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Malt Shop Rebellion: Restaurant defies wage law

By   /   February 21, 2013  /   4 Comments

MINIMUM WAGE REBELS: The owners of a malt shop in Albuquerque have defied paying the increased minimum wage to tipped employees, saying it will run them out of business.

 

By Rob Nikolewski │ New Mexico Watchdog

ALBUQUERQUE — Folk heroes to some, villains to others, the owners of the Route 66 Malt Shop in Albuquerque have refused to abide by the city’s recently adopted minimum wage ordinance.

The increase, they say, would bury their 18-year-old small business.

“We had the choice to close the business and destroy 18 years of blood, sweat and tears and hundreds of thousands of dollars over the years … and fire 12 people or disobey the law,” Eric Szeman told New Mexico Watchdog after a busy lunch-time rush.

“The law’s the law,” said Pat Davis, executive director of the liberal activist group Progress Now Mexico, which organized a protest in front of the malt shop earlier this week. “What they’re doing is wrong, and it amounts to stealing from their workers.”

“Pure and simple, it would double one-third of our payroll,” said Szeman, a 65-year-old Navy veteran who’s married to the restaurant’s owner, Diane Avila. “It would put us up to $5,000-$6,000 (in payroll) from $3,600 … anything over that, we’re out of business.”

In November, two-thirds of voters in Albuquerque passed an ordinance raising the minimum wage in New Mexico’s largest city from $7.50 an hour to $8.50. The fierce debate saw progressive groups pushing the issue while business groups and the Albuquerque Chamber of Commerce fought back, arguing that adopting the ordinance would hurt small business owners.

The debate over raising the minimum wage has extended to the statehouse, where two Democrats have introduced a bill calling for New Mexico to duplicate the $8.50 rate across the state.

In his State of the Union speech last month, President Obama called for raising the national minimum wage from $7.25 to $9 an hour — a 24 percent increase.

“I think that would kill businesses across the country,” Szeman said. “A lot of us are just barely getting by.”

Szeman, whose business card says he’s in charge of “Logistics, Procurement & BS” for the restaurant, said he is abiding by the $8.50 an hour mandate when it comes to paying his cooks. But within the ordinance, there’s a provision calling for tipped employees to see their hourly minimum wages increase from $2.13 an hour to $3.83, an 80 percent raise, followed by raises in succeeding years based on the Consumer Price Index.

“It’s the raises for tipped employees that would kill us,” Szeman said. “We ran the numbers on every single waitress and waiter and they averaged $20 an hour in tips, not counting their wage. So when the (minimum wage hike) came to the forefront, we said we’d have to close our doors.”

Critics of the malt shop’s stand have called on city officials to crack down on the owners and force them to pay the higher wage. Earlier this week, Mayor Richard Berry said it’s the job of the city attorney’s to enforce the ordinance, but the attorney, David Tourek, said he wouldn’t step in unless the city council gives him the authorization and the money.

The malt shop, however, is vulnerable to lawsuits from employees. “It’s a bad business decision for him,” Davis said.

But Szeman said business in the trendy Nob Hill section of Albuquerque has doubled since the controversy broke. The booths and stools were packed Thursday with customers, some of whom went out of their way to eat at the restaurant.

The customers included Sean Henry, who made the 82-mile roundtrip from Moriarity to eat lunch. “I think the whole minimum wage thing will shut down small businesses,” Henry, a part-time rodeo photographer, said. “They only bring in so much and they’ve got a lot of overhead.”

“The other irony is, (the protesters) are only hurting the employees; we (the owners) don’t make any money any how,” according to Szeman, who said one waitress made $300 in tips Tuesday, a result of the increased traffic. “The lowest-paid employee makes more than the wife and I together.”

As customers entered the restaurant they saw a picture of Martin Luther King Jr., with the quote: “It is our duty to disobey unjust laws.” A tip jar on the lunch counter carried a sign that said: “Legal defense fund.”

Davis thinks the boost in business will be “short-lived,” adding, “I’ve lived in Nob Hill longer than he (Szeman) has, and I think the long-term effects will hurt him in the neighborhood.”

A former waiter at the malt shop who complained about not getting the minimum wage increase accused Szeman’s son of confronting him with a baseball bat and a machete Sunday. A police report was completed but no charges were filed. Szeman’s son, 24-year-old Andrew Szeman, said he only brought a bat for protection in case the former employee became violent.

“It seems to me that doing the right thing down the road will pay off for him,” Davis said of Szeman.

As for the hero and villain portrayals, Szeman, a Vietnam veteran, said, “Hey, I was in a war, I had bullets flying over my head. There were times I could reach up and grab mortar shells, they were so close. This don’t bother me.”

***

Here’s Szeman talking to us about the restaurant’s stand:

Contact Rob Nikolewski at rob@nmwatchdog.org

 

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Rob Nikolewski is an investigative reporter for Watchdog.org based in Santa Fe, N.M. Contact him at rnikolewski@watchdog.org and follow him on Twitter @NMWatchdog.

  • SixSixSix

    Can you spell B.S.? I thought you could. Wow $3.83 an hour when customers voluntarily chip in the other $18 thus subsidizing the owners. What an affront. No wonder the Job title includes “& B.S”. Truth in advertising, sometimes.

  • chrismalllory

    Much better for the wait staff to lose their jobs when the place is shut down. Then they can go on unemployment! Yay! for Unintended consequences!

  • Combaticron

    Subsidizing the owners? Do the employees share tips with the owners? Do you have any idea how tips work? I don’t think you do.

  • server for life

    I work in Washington state where minimum wages for tipped employees has always been the same as anyone else. As a result I was able to support my children as a single mother. But the consequence was high as I had to remain 3000 miles away from my parents because minimum wages for tipped employees was under $3 an hour. Quite a few states provide decent minimum wages for tipped employees and businesses are profitable. I don’t feel sorry that owners are having to pay more anywhere because it’s not always easy for servers and welfare should never have to substitute when tips are lean.

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