Here’s a Tip For Oregon Businesses: Stop Demanding Tips

The consumer-price index rose 8.5% in March from a year earlier, the fastest annual pace since December 1981, the Wall Street Journal reported on April 20. That’s the figure most consumers think of when they worry about rising prices.  But there’s another number too often ignored – the cost of tips and the insidious spread of tip expectations.

In a recent stop at a local Burgerville, I encountered a Uniden digital payment device with tip options: 15%, 18% 20%, custom and no tip.

The evil digital tip trap

At another burger place, their digital payment device presented me with tip options of 15%, 20% and 25%.

A 20% or 25% tip, where there used to be no tip expectation at all, is equivalent to a 20-25% price increase on top of any inflationary increase in the price of the food itself. 

Tip requests on electronic devices are becoming so pervasive that they are starting to feel like demands, particularly when the transactions are occurring under the watchful eyes of employees. 

As consumers are becoming more price sensitive over a host of goods and services, the reality that tips are increasingly becoming part of the price is raising concerns.

“Seems like anyone doing anything for you these days, even if it is in the scope of their responsibilities/expectations, has their hand out,” a recent commenter on a Tripadvisor Forum complained. “You don’t tip at a fast food restaurant,” another commenter said emphatically.

Consumer concerns are growing, particularly in states like Oregon where workers, such as servers, must be paid the state’s minimum wage ($14 in the Portland Metro Area, one of the highest in the United States according to the National Conference of State Legislatures) even if the worker also receives tips.

Regular minimum wage laws often don’t apply to restaurant workers, such as servers, who earn a lot of their income from tips. Federal law stipulates that employers can pay tipped workers as little as $2.13 an hour (an amount unchanged since 1991), so long as their tips bring them up to at least the federal minimum wage of $7.25. 

Shoppers are generally sympathetic to the plight of low-wage workers, but public resentment seems to be growing when tips are expected in food service and other situations where a worker is also guaranteed earning an elevated minimum wage or in situations where tip expectations are new. We don’t generally tip retail workers in a mall who are also guaranteed a respectable minimum wage in Oregon, for example.

A recent New York Times article about tipping generated a lot of comments, many of which lamented the seeming spread of tipping expectations to multiple businesses and regardless of the amount of actual service by an employee:

“Travelling to the USA each year from Europe I notice this just getting more extreme and expensive with zero additional benefits to the consumer. The next screen flip I get, I would like to flip my own card with discount options for the proprietor that is forcing us to shoulder his staffing costs.”

“I hate the companies that use payment systems like Square, and I particularly hate the companies, like Square, that have brought this new dystopian world upon us. Down with tipping!”

“Collectively, we cringe when the iPad is swiveled into our face at the coffee counter or deli; we know it is extortion rather than appreciation for services rendered.” 


The union campaign at Burgerville: a quixotic quest


Local news is replete with stories about the failure of contract negotiations between Burgerville and the Burgerville Workers Union ands the threat of a worker strike, but most are failing to point out a critical fact — only 111 Burgerville employees at a total of five of the company’s 47 locations have even voted to form a union.

Furthermore, of the 142 employees who were working in those five locations during their respective votes, only 94 of them were still employed at Burgerville as of mid-2019 and the lead organizers of the unionizing effort at three of the five restaurants no longer worked at the company

It’s also likely that most of  the employees now threatening an “imminent” strike will not be at Burgerville long-term because the fast-food industry is grappling with record employee turnover.

According to MIT Technology Review, the turnover rate in the fast-food industry is 150%. In other words, the typical fast food restaurant is seeing its entire workforce, plus half of its new hires, replaced in 12 months.

Burgerville is doing better, perhaps because of its expansive benefits, including health insurance, vacation pay and financial wellness training. Still, the annual turnover rate across all its restaurants in 2018 was 83% (up from 71% in 2017), according to the company.

The union has reportedly asked for a $5 hourly increase for all unionized workers; Burgerville has offered a $1 an hour increase for all workers, which would put them 6 months ahead of a state-mandated minimum-wage increase.

The union says Burgerville’s proposed pay raise is “miserly.” Is it?

According to Glassdoor, a website where current and former employees anonymously review companies and anonymously submit and view salaries, average base pay for hourly crew members is currently $12.  When factoring in bonuses and additional compensation, a crew member at Burgerville can expect to make an average annual salary of $25,298.

For comparison, the typical McDonald’s crew member makes $9 per hour, according to Glassdoor. When factoring in bonuses and additional compensation, a crew member at McDonald’s can expect to make an average annual salary of $19,242.

The typical Wendy’s Crew Member makes $9 per hour., Glassdoor says.  When factoring in bonuses and additional compensation, a Crew Member at Wendy’s can expect to make an average annual salary of $18,738.

In other words, the average hourly pay of Burgerville crew members is already higher than at key competitors.

Could Burgerville afford to pay its employees more? It’s a private company owned by The Holland Inc., so it doesn’t make its financials public. The economy is strong, however, and the fast-food, or quick service restaurant (QSR), industry in the United States, has been doing well, particularly in 2018 and 2019. Workers have reason to believe Burgerville has benefited.

I understand workers’ desire to share in America’s prosperity, but any increase in wages crunches the bottom line and in a highly competitive marketplace only some of additional labor costs can be passed on to price sensitive consumers. The preferred solution for many fast-food businesses is reducing, not increasing, labor costs, largely by leveraging technology to employ fewer people.

Then, of course, there’s the question of whether the union’s demand for “a living wage” at Burgerville is even realistic.

According to a Living Wage Calculator developed by MIT, A living wage is the hourly rate that an individual in a household must earn to support his or herself and their family. The assumption is that the sole provider is working full-time (2080 hours per year).

The Calculator says a living wage for two adults, with one working, and one child in Multnomah County is $26.06 an hour or $54,205 a year. It is delusional to think Burgerville will pay that much to an easily replaceable crew member with limited skills and an expected short tenure.

The fact is, rather than pushing for unattainable wages at Burgerville, current crew members would be better off enhancing their job skills and/or education to qualify for higher paying employment elsewhere.

Unionizing Burgerville: workers of the world unite…then quit.

Time passes. Things change.

That’s certainly been the case at Burgerville, where workers at the company’s restaurant at 3504 SE 92nd Ave. in Portland voted 18-4 in April 2018 to form a union.


Over the next 12 months, employees at four more Burgerville sites followed suit:

May 13, 2018: 19119 SE McLoughlin Blvd. site – 17 yes, 5 no

Dec. 11, 2018: 1122 SE Hawthorne Blvd. site –  13 yes; 9 no

April 3, 2019: 8218 NE Glisan St. site – 15 yes, 9 no

April 4-5, 2019: 1135 NE Martin Luther King Jr Blvd. site – 14 yes, 7 no

Adding it all up, 111 Burgerville employees at a total of five locations have voted on whether to form a union.

Burgerville says it hasn’t kept track of which specific employees participated in the union votes, so it can’t quantify how many of the 111 voters are still employed by the company. It has determined, however, that of the 142 employees who were working in the five unionized locations during their respective votes, only 94 of them, or 66%, are still employed at Burgerville.

Furthermore, the lead organizers of the unionizing effort at three of the five restaurants no longer work at Burgerville. Two resigned their positions less than one month following their locations’ votes and a third organizer just resigned.

The fast-food industry is currently grappling with record employee turnover. According to MIT Technology Review, the turnover rate in the fast-food industry is 150%. In other words, the typical fast food restaurant is seeing its entire workforce, plus half of its new hires, replaced in 12 months.

Burgerville is doing better, perhaps because of its expansive benefits, including health insurance, vacation pay and financial wellness training. Still, the annual turnover rate across its 42 restaurants in 2018 was 83% (up from 71% in 2017), according to the company.

What all this means is:

  • Three of the five union organizers are no longer working at Burgerville.
  • A significant share of all the Burgerville employees who voted in the five union elections since April 2018 are likely not still working at the company.
  • It is highly likely that few of the 142 employees who were working at the five unionized locations during their respective votes will still be employed at Burgerville 12 months from now.
  • Few of the employees at the five Burgerville locations 12 months from now will have participated in the original votes to unionize.

Why, then, should the employees at the five locations one year from now be forced to be members of a union?

Unfortunately, future employees at the five Burgerville  restaurants probably won’t be given an opportunity to vote on whether to be represented by a union and, if so, which one.

One option to address this situation could be automatic representation elections whenever employee turnover by a bargaining unit over time exceeds a certain percentage. A bill introduced in Congress in 2017 (H.R. 2763 – Employee Rights Act) proposed 50 percent be the trigger.

Another possible solution, suggested by both Samuel Estreicher, a Professor of Law at New York University School of Law, and Michael Oswalt, an Associate Professor of Law at the Northern Illinois University College of Law, is regularly scheduled union representation elections the same way we regularly schedule political elections.

Estreicher, who called his proposal “easy in, easy out,” suggested that every two or three years the employees in a unit, after an initial minimal required showing of interest, would have an opportunity to vote in a secret ballot whether they wish to continue the union’s representation, select another organization, or have no union representation at all.

Oswalt argued that regularly scheduled union representation elections would be better than the simple continuation of the status quo.

“…workplace culture would slowly shift, creating an atmosphere where workers would feel internal pressure to, at the very least, think about the ramifications of selecting or not selecting a bargaining agent,” Oswalt wrote.

That would  be a good thing for Burgerville workers.











Down with capitalism! The IWW and Burgerville

Down with capitalism!

That’s the message from Industrial Workers of the World (IWW) as it tries to unionize Burgerville workers.


“It is the historic mission of the working class to do away with capitalism,” says the Preamble to the IWW Constitution. “The army of production must be organized, not only for everyday struggle with capitalists, but also to carry on production when capitalism shall have been overthrown.”

The IWW says its long-term goal is for the “working class” to “take possession of the means of production (and) abolish the wage system”. If you were a company owner, would you welcome a union with these ultimate goals?

Citing as their inspiration garment workers in Cambodia, factory workers in China, and other fast food workers across the United States, Burgerville employees pushing for a union have a list of demands, including:

  • an immediate $5 an hour raise for all hourly workers
  • affordable, quality healthcare
  • paid maternity/paternity leave
  • free childcare and transportation stipends

The employees involved in the organizing effort say a typical Burgerville worker makes $9.60 an hour and is scheduled 26 hours a week, generating a monthly income of about $990 a month before taxes.

Burgerville has said the average hourly pay company-wide is $11.36 per hour and in Oregon the average is $10.89 per hour.

Whoever’s figures are used, the IWW’s demands, if implemented, would put the wages of Burgerville’s hourly workers far above the levels in the minimum wage law signed by Governor Brown in March 2016.

Under that law, the minimum wage within the Portland urban growth boundary is now $9.75 and will increase as follows:

July 1, 2017: $11.25

July 1, 2018: $12.00

July 1, 2019: $12.50

July 1, 2020: $13.25

July 1, 2021: $14.00

July 1, 2022: $14.75

Add in healthcare coverage, paid maternity/paternity leave, free childcare and transportation stipends and the cost of hourly workers would go through the roof for Burgerville.

In arguing its case for a Burgerville union, the IWW quotes a Burgerville worker: “Most people can’t even afford to have an apartment. In Portland, everyone knows that the cost of living is insane. It basically took me a second job to be able to have a place of my own. I couldn’t afford it with what Burgerville pays me.”

I get it. It’s hard to live on an hourly wage of a typical Burgerville worker, but most of these jobs are not expected to be family-wage jobs, nor are they intended to be lifetime careers.

Burgerville says, for example, that and over half of its hourly employees are age 22 or younger. If they expect their hourly jobs to ever generate enough income to support a family they are delusional.

And if a Burgerville union succeeded in pushing the company to meet its demands, it’s likely that this would disproportionally hurt the very people the union organizers say they want to help, less-educated low-skilled workers.

A broadly cited study by David Neumark, an economics professor at the University of California at Irvine, and William Wascher, deputy director of research and statistics at the Board of Governors of the Federal Reserve System, examined the literature on this issue and found “the weight of the evidence points to” lower employment effects.

That’s of considerable concern to people like Craig Garthwaite, an assistant professor of management and strategy at Northwestern University’s Kellogg School of Management.

“That’s troubling, because I think it’s important for people to get into the labor market,” Garthwaite said. “Even if these aren’t great jobs, they lead to better jobs as your skills improve. That’s the idea. I don’t think we should be doing anything to dissuade people from entering the job market right now.”

Minimum wages are intended to be commensurate with a worker’s skills, education and productivity at that point in time, enable them to develop higher skills and work their way out of minimum wage and up the pay scale.

It’s clear that the IWW and the Burgerville workers demanding expensive wages and benefits just don’t get it.