A living wage
BELLOWS FALLS — A Bellows Falls restaurant has taken a step, with support of patrons, to increase the minimum wage of all employees to at least $15 per hour through a new “living wage adjustment” on purchases.
Gary Smith, one of 25 shareholders that oversees Popolo Restaurant, launched what he calls a “new course of action” on Friday, June 10.
“The employees are jazzed,” Smith said on Monday, June 13. “They’re very happy.”
To put the plan into action, Popolo’s directors reached out to the community with a simple plan: Ask each diner for an additional contribution based on a fixed percentage of their pre-tax total purchase.
Smith said that the move will help equalize the pay balance between the kitchen staff and server staff.
Rather than raising prices on meals, Smith made the $15 per hour minimum wage possible through a new 6 percent “Living Wage Adjustment” charge that now appears on each visitor’s bill.
“Six percent is the magic number for Popolo,” said Smith, the restaurant’s general manager. “I’m sure it’s different for every employer, but based on our previous experience, 6 percent will cover the pay increase here.”
He said the restaurant shareholders arrived at that number after discussing with state tax officials and accountants as to how to put their idea into place. With their accountants, they looked at the numbers and figured out exactly how much they would need to add to the bill to transfer that added amount to employees to make their wages $15 per hour without raising the restaurant’s prices, which would have added additional tax onto the bill.
“We think explaining the plan with complete transparency not only offers a better deal to our customers, it reminds them they're all helping to guarantee our workers enough to live,” he said.
Smith also said that the restaurant is receiving “fabulous feedback,”on the pay change.
“We’re shareholder owned, and we’re a community-supported restaurant,” he said.
The idea, he said, was to make that “Living Wage Adjustment” percentage dedicated to paying the employees. That adjustment percentage could also decrease in the future if sales go up due to increased community support, he said.
“Before we decided to do it, we had seen no one else doing it,” he said. They then contacted the state tax department, where officials at several levels said they also had not heard of anyone else doing this.
Smith also said the funds from that 6 percent on the bill will not be allocated anywhere else.
“By law, this is forced to go to employees,” he said.
Smith said the Vermont Department of Taxes agrees that, as long as the restaurant follows some simple rules about the notice and disbursement of this revenue, the charge will not be subject to Rooms and Meals Tax, so all of the additional revenue will go to employees.
“It should be realized that paying people a living wage convinces them to stay longer and work harder, and also decreases our training costs,” he said.
When the idea was first introduced, some people had concerns that the service staff would be penalized and see a reduction in gratuities. That did not happen. In fact, Smith said he has seen the opposite. The tips to servers went up, he said. Sales and visitor attendance on Friday, June 10, as compared to the same Friday last year, also increased.
“We’ve had fabulous feedback,” from customers, Smith said. “It was amazing.”
Smith said that the change, which is in a sense partnering with the public, is “something we can
do now while everyone else is debating the topic of the minimum wage.”
In 2012, after the village’s only full-service eatery had burned down years ago, the group of 25 investors opened Popolo in a historic building that had sat mostly unused for decades. The restaurant features a “farm-to-table cuisine and an intimate music venue,” according to Smith.
Sen. Bernie Sanders, D-Vermont, has been one of the most vocal proponents for an increase in minimum wage to $15 per hour, Smith said. Vermont’s minimum wage is now $9.60 per hour, and the federal minimum wage is $7.25. Some U.S. cities have already increased the minimum wage with an eventual target of $15 per hour.
Popolo and its shareholders feel that waiting for the increase does not fit with the company's principles, Smith said. He called the adoption of the Living Wage Adjustment an “immediate remedy.”
“Many small contributions make this improvement possible,” Smith said. “There aren’t many diners who will balk at spending a couple dollars more to secure quality of life for our workers. It’s part of the cost of dining out.”