creating conditions leading employees to work when they are sick or injured. The health and safety of both workers and consumers is compromised as a result. Workers who do not have employment-based health coverage and cannot otherwise afford insurance delay accessing treatment, often leading to the development of more serious medical conditions requiring more costly medical care. Because they receive low wages, they are generally unable to pay for the cost of that care, increasing uncompensated costs incurred by public hospitals. Furthermore, when workers are unable to earn enough to support themselves and their families through their jobs, they are forced to rely on public safety net programs to make ends meet. The result is a hidden cost of the restaurant industry in the form of indirect public subsidies to employers who do not pay adequate wages. B. Endangering Public Health You just don t get sick..it s a tight team with a tight schedule, you typically don t get sick. If you get sick you better be sick enough to go to the doctor. Most of what you get sick with are colds and coughs and flu s... so if somebody was sick you d disrupt the whole schedule scenario...you d have to find somebody on their day off that wasn t tired. - General Manager, 28 years in the industry, Fine Dining Our research findings strongly suggest that low road workplace practices prevalent in the Greater New Orleans restaurant industry can increase public health risks. For instance, 72.3% of workers we spoke with in the course of our study reported working while sick. Several workers reported needing to work while sick because they could not afford to take the day off. One back of the house worker explained, I go to work [when I m sick]. I can t afford over the counter medicine. I need to go to work! Eighty-nine (89%) percent of workers surveyed reported that they did not receive paid sick days. During the outbreak of the H1N1 Swine Flu epidemic in early 2009, the President and Surgeon General both urged people staying home to be the best way to minimize the spread of the flu. 80 However, since nearly all food service workers lack paid sick days and earn low wages, staying home is not feasible for them. Thus, a lack of paid sick days and preventative health care contribute to the risk of the widespread illness among both restaurant workers and the public they serve. Employers who force restaurant workers to work while sick are contributing to a public health challenge. The U.S. Centers for Disease Control and Prevention (CDC) in Atlanta estimates that noroviruses, a family of pathogens associated with outbreaks of foodborne illnesses, are actually more common in restaurants. In 2004, the most recent year for which data are available, 251 reported outbreaks of food borne illnesses across the country involving 10,000 victims were thought to be viral. According to CDC statistics, almost all were classified as norovirus-related, and 93 were norovirus outbreaks tied to restaurants If an employee stays home sick, it s not only the best thing for that employee s health, but also his coworkers and the productivity of the company. Commerce Secretary Gary Locke 82

61 Chapter VI C. WORKPLACE PRACTICES AND CONSUMER RISK You can taste everything. Fried oysters, regional dishes, all that was good. I saved like $200 a month in food bills, but it was also not healthy. They make you eat in the back by the trash cans, [which is] completely unsanitary. There are roaches and trash, and the pipe in the back constantly overflows! Female, 3 years in the industry, Server & Host Fourteen (14.4%) percent of workers surveyed had done something as a result of time pressure that might have put the health and safety of a customer at risk. Employers pursuing a low road business strategy place enormous pressure on workers, and often cut corners on health and safety training, leading to workplace practices that endanger employee and food safety, and consequently public health. These strategies lead to workplace practices that endanger employee and food safety, and consequently public health. As demonstrated by Figure 5, workers who reported employment law violations at their place of work were also much more likely to report workplace practices such as failure to provide health and safety training, being required to work when the restaurant is understaffed or perform several jobs at once, and being asked to perform a job for which they are not trained. In fact, workers who experienced employment law violations were twice as likely as workers who experienced no employment law violations to be forced to do something under time pressure that put the consumers safety at risk. This combination of workplace conditions could have harmful effects on the health and safety of customers. Workers who reported that they had done something as a result of time pressure that might have harmed the health and safety of the customer were much more likely to experience overtime violations (46.2%) and working off the clock without pay (58.3%) than the general survey population. In this instance, there is an inextricable link between the healthy and safe working conditions for restaurant workers, and restaurant workers ability to carefully prepare and serve food to the public in a matter that will meet the requirements of consumer food safety. Figure 3: Linkage Between Risks to Consumer Health and Workplace Violations Worker did not receive health and safety training from employer 18.8% 35.1% Any labor violations No labor violations Worker had to work when restaurant was understaffed 82.9% 88.1% Worker had to do a job for which worker wasn't trained 27.2% 49.4% Worker had to cut corners because of time pressures that might have harmed the health or safety of customers 8.6% 17.3% Percent of Workers Source: New Orleans Restaurant Industry Coalition survey data 54

62 Chapter VI I know for a fact [this place] is not clean. I start work at 4pm. Me and the Chef are the only ones in there and when everybody else comes in they just go to work at night when they shut down they clean the line and take silverware off tables, windex the tables and then they re done so where is the cleaning coming from? They may sweep the floor but I don t see anyone mop unless there is a cleaning crew when we re not around, but I doubt he d spend money on that when he could get employees to do it. Besides cleaning up the kitchen I don t really see anyone cleaning up the restaurant. At [my second job] it s worse - the day after we will still have food on the table left out from the night before. The bathrooms for customers and the dining area in the courtyard won t be clean and as soon as the lights go out you will see rats running and jumping. One night the electricity went out like at 8:30 pm and the lights were out like two minutes, and I went back to the kitchen for something and there were rats jumping on the kitchen counter. Easily these things are impacting customers. I would not eat [where I work]. Andre, 17 years in the industry, Barback, Server & Bartender D. Hidden Costs of Low-Wage Jobs Paying workers wages below the federal poverty line hurts not just workers and their families, but everyone from employers who pay higher unemployment insurance premiums to the taxpayer who pays more for, or receives fewer, social benefits. When workers have trouble making ends meet, they have no choice but to utilize food banks, housing and child care subsidies, tax rebates for low-income people, and other social benefits. As a result, more public resources must be devoted to these programs or, more likely in the current economic climate, there are fewer public resources available to all of those in need. According to the authors of Wages, Health Benefits, and Workers Health, higher-wage workers are more likely than their lowerpaid counterparts to have health insurance and health-related benefits, such as paid sick leave, and to use preventative care. 83 Low-wage workers, meanwhile, are much more likely to forego needed health care because of cost and to report problems paying medical bills. HEALTH CARE COSTS I don t have benefits, I mean so how does that affect me? I never go to the doctor unless it s an emergency. I m sure later on I ll be sorry for not going to the doctor when I should have but I just couldn t afford it, or to take the time off to even go to the doctor. Male, 17 years in the industry, Barback, Server & Bartender Our survey data indicates that the lowest paid workers in the restaurant industry are much less likely to have health insurance. Eighty-seven percent (89.9%) of those without health insurance were earning low and poverty-level wages. As a result, low-wage workers are less likely to be able to access primary or preventative care for themselves or their families. Data from other studies suggests that low-wage workers are much more likely to forego needed health care because of the costs involved, and to report problems paying medical bills. 84 Additionally, workplace injuries among restaurant workers are endemic. Data from this and other studies suggests that restaurant workers often access emergency room services for a range of work related injuries such as burns, scalds, and cuts. Not having benefits has made things difficult. If it wasn t for my son being on Medicaid it would put us in a really big bind. Health insurance for me and my wife is something I try to get and keep when I can. Otherwise, there s such a small opportunity to get help right now. My son was adopted through the foster care system and because of the special needs that he has, the State has continued medical coverage for him for life. Male, 13 years in the industry, Cook When medical care is required, restaurant workers without health insurance are forced to seek treatment in emer- 55

63 Chapter VI gency rooms at public hospitals, and are often unable to pay for the medical services they need. Sixty-one percent (61%) of workers going to the emergency room did not have health insurance and were not able to pay for their visit. When these realities are compounded by the fact that low-wage workers are also less likely to receive paid sick days, it is clear why restaurant workers often feel compelled to work while sick, increasing the risk of worsening health conditions and increased public health hazards. Previous studies have noted that where health care financing relies on employer sponsored health insurance, the public suffers as a result of free riders - employers who opt out of the system by not providing affordable health insurance to their workers, and pass the costs of their workers health care onto the public. 85 Ultimately, it is other employers, workers, and the public at large who pay for these low road practices espoused by employers. Tim has worked in the restaurant industry for most of his adult life, mostly in restaurants downtown and in the French Quarter as a server, often in fine dining. Recently I worked at a restaurant that ultimately cost me to lose my home, lose my phone, lose contact with my wife, basically disrupt my entire life. Tim shares of a recent job offer that first sounded almost too good to be true, and in fact it was. When I first took this job I was offered $500, a flat salary every week. I left another job under the pretense that this employer would hold up his end of the bargain. I filled out my tax forms, but didn t sign an employment agreement. It isn t normal to sign such an agreement, it is just assumed that the boss will hold up his end of the bargain. Unfortunately, he didn t in the end, so it affected my life first with the loss of my apartment with my eviction, then other issues that soon after transpired due to my subsequent lack of financial stability. Shortly after my eviction, I showed up at the restaurant and the owner agreed to allow me to sleep there, this instead of paying me so I could move into another apartment. Doing that would have required him to pay me all the money he still owed me in back wages. From there, he would always promise to make it up to me the next week. The next week just never came. While living at the restaurant, the owner also took advantage of the fact that I was having to live there and would make me work countless hours. I couldn t just leave so if I was home, so to speak, I could always be forced to work. It was like slave labor. In effect he was treating his employees that lived there like slaves. At one point three workers were living at the restaurant at the same time! I ended up having to live at the restaurant for almost two months, hoping maybe that next week I would finally get all my owed wages. Tim also has other issues to deal with that he can no longer afford to do anything about. Due to certain medical conditions, I can t even fill my prescriptions anymore, which then jeopardizes my health, and could seriously hurt my ability to work at any other restaurant, or even work period. We want to put an end to situations like these, with employers that fail to pay their employees able to manipulate them into situations like this, or worse, we re forced to become homeless while still working for money each day just to stay out of the streets. This only puts workers like me in situations from which we just can t escape from. It s a vicious cycle, and it has a rippling effect on all our lives. SOCIAL PROGRAMS Our survey data also revealed that low-wage restaurant workers are, at times, forced to access social programs such as welfare benefits and housing and childcare subsidies in order to supplement low wages. Fifteen percent (15%) of all workers surveyed reported accessing social programs at some point to supplement their wages. Ironically, of the respondents who reported receiving public assistance of some kind, 56.8% of these workers accessed food stamps through the federally funded Supplemental Nutrition Assistance Program (SNAP). At the peak of the recession, the number of Americans receiving food stamps reached 35 million in June 2009, the highest number since the program began in 1962, with an average monthly benefit of $ per person. 86 Numerous studies have suggested that employers paying low wages rely on social programs to sustain their workers rather than paying better wages. 87 By creating conditions that force workers to participate in social programs rather than providing essential benefits, employers are, in effect, receiving an indirect public subsidy for engaging in poor, and sometimes illegal, workplace practices. Such practices also have the effect of undermining other employers who do provide benefits, thereby creating disincentives to those who might otherwise take the high road to profitability. 88 Existing literature concludes that this can lead to a downward cycle for wages and benefits across the industry, ultimately resulting in worsening conditions for workers, consumers, and the public

64 Chapter VI Clearly, further study is needed to determine the full impact of the prevalence of low-wage jobs in the restaurant industry on social programs in the Greater New Orleans area. What is clear from existing data is that failure to address low wages and the lack of health coverage for thousands of workers in the industry leads to increased costs to workers, employers pursuing the high road, and, inevitably, the public. The Kaiser Family Foundation reports that 26.4% of all adults in the state of Louisiana are uninsured, and 28.9% receive some form of publicly offered health coverage. 90 Sixty-seven percent (66.9%) of all those who are uninsured in the state of Louisiana are employed, and 53.2% of those receiving Medicaid are employed. Taxpayers in the state of Louisiana spend $22.6 billion on health care expenses, or $5,040 per Louisiana resident, and almost $2 billion specifically on Medicaid. Thus, almost half of the Medicaid expenses for taxpayers in the state of Louisiana are paid for workers whose employers - as in the restaurant industry - leave their workers to rely on the public system. 57

65 C H A P T E R VII Conclusions & Public Policy Recommendations