behind the kitchen door: the hidden costs of taking the low road in chicagoland's thriving...

1. Primary Research Support Provided by Ted Smukler, De Paul University LaNysha Adams, Restaurant Opportunities Centers United Editorial Support Provided By Nirupama Jayaraman Design by Christopher Chaput February 9, 2010 Funding Provided By: Chicago Foundation for Women The Ford Foundation The Woods Fund The Chicago Community Trust By the Restaurant Opportunities Center of Chicago, the Restaurant Opportunities Centers United, and the Chicagoland Restaurant Industry Coalition Behind the Kitchen Door: The Hidden Costs of Taking the Low Road in Chicagolands Thriving Restaurant Industry

2. Behind the Kitchen Door: The Hidden Costs of Taking the Low Road in Chicagolands Thriving Restaurant Industry Primary Research Support Provided by Ted Smukler, De Paul University LaNysha Adams, Restaurant Opportunities Centers United Editorial Support Provided By Nirupama Jayaraman Design by Christopher Chaput February 9, 2010 Funding Provided By: Chicago Foundation for Women The Ford Foundation The Woods Fund The Chicago Community Trust By the Restaurant Opportunities Center of Chicago, the Restaurant Opportunities Centers United, and the Chicagoland Restaurant Industry Coalition

3. Executive Summary i Executive Summary Behind the Kitchen Door: Pervasive Inequality in Chicagolands Thriving Restaurant Industry was conceived of and designed by the Chicagoland 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 Chicago. The report uses data from 582 worker surveys, 29 one-hour interviews with restaurant workers, and 31 one-hour interviews with restaurant employers in Chicago. 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 overall health of the restaurant industry, which is fundamental to Chicagos 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 industrys sustainable growth. A Resilient and Growing Industry Chicago is home to a vibrant, resilient, and growing restaurant industry. The industry includes approximately 9,000 food service and drinking places that make significant contributions to the regions tourism, hospitality and entertainment sectors and to its economy as a whole. In fact, Chicago has the second largest restaurant industry in the nation. Perhaps the industrys most important contribution to the regions economy is the thousands of job opportunities and career options it provides. In 2008, the gross domestic product by metropolitan area from the accommodations and food services sector was $12.7 billion. Since 1995, employment growth in the food services sector has outpaced that of the Chicago region overall. Restaurants employ almost 140,000 workers in Cook County alone and almost 250,000 workers in Chicagoland 6.8% of the regions 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 Chicago restaurant industry the high road and the low road. Res- taurant 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 Chicago area appear to be taking the low road, creating a predomi- nantly 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 Statistics, the median wage for restaurant workers is only $8.86, compared to a median wage of $17.28 for all workers in Chicago. In our own survey of restaurant workers, the vast majority (90.5%) reported that they do not have health insurance through their employers (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 $17,844 in 2008 compared to $55,409 for the total private sector.

4. Executive Summary ii 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 one-third of the workers surveyed in our study (32.6%) experienced overtime violations and 28.5% reported working off the clock without being paid. Workers of color are largely concentrated in the industrys bad jobs, while white workers tend to disproportion- ately hold the few good jobs. Workers of color also reported discriminatory hiring, promotion and disciplinary practices: 21.8% of all workers reported being passed over for a promotion, or receiving less pay than another in the same position and 42.8% of those workers felt that the unequal treatment was based on 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 discussion in Chapter VI: The Social Cost of Low-Wage Jobs). The pervasiveness of accidents coupled with the fact that so few restaurant workers have access to benefits such as paid sick days and health insurance have negative impacts on workers as well as consumers and taxpayers. 96.2% of all workers surveyed reported not having access to paid sick days, and 75.9% reported working while sick. In addition, 90.5% reported not having access to employer-provided health insurance, which can lead to escalating un- compensated care costs incurred by public hospitals. For example, 15.8% 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, which results in indirect subsidies to employers who are engaging in low road practices. 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, 22.3% 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 $16.48 per hour were also much more likely to have health insurance than workers earning less than the minimum wage of $7.75 per hour.

5. Executive Summary iii Our Recommendations The Chicagoland Restaurant Industry Coalition recommends the following steps to address the workplace problems documented in our study: 1. Level the playing field by providing paid sick days and increasing the tipped minimum wage. Policymakers should require 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. 2. Incentivize high road practices. 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 stellar workplace practices, and subsidies to employment-based health insurance or support of collective health insurance provisions across the industry. 3. Promote opportunity, penalize discrimination. Policy makers should explore initiatives that encourage internal promotion and discourage discrimination on the basis of race and immigration status in the restaurant industry. 4. Labor, employment and health and safety standards should be strictly enforced. 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. 5. Promote model employer practices. 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. 6. Allow workers 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. 7. Support further industry research. 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 industrys practices on health care and public program costs. The information collected here from workers, employers, and industry experts is critical to ensuring that the Chicago metropolitan areas restaurant industry truly shines as not only an important contributor to the regions job market and economy, but also to the well-being of its workers and communities.

6. Executive Summary i Chapter I: Introduction & Methodology 1 Chapter II: Overview of Chicagolands Restaurant Industry 4 Chapter III: Workers Perspectives 12 Chapter IV: Employers Perspectives 24 Chapter V: Segregation & Discrimination 36 Chapter VI: The Social Cost of Low-Wage Jobs 48 Chapter VII: Conclusions & Policy Recommendations 54 Appendix & Endnotes 56 Behind the Kitchen Door: The Hidden Costs of Taking the Low Road in Chicagolands Thriving Restaurant Industry Copyright 2010 Restaurant Opportunities Centers United (ROC-United) Table of Contents

7. Chapter I 1 C H A P T E R I Introduction and Methodology The Chicago 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.1 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 regions economy in the near future. ABOUT THIS STUDY This study was conceived and designed by the Chicagoland Restaurant Industry Coalition - a broad gathering of academics, policy analysts, worker advocates, worker organizers, unions, restaurant workers and employers. Data were collected from 582 worker surveys, in-depth interviews and focus groups with 29 restaurant workers, and 31 interviews with restaurant industry employers in Cook County, collected over a one-year period. The results of this primary research are supplemented by analysis of secondary 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 in its importance to Chicagos 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 industrys sustainable growth. The regions restaurants are an important source of jobs particularly for people of color, new immigrants and young people just starting in the workforce.2 Thousands of Chicagoland 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. Our primary research, review of existing literature, and analysis of government and industry data re- veal that there are two roads to profitability in the Chicago 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 support themselves and their families, remain healthy, 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 Chicagos restaurant industry, like employers in other parts of the country, are employing low road workplace practices, contributing to the creation and perpetuation of a predominately low-wage industry in which 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 peoples lives. 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, as well as strategies employed by some restaurant employers to overcome these factors. 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.

8. Chapter I 2 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 generally represents those interacting with customers in the front of the restaurant including wait staff, bussers and runners. Back of the house workers generally refer to kitchen staff including chefs, cooks, food preparation staff, dishwashers and cleaners. High road and low road are industry terms referring to opposing business strategies for achieving productivity and profitability. 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. In our research, we also found a high degree of sep- aration and racial disparity in wages and working conditions between white workers and workers of color in the Chicago restaurant industry. 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. Res- taurant 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 Chicago 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 jobs requiring the longest hours, featuring 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 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 Chicago 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. This report includes the perspectives of both high road and low road employers, the experiences of workers, government and industry data, and academic research. In effect, we have created a unique and rich source of information on the metropolitan areas 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 Chicago.

9. C H A P T E R II Overview of Chicagolands Restaurant Industry

10. Chapter II 4 C H A P T E R II Overview of Chicagolands Restaurant Industry A. A Significant and Growing Industry The restaurant industry is increasingly significant for Chicago, especially as manufacturing jobs decline. Food services and drinking places are one of Illinois largest employers.3 The tourism industry, which includes the restaurant industry, is now considered one of Chicagos largest and fastest-growing industries.4 Cook County is home to approximately 9,500 food services and drinking places, a number that grew substantially in the 1990s, and is expected to keep growing.5 The restaurant industry is a key contributor to Chicagolands tourism and hospitality sectors, and to the economy as a whole. In 2008, the gross domestic product by metropolitan area from the accommodations and food services sector was $12.7 billion.6 The restaurant industry makes up over 70% of the accommodation and food services sector, and has an annual average growth rate of 5% in millions of dollars contributed to the local economy. 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 also serves as 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 almost 250,000 jobs per year in the Chicago metropolitan area (hereafter food services sector), and more than 171,000 jobs in Cook County alone.7 In fact, the food services sector contributed to 73% of employment in the Leisure and Hospitality supersector.8 The restaurant industry has been one of the largest and fastest-growing sectors of the Chicago economy, second only to the government and healthcare. Now, the food services sector employs more people than a wide variety of both old and new economy industries such as finance, securities, and construction.9 TABLE 1: Employment in the Food Services Sector and Other Select Industries, Chicagoland, 2009 Industry Employment (in 1000s) Share of Total Employment Total Division Non-farm Employment 3692.9 100.0% Health Care and Social Assistance 413.7 11.2% Leisure and Hospitality 341.9 9.3% Manufacturing 331.1 9.0% Food Services and Drinking Places 249.9 6.8% Hospitals 148.4 4.0% Construction 149.9 4.1% Source: Bureau of Labor Statistics, Current Employment Statistics, July 2009 In this table, Chicagoland refers to the Chicago-Naperville-Joliet, IL Metropolitan Division which includes Cook, DeKalb, DuPage, Grundy, Kane, Kendall, McHenry and Will counties Note: Industry Categories are not mutually exclusive The restaurant industry has the 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 there are living wage jobs. From our survey data, 12.3% of all workers surveyed reported an hourly wage of $18.31 or higher.

11. Chapter II 5 Since 1992, employment growth in the food services sector has outpaced that of general employment in Chicago- land. 10 Figure 1 depicts employment growth in the food services sector from 1990 to 2008, compared to job growth in the overall region. Even during the current economic crisis, the restaurant industry has not nearly suffered the kind of job loss locally or nationally experienced by the economy as a whole. 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.11 Even as late as December 2007 in Chicago, while the rest of the regional economy was experiencing serious decline, the restaurant industry continued to experience growth (see Figure 1). Since the beginning of the recession in De- cember 2007, manufacturing and construction job losses have accounted for the overwhelming majority of the job loss in the entire state.12 0.9 1.2 1.5 Food Services & Drinking Places Total Division Employment 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990 1990=1.00 FIGURE 1: Job Growth in Food Services and Drinking Places and Total Employment, Chicagoland, 1990-2008 Source: Bureau of Labor Statistics, Current Employment Statistics, July 2009 Note: Chicagoland refers to the Chicago-Naperville-Joliet, IL Metropolitan Division which includes Cook, DeKalb, DuPage, Grundy, Kane, Kendall, McHenry and Will counties. C. What Kind of Restaurant? The food services sector includes four distinct industries: full-service restaurants, limited-service eating places, special food services and drinking places.13 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 see 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. Table 2 details employment levels for each of these two types of restaurants between 1990 and 2008. Over this period, employment growth in full-service restaurants outpaced that of other parts of the industry, increasing its share of industry-wide employment.

12. Chapter II 6 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 -tablecloth restaurants;1. Family-style restaurants, also described as casual dining, including both franchise or chain restaurants such as Olive2. Garden or Applebees, and smaller establishments, frequently neighborhood-based and/or ethnic restaurants; Fast-food or quick-serve restaurants.3. 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 singly 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. TABLE 2: Restaurant Industry Employment, Chicagoland, 1990 and 2008 (In thousands) Year Full-Service Restaurants Limited-Service Eating Places Restaurant Industry Employment, 1990 84.3 65.2 Restaurant Industry Employment, 2008 117.9 96.6 Change in Employment, 1990-2008 33.6 31.4 Percentage Increase in Employment, 1990-2008 18.05% 16.86% Share of Food Services Sector in 1990 45.27% 35.02% Share of Food Services Sector in 2008 46.88% 38.41% Source: Bureau of Labor Statistics, Current Employment Statistics In this table, Chicago Metropolitan Area refers to the Chicago-Naperville-Joliet, IL Metropolitan Division which includes Cook, DeKalb, DuPage, Grundy, Kane, Kendall, McHenry and Will counties D. Where are the Jobs? While the restaurant industry is widespread throughout the seven counties that comprise what is known as Chica- goland, this report focuses on Cook County. As indicated by the data contained in Table 3, Cook County accounts for more than two thirds (67.5%) of the Chicagolands employment in full service restaurants, and almost two thirds (64.4%) of the states limited service eating places.

13. Chapter II 7 TABLE 3: Employment by County in the Restaurant Industry, Chicagoland, 2007 Full Service Employees Limited Services Employees Chicagoland Total 100.00% 100.00% Cook 67.49% 64.40% DuPage 15.31% 14.21% Will 6.18% 8.27% Kane 5.47% 6.24% McHenry 3.49% 3.37% DeKalb 0.94% 1.67% Grundy 0.50% 0.64% Kendall 0.62% 1.20% Source: U.S. Census Bureau, County Business Patterns 2007 E. Who Gets the Jobs? Most jobs in the restaurant industry do not require much formal education, and, with the exception of chefs and sommeliers, 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 workspaces, 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 the 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. F. What are the Characteristics of the Workforce? The Chicago restaurant industry is extraordinarily diverse, with no majority ethnic group, substantial immigrant populations, and almost equal numbers of men and women. Whites, Latinos, and African-Americans comprise the largest racial groups in the industry, with substantial numbers of Asian American workers as well. The industry is also fairly diverse in terms of age. Not much has changed in terms of the industrys demographics from 2000 to 2008. The most dramatic difference in restaurant worker characteristics during this period was an increase in educational levels among restaurant workers- fewer workers with less than a high school education, and more workers with high school and bachelors degrees. There has also been a slight (4%) increase in the proportion of Latino workers in the industry, and an equivalent decrease in the proportion of black workers. There has also been a slight increase in the proportion of workers who speak English very well. Compared to the overall Cook County workforce, Chicago restaurant workers are more diverse. The restaurant workforce has a higher percentage of Latino and mixed race individuals than the overall Cook County workforce. Restaurant workers are also more likely to be immigrants and non-native English speakers, and less likely to have a college education.

14. Chapter II 8 Table 4: A Demographic Profile of Cook County Restaurant Workers, 2000-2008 (column percentages) Restaurant Workers 2008 Only 2000 2008 Difference (2008-2000) All Cook County Workers Difference (Restaurant Workers All Workers) Gender Male 52.7 52.1 -.6 51.4 0.7 Female 47.3 47.9 .6 48.6 -0.7 Age 16-24 38.6 35.6 -3 14.7 20.9 25-44 42.5 43.6 1.1 44 -0.4 45-64 16 18.3 2.3 35.4 -17.1 65 and older 2.9 2.4 -.5 6 -3.6 Race/Ethnicity Non-Hispanic White 37 37.8 .8 49.3 -11.5 Non-Hispanic Black 21.8 17.8 -4 22.2 -4.4 Asian 6.9 6.8 -1 6.4 0.4 Hispanic/Latino any race 32.2 36.1 3.9 21 15.1 2 or more races and Other 2.1 1.5 -.6 1.2 0.3 Nativity Citizen by Birth 63.5 63.6 .1 73.5 -9.9 Foreign Born 36.5 36.4 -.1 26.5 9.9 World area of Birth US 63 62.8 -.2 72.8 -10 Latin America 24.4 25.1 .7 13.1 12 Asia 7.3 7.2 -.1 6.3 0.9 Europe 4.7 4.5 -.2 6.7 -2.2 Africa 0.5 0.2 -.3 0.7 -0.5 Other 0.1 0.1 0 0.3 -0.2 Years in US Born in the U.S. 62.2 62.6 .4 72.1 -9.5 0-5 11.1 6.7 -4.4 3.7 3 10-Jun 8.1 7.3 -.8 5 2.3 15-Nov 6 6.8 .8 4 2.8 16-20 4.7 6.8 2.1 3.9 2.9 21 or more 7.9 9.9 2 11.4 -1.5 Ability to Speak English Speaks very well 37.5 45.4 7.9 53.2 -7.8 Speaks well 25.5 20.5 -5 21.9 -1.4 Speaks, but not well 26.3 26.2 -.1 19 7.2 Does not speak English 10.7 7.9 -2.8 6 1.9 Education Less than High School 43.3 28.3 -15 14.1 14.2 High School Degree 25.7 31.4 5.7 22.7 8.7 Some College 22.4 27.9 5.5 28.8 -0.9 Bachelors Degree and Higher 8.6 12.4 3.8 34.4 -22 Source: U.S. Bureau of the Census, Public Use Micro Sample from US Census (2000) and American Community Survey (2008). Note: Difference is percentage point

15. Chapter II 9 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: 1. Managers and supervisors, including chefs 2. Front of the house positions 3. Back of the house positions H. What do the Jobs Pay? While the industry does provide some living-wage jobs, 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 Chicago- land is $8.86 an hour. Eighty-two percent (82.38%) of workers in the industry are employed in jobs for which the hourly median wage is below $10.00.14 As will be discussed in greater detail in Chapters III: Workers Perspectives and Chapter V: Segregation & Discrimination, people of color hold the majority of the lowest paid jobs in the restaurant industry. Data show that the Chicagoland restaurant industry is an important and growing source of income and employment. As this industry grows, it creates more low-wage jobs than living wage jobs. The restaurant industry contributes almost 250,000 jobs to the Chicagoland economy, but 82% of those jobs pay less than $10 per hour. And, given the industrys growing reliance on immigrants and people of color, it is communities that are already marginalized that occupy these low-wage jobs. Table 5. Employment and Median Wages for Food Preparation and Serving Related Occupations in Chicagoland, 2008 Occupation Employment share Median hourly wage All workers $8.86 Chefs and head cooks 1.44% $15.80 First-line supervisors/managers of food preparation and serving workers 6.27% $15.16 Cooks, fast food 5.30% $8.17 Cooks, institution and cafeteria 2.72% $11.75 Cooks, restaurant 6.85% $10.70 Cooks, short order 1.16% $9.71 Cooks, all other 0.33% $13.16 Food preparation workers 11.64% $9.32 Bartenders 5.05% $8.81 Combined food preparation and serving workers, including fast food 19.55% $8.09 Counter attendants, cafeteria, food concession, and coffee shop 5.46% $8.08 Waiters and waitresses 17.64% $7.99 Food servers, nonrestaurant 2.06% $8.96 Dining room and cafeteria attendants and bartender helpers 4.98% $8.50 Dishwashers 4.68% $8.15 Hosts and hostesses, restaurant, lounge, and coffee shop 3.12% $9.22 Food preparation and serving related workers, all other 1.75% $9.50 Under $10.00 per hour 82.38% Footnotes: (1) Estimates for detailed occupations do not sum to the totals because the totals include occupations not shown separately. Esti- mates 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 Chicago-Naperville-Joliet, IL Metropolitan Division, 2008

16. Chapter II 10 While restaurant jobs in the Chicago metropolitan area have grown, restaurant wages over the past decade have not experienced the same growth. As Figure 2 illustrates, growth in average annual earnings in the industry has lagged behind that of the entire private sector in Chicago. In 2009 dollars, 2001 private sector annual earnings av- eraged $52,645, but only $17,670 in the restaurant industry. By 2008, private sector earnings had increased by 5.3% to $55,409 a year, while wages in the restaurant industry increased by 1%, to $17,844 over the same period. Thus, restaurant wages grew much more slowly than wages in other economic sectors, despite the growth in the industry during the same period. In sum, while the Chicago metro area restaurant industry is a growing source of income and employment, earnings lag far behind those of other private sector workers in the city, raising concerns about the proliferation of low-wage jobs. The restaurant industry contributes close to 250,000 jobs to the Chicago metro economy, and over 171,000 to Cook County alone but 82% of those jobs pay less than $10 per hour.15 And, given the industrys growing reliance on immigrants and people of color, it is already marginalized-communities that occupy these low-wage jobs. 10,000 20,000 30,000 40,000 50,000 60,000 All industries Restaurants 20082007200620052004200320022001 AverageAnnualEarnings Figure 2: Average Annual Earnings by Industry, Cook County, 2001-2008 Source: Bureau of Labor Statistics, Quarterly Census of Employment and Wages Note: Earnings are deflated using the CPI-U for Midwest Urban.

17. C H A P T E R III Workers Perspectives

18. Chapter III 12 C H A P T E R III Workers Perspectives The information summarized in this chapter represents a compilation of the results of 582 surveys and interviews and focus groups with 29 restaurant workers conducted between September 2008 and May 2009. By speak- ing directly with Chicago restaurant workers, we gained more insight on the daily experiences of workers in the metropolitan regions 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 surveyed reported health and safety hazards at their workplace, compound- ed by a pervasive lack of health and safety training. In addition, many of the workers we spoke with reported getting injured on the job. 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.

19. Chapter III 13 A. Introduction and Methodology While a majority of jobs are low-wage, low-road jobs in the restaurant industry, our survey research shows that the low road is not the necessary path in this industry. 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 quantitative and qualitative data documenting the experiences of restaurant workers in the Chicago. In an effort to pick up where official and industry statistics leave off, the Chicagoland Restaurant Industry Coalition 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 Cook County. Stratification was used as a sampling technique to ensure that our sample was truly representative.16 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.17 The survey was administered from September 2008 and May 2009 by staff, members, and volunteers from the Res- taurant Opportunities Center of Chicago a community-based organization with significant contacts among restaurant workers and access to workplaces in the industry. A total of 582 surveys were conducted face-to-face with workers in Cook County 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.18 Furthermore, our sampling frame, or set of participants from which the sample was drawn, consisted only of workers employed in the industry.19 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 29 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 of Brooklyn College, 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.20 B. Earnings But people really dont know [how much we get paid]. Like I had a woman who got really upset about it when I told her -- you know like, servers dont really make like an hourly rate. She thought like you get ten dollars an hour and the tips are extra. I was like...no. Male, 4 years in the industry, Server Our survey data is consistent with government and industry statistics demonstrating that restaurant work is primar- ily low-wage work. Seventy-eight percent (78%) of workers surveyed in our study reported earnings of less than $16.48 an hour. Five percent (4.6%) of this group did not earn minimum wage even when tips were accounted for. Twenty-two percent (22.3%) 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 programs21 and was calculated using the Economic Policy Institutes Basic Family Budget Calculator. (See side box for wage group definitions).

20. Chapter III 14 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 Illinois State minimum wage at the time the survey was conducted ($7.75), 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 Institutes (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 6. Table 6: Wages Earned by Restaurant Workers Less Than Minimum Wage (< $7.75) 4.6% Below Poverty Line ($7.75 $8.45) 15% Low Wage ($8.46 - $16.47) 58.1% Living Wage ($16.48 and higher) 22.3% Source: Chicagoland Restaurant Industry Coalition survey data Over half of workers in our sample (58.1%) reported earning low wages, and one-fifth (19.6%) reported earning wages below the poverty line. The impact of occupational segregation, which will be discussed further in Chapter VI: The Social Cost of Low-Wage Jobs is substantial; even though the median wage of our entire survey population was $11 an hour, when workers of color earnings were taken out of our sample, the median wage rose to $14.56 an hour. The earnings picture is slightly different for restaurant workers when compared to other workers because an exception to minimum wage laws is made for workers who regularly receive tips. As a result, restaurant employers in the State of Illinois are permitted to pay tipped workers minimum wages of $4.65 per hour, or 60% of the state minimum wage, as long as tips make up the difference between $4.65 and the state minimum hourly wage of $7.75 (at the time the survey was conducted). If they do not, the employer must pay workers the difference.22 In Illinois, 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).23 Twenty-eight percent (28%) of the workers surveyed in our study reported that they were born in another country, and 36% 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),24 which made it illegal 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 federal and state mandated minimum wages.25 Census data is unlikely to capture the earnings of these workers.

21. Chapter III 15 WHAT DOES IT MEAN TO LIVE ON A RESTAURANT WORKERS EARNINGS? According to the American Chamber of Commerce Researchers Associations (ACCRA) Cost of Living Index, which is based on the composite price of groceries, housing, utilities, transportation, health care, clothing, and entertainment, Chicagos cost of living is on par with the national average, making it even harder for low-income workers to make ends meet;26 According to the National Low Income Housing Coalition (NLIHC), while the Fair Market Rent for a two-bedroom unit in the Chicago metro area27 is $1,004, an extremely low-income household (earning $22,470 or 30% of the Area Median Income of $74,900) can afford monthly rent of no more than $562.28 On average, a restaurant worker earning $11.00 per hour can afford monthly rent of no more than $572 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 $3,347 monthly or $40,160 annually. The typical restaurant worker would have to work approximately 76 hours per week in order to afford a two-bedroom unit at the areas 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 areas Fair Market rent in the Chicago metropolitan area is $19.31. C. Benefits Thank goodness, I am single but I do have a friend who knows somebody in the health insurance industry, but I am still paying $150 a month for health insurance and I mean it is not the greatest. It has no pharmacy or anything so thats a nice chunk when you are not making that much money Male, 4 years in the industry, Various Back of the House positions The majority of restaurant workers surveyed reported that they do not receive basic workplace benefits. The data in Table 7 reveals that the vast majority of workers surveyed do not have health insurance through their employers (90.5%), over half (53.4%) reported not having any type of health insurance coverage at all, and 15.8% went to the emergency room without being able to pay. An overwhelming majority reported that they do not get paid sick days (96.2%) or paid vacation days (87%). Table 7: Job and Health Benefits Reported by Restaurant Workers Employer does not provide health insurance 90.5% Do not have any health insurance coverage 53.4% Do not get paid sick days 96.2% Do not get paid vacation days 87% Have worked when sick 75.9% Source: Chicagoland Restaurant Industry Coalition survey data Well, for me, its your life, its how you pay your bills and the way I saw it was, you work with these people. But I know I shouldnt get friendly or personal with these people but, you know, you spend so much time together, and you make jokes together and you try to work and have fun at the same time. What I noticed was the owners of this restaurant that I used to work at they were more concerned about my production than my well-being, or how I got along with everybody. And one of the owners came over to me and said, Well, now that youve done all your duties and all the work that youre supposed to do, why dont you go to the back of the house and bring in, you know, this furniture, and I thought, youre giving me something to do and Im going to break my back and you dont even provide me with insurance. So we had this big-big argument and he said, Get back and do your job or else youre fired. And it was like, you dont get it. Like, I break my back in here and whos going to take care of me, whos going to feed me, whos going to pay my bills, Im only supposed to work in the restaurant. Im not your maid! Male, 9 years in the industry, Busser, Barback, & Server I believe that the restaurant industry should be a store bound type of a job. Whether workers are a waitress bartender or a dishwasher. I believe everybody should get the same benefits as someone you know who works in an office gets dental. They work way more hours, they are doing the same labor. Theyre doing overtime. Working in a restaurant is hard labor. Its really hard labor. I think that someone who works in the restaurant industry should get the same benefits as someone in the corporate office. Female, 2 years in the industry, Server

22. Chapter III 16 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. As a result, 75.9% 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 com- municable diseases are spread. If workers are coming in to the job sick, it endangers the health of their co-workers, customers and the general public. Well, you dont feel priority, I guess. You just feel like a normal worker, when you dont have benefits. Youre not special, I guess. You have nothing to look forward to, because some people get a pension plan, but you have nothing to look forward to. So, I guess it does affect me a little bit. Male, 6 years in the industry, Server Throughout all my restaurants and catering, no benefits. No vacation, no sick time. Thats what the restaurant business is, though, right? Because a server, a bartender, you just know off the bat [youre not getting any benefits]. Male, 5 years in the industry, Host It affects me because every time we go to the doctor or whatever we have to pay for everything medicine, the appointment every time. Male, 14 years in the industry, Bartender Twenty-eight percent (28%) of workers surveyed with health care pay for a private health insurance plan out of pock- et. Additional information on the impact of the industrys lack of benefits on workers, taxpayers, and the public can be found in Public Cost section of Chapter VI: The Social Cost of Low-Wage Jobs. D. Dead end jobs Ideally, restaurant workers would be able to advance from lower-paying positions in the industry (often in the back of the house, or in lower-level front-of-house positions) to higher-paying positions in the industry (most often server and bartender positions in the front of the house) over time based on their experience and ability, and would have the opportunity to move up in one restaurant setting, in which internal promotions are possible and encouraged. Unfortunately, restaurant workers have few opportunities to move up in the industry (see Table 8). 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. Eighty percent (79.5%) of survey respondents reported that they do not receive regular raises, and 74.5% 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 71.4% of workers surveyed said they had not moved up from their last job when they took their current one. Moreover, 61.8% of workers surveyed reported that they do not receive on-the-job training needed to be promoted. Table 8: Raises and Promotions Reported by Restaurant Workers Do not receive regular raises 79.5% Have never been promoted in current job 74.5% Did not move up in position from last job to the current job 71.4% Did not receive on-going job training needed to be promoted from employer 61.8% Source: Chicagoland Restaurant Industry Coalition survey data I havent received a promotion I have requested well, first when I applied I mentioned that I wanted to work bar eventually, or be trained on the bar because I do think that the best way to move into bartending is to have experience in a restaurant, and then have experience working an actual bar. So it was something I made clear when I applied and when I was hired, and regularly when weve had openings Ive indicated my interest to my managers maybe I havent exactly requested the promotion, but Ive been told I will never get it pretty clearly. Its not going to happen. Female, 2 years in the industry, Server

23. Chapter III 17 The majority of restaurant workers are essentially trapped in low-wage jobs with long hours, few benefits, and few advancement opportunities. A discussion of a lack of movement between front and back of the house workers emerged as a reoccurring theme in the interviews. A dishwasher who has been in the industry for 8 years explains that he recently received a promotion to food prep, even though he wants to be a server. After three years in the industry, a cook who works in a fine-dining establishment reported: I asked for a promotion to bartending but I didnt get it because they think that women are better for it. Several employers explained that when they hire for the kitchen, there is not much room to advance in position; as when they hire for a dishwasher, for example, they are looking for a person to do that job and to continue occupying that position. Most of the workers we spoke with working in the industry for three years or more, reported having no choice but to leave an employer in search of better jobs 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.29 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 Chapter III: Employers Perspectives. Well, I think any time Ive tried to advance anywhere, I dont think that was the reason. It was more like they denied me because they didnt think I was right for it for whatever reason. But Ive also never, I figured I got paid more as a barista than a dishwasher and a busser, so [I look for those positions]. Female, 3 years in the industry, Cashier E. Employment and Labor Violations As mentioned in Section B above, restaurant employers in the State of Illinois are permitted to pay wages of $4.65 per hour to tipped workers. If tips do not bring the worker up to minimum wage, employers are responsible for making up the difference. Furthermore, it is unlawful for employers to take tips from restaurant workers. The employer, for each pay period in which tips are reported, must keep a written tip statement signed by the employee and dated before each paycheck is received on file.30 In paying workers $4.65, or 60% of the states minimum wage, employers rely on tips from customers to pay the difference between workers tipped hourly rate of $4.65 and the legal minimum in the state. 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 is a common practice in most restaurants, it is unlawful for employers to take tips from restaurant workers. Interestingly, 88.7% of restaurant workers surveyed were not aware of the correct minimum hourly wage for tipped workers and 68.5% did not know that $7.75 was the state minimum hourly wage at the time the survey was conducted. Illinois has a state minimum wage that is higher than the federal minimum wage for both tipped workers ($2.13) and non-tipped workers ($7.25). The state hourly minimum wage increased from $7.75 to $8.00 in Illinois on July 1, 2009. Illinois will experience another minimum wage increase to $8.25 an hour on July 1, 2010 as mandated by Public Act 094-1072, an amendment to the Illinois Minimum Wage Law.31 Clearly, more public education, for workers and employers alike, is needed with respect to governing laws in the restaurant industry. I recently took a job there for this thing, temporary, another kind of awful experience. But now, I believe because its such a horrible corporate place it was just a really bad experience. They dont have a percentage for what you tip out to your bussers, they leave that to your discretion because the tipping from their clientele is so horrible. Male, 4 years in the industry, Server Table 9: Employment Law Violations Reported by Restaurant Workers Employment Law Violations Reported by Restaurant Workers Percent of Workers Experienced overtime wage violations 32.6% Worked off the clock without pay 28.5% Management took share of tips 14.7% Experienced minimum wage violations 4.6% Source: Chicagoland Restaurant Industry Coalition survey data As illustrated by Table 9, 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. Thirty-three percent (32.6%) of all workers surveyed told us they were not paid overtime for hours worked beyond

24. Chapter III 18 the standard 40-hour workweek. While fine-dining workers reported a higher proportion of management stealing tips (12.5%) and minimum wage violations (18.5%) than the general survey population, employment violations oc- curred in every segment of the industry. Theres always a tip. So we do events and at the end of the event theres a big tip. But always with the tips its always corrupt because the function director, hes the manager who receives the big tip and hes supposed to divide it evenly with all the servers, the cooks, the chefs and himself. So at the end of the night hes supposed to give everyone an even amount. But theres always times when you think he doesnt, when someone gets more than you, or when you get a very less amount, knowing that its more, and you just know that he got the rest of the money. And right there, theres no sense of word, or how do I say it, or paperwork. He has all the power and nobody can tell him what to do or what not to do. Theres always problems at the end with the tip. Male, 4 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 and 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.32 Furthermore, 100% of the workers interviewed who worked in the front of the house positions reported that their hourly wage depended on the type of shift they worked. For example, a server who has been in the industry for 12 years, explained I usually worked eight to ten hour shifts, sometimes much shorter depending on how busy it is. The restaurant where I work usually has fewer servers and really big sections so I usually have a section of maybe 12 tables or more. And were usually busy at 6pm, weekends we get a rush at like midnight, [thats when I get the most tips]. When a particular shift is less busy, all servers reported being cut because they were not making any tips. Juan, a server who has been in the industry for 3 years reported: Id come in for four hours and make less than $30 on a slow shift. Thats all I would make. Several workers also 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. 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. The workers pretty much gettheir money from the tips. The restaurant doesnt pay anything to them not even the minimum wage. They make their own money but everything is made out of tips they get nothing from the house. I have a friend who works there he is from Cuba he was telling me the slow days run from $120 to $150 a day and the busy days $300 a day. Which is good but the house does not put money in their pockets. I think is good money but bad because they do not get paid by the house they should get at least the minimum wage. Male, 10 years in the industry, Cashier Five percent (4.6%) of workers reported being paid less than minimum wage, in violation of the law. In the State of Illinois, employers may pay as little as $4.65 an hour to tipped employees, as long as they receive enough in tips to make up the difference between the tipped wage and the state minimum wage. If tips are insufficient to bring workers up to the state minimum wage of $7.75 an hour (at the time the survey was conducted), however, employers are obliged to make up the difference.33 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. I usually worked 8 hours straight. I needed those tips. I was almost on a tight schedule. I was working from 8:45 am until 5:00 pm without a break. You know that that is illegal but there is always this mentality that you go to your job get it done then go home and rest. It is an unwritten mentality. Male, 8 years in the industry, Busser Where I work now, they dont pay holidays, overtime, or when its slow. I rely on tips. Male, 15 years in the industry, Busser

25. Chapter III 19 More than a quarter (28.5%) of the workers we surveyed reported working off the clock without pay. 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 continued to work because they needed the opportunity to earn tips. Finally, 14.7% of tipped workers reported that management was unlawfully taking a share of their daily tips a severe burden to workers who are already being paid very low wages. I am very passionate about the way [we] are treated, unfortunately Ive gotten a reputation for stand- ing up for what I believe, about how managers been treating their employees, especially the manager taking hosts tips. Those issues are not addressed by management and wont be addressed by management. Female, 5 years in the industry, Server F. Health and Safety Violations By now this day is just all about money and as long as they make their bucks you know, cause I heard a lot of people I have a lot of friends who work down town and they get no training they treat you like you were blind, just throw you go play, you know without you knowing anything. You have to pick up on your own if you do something you were not suppose is a mistake, but now the supervisor sees you because they did not train you so, is their fault. I have a friend this is weird thing, he just came from school it was summer and he said he went to the kitchen and the supervisor told him okay I want you to cut this lime for me and when he was cutting it he cut his finger. They told him you have to go you are out of here and they fired him. They said it was his fault because he should have told them that he never used a knife before. Male, 10 years in the industry, Busser 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).34 Table 10: Health and Safety Violations Reported by Restaurant Workers Unsafely hot in the kitchen 25.7% Fire hazards in the restaurant 18.1% Missing mats on the floor to prevent slipping 19.7% Missing guards on cutting machines 26.8% Done something that put own safety at risk 33.6% Did not receive instruction or training about workplace safety 32.3% Source: Chicagoland Restaurant Industry Coalition survey data As shown in Table 10, twenty-six (25.7%) percent 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 fire extinguishers in the restaurant where they worked (18.1%), as well as absence of guards on the cutting machines (26.8%) and mats on the floor to prevent slippage (19.7%). Thirty-four (33.6%) percent reported having done something at work that put their own safety at risk. Despite the prevalence of health and safety hazards in restaurant workplaces, nearly a third of the workers (32.3%) told us they did not receive health and safety training from their employers. Table 11: Workplace Injuries Reported by Restaurant Workers Burned while on the job 47.8% Cut while on the job 53.7% Slipped and injured while on the job 13.5% Came into contact with toxic chemicals while on the job 11.3% Have chronic pain caused or worsened by the job 21.8% Source: Chicagoland Restaurant Industry Coalition survey data

26. Chapter III 20 Table 11 demonstrates that on-the-job injuries are pervasive in Chicago restaurants. 47.8% of all workers surveyed or 271 workers out of the 568 workers eligible to answer the question - had been burned on the job. Fifty-four percent (53.7%) of workers surveyed had suffered work-related cuts on at least one occasion, and 11.3% had come into contact with toxic chemicals. Fourteen percent (13.5%) reported that they had slipped and injured themselves while at work. Additionally, 21.8% reported chronic pain that was caused or worsened by their job. So, I cut my finger at work last year. I cut my tendons in my finger. I wasbartending, actually. I thought I was going to recover after three days, but I noticed that my finger wasnt going up or down. So I went to go see the doctor, and he told me you hurt your tendon at work. So he told me my work would give me workers comp. And it actually worked pretty good about that. I was lucky to have insurance from my school and they paid for the whole surgery and everything. It was over three or four grand. If I hadnt been in school, I would probably have a deformed finger Male, 6 years in the industry, Server Table 12: Workplace Practices Reported by Restaurant Workers Worked when the restaurant was understaffed 81.1% Performed several jobs at once 88.0% Experienced verbal abuse from supervisors 30.9% Performed a job not trained for 52.1% Done something due to time pressure that has put own health and safety at risk 33.6% Done something due to time pressure that might have harmed the health and safety of customers 23.9% Source: Chicagoland Restaurant Industry Coalition survey data Finally, Table 12 reveals that understaffing, which places inordinate pressure on workers, is a common industry practice. Eighty-one percent (81.1%) of respondents reported working when their restaurant was understaffed and 88% reported they have performed several jobs at once. Half (52.1%) responded that they have been required to perform jobs for which they had not been trained, and 33.6% of workers reported doing something under time pressure that put their own safety at risk (i.e., grabbing overly hot plates/pans in order to not keep the customer waiting). And, as previously discussed, nearly three fourths of the workers we surveyed reported working while sick (75.9%). Such low road workplace practices not only affect workers, but can also have serious consequences for consumers. Fourteen percent of workers reported having done 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. 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. In addition, employers in the State of Illinois must secure workers compensation insurance for every employee. The Illinois Workers Compensation Act is a no-fault law; workers are eligible for benefits even if they contributed to their own injury. A work related injury may be an isolated incident (falling down) or a reoccurring action that leads to an injury, condition or illness (daily inhalation of a toxic chemical). Illinois Workers Compensation law also stipulates that workers related medical expenses will be fully covered, to employees entitled to workers compensation benefits, with no time or monetary limits. Furthermore, the injured employee has the injured employee has the right to be treated by two doctors and their referrals at the cost of the employer.Workers are also allotted time off to recover from an injury or illness, and may be eligible to receive fixed compensation for any permanent disability.35

27. Chapter III 21 G. Many bad jobs, a few good jobs Analysis of our data revealed the existence of not only the low road practices described above, but also of correlations 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. Restaurant workers surveyed reported working an average length of time in each restaurant at two and a half years. More than a quarter (27.2%) of workers surveyed reported working in one restaurant for three years or more. More than three-fourths (79.6%) of the workers that reported working in the same restaurant for six or more years were workers of color. While they may not stay in one particular restaurant for many years, many workers most definitely stay in the industry for their lifetime. The median hourly wage reported by workers that worked in one restaurant for three or more years was $11.54, compared to $8.50 for workers who had worked in the same location for only one year or less. Additionally, there was a high correlation between workers that reported receiving promotions and the length of time they stayed working in one restaurant. Fifty-three percent (52.9%) of workers who stayed in their restaurant for six or more years received a promotion, while only 26.4% 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, still in the restaurant industry. Thus, contrary to the popular myth that workers are transient and use their jobs as temporary stepping stones on their way to earning more money, the restaurant industry is actually a career choice for many. A fine dining server who has been in the industry for more than five years explains that low wages and lack of access to benefits in the industry sucks because some of us take our jobs seriously. We make the restaurant our career, but we dont [enjoy] the benefits of a career. Of the 582 workers we surveyed, the vast majority reported working 40-hours per week (53.1%), year-round (91.2%), for more than one year in one restaurant (71.8%). 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. Yes they paid overtime, they paid holidays all time and a half. Every paid shift they gave you a paid lunch and at the end of the year if you dont use it you can cash it and they give you cash or you can still use it if you like. I mean it was pretty good Iwas very happy that I worked with them. I left because I needed benefits. Male, 8 years in the industry, Server Our research shows that when workers receive poverty 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 lower wage positions are: Less likely to receive regular raises, promotions and job training needed to move up in the industry. Conversely, workers in living wage jobs are more likely than workers earning incomes below the poverty line, and much more likely than workers earning less than minimum wage, to be promoted within their workplace or when they move from one job to another. Less likely to receive workplace benefits such as employer provided health insurance, or paid sick and vacation days. For example, workers in living wage jobs were more likely than workers making less than minimum wage to have health insurance. More vulnerable to violations of employment laws, more likely to be exposed to unhealthy and unsafe workplaces, and more likely to have to work longer hours in order to make a sustainable living in the industry. For example, more than three quarters (83.3%) of workers earning less than minimum wage reported overtime pay violations, compared to only one-third of workers in living wage jobs (33.3%). Less likely to receive training, such as health and safety training, to perform job duties. Workers earning less than the poverty level are particularly likely to be required to perform jobs without receiving the necessary training.

28. Chapter III 22 TABLE 13: Conditions Reported by Restaurant Workers, by Wage Group Conditions Reported by Restaurant Workers, by Wage Group Less than Minimum Wage Under Poverty Line Low Wage Living Wage Do not get regular raises 95.2% 85.3% 73.3% 89.7% Do not receive paid vacation days 100.0% 88.4% 86.4% 85.6% Do not receive paid sick days 100.0% 93.8% 95.9% 98.3% Do not have health insurance 80.8% 57.6% 49.4% 54.8% Have not been promoted in current place of employment 84.6% 91.6% 68.6% 78.5% Have not moved up in position from last place of employment to current 80.8% 77.2% 69.4% 72.9% Experienced overtime violations 83.3% 55.6% 24.9% 33.3% Worked off the clock without being paid hourly wage 20.0% 35.8% 28.7% 24.1% Did not receive health and safety instruction or training from employer 34.6% 40.0% 31.2% 29.8% Source: Chicagoland Restaurant Industry Coalition survey data Kam, Hong Kong, delivery I came here 5 years ago from Hong Kong and I have worked in the restaurant industry for a year. When I first started in the industry I was excited because I had several different positions as a server. I later saw that there was no reason to be excited I always got paid below minimum wage, at one place I was paid $10 a day plus tips for working 9-10 hour shifts, I have always been paid between $0-$2.50/hr as a server. I decided that this wage was too low and I switched to delivery driver, as a delivery driver I was not paid an hourly wage and only received the delivery charge and whatever tips came from that delivery, I was required to provide my own car and pay for my own gas. When I switched my position I was forced to sign a paper to state that I was not an employee of that restaurant, when I got burned from chemicals on the job and my nail split open I could not ask to get gloves for protection because I had signed that paper, I was forced to bring my own from home. As a delivery driver with no hourly wage I was also forced to do side jobs, I washed the dishes, cooked, and bussed tables, with this extra responsibility I worked over forty hours and only occasionally received $30 a day. I also did not receive a break, workers were not allowed to eat in the restaurant, only occasionally when it was really slow, but since I was delivery I was able to sneak a lunch, I would deliver the food quickly then I would park my car and eat the lunch I had brought myself. The schedule I work changes week to week, sometimes I work three days sometimes four, this makes it impossible for me to plan my life and schedule for anything other than work, the restaurant wants a career commitment without providing me the career benefits. I do not have health insurance, I do not have sick days the boss is always unhappy when people call in sick, and they always tell us things like if you dont come in today dont ever come back. If you dont like working here there is the door, is something we hear daily. All of the workers at the restaurants I have worked in were Asian immigrants and they treated us all unfair, they took advantage of our need to work. I like working in restaurant industry I just want to be treated with respect and I want this job to have career benefits because its my career.

29. C H A P T E R IV Employers Perspectives

30. Chapter IV 24 C H A P T E R IV Employers Perspectives Our interviews with employers in Chicagos 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 Chap- ter 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 green trends in the industry, 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 (58%) of Chicagoland restaurant employers interviewed elect to take the low road to profitability, offering low wages, even while stating preferences for some high road strategies. 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 low road and paying living wages, providing benefits, and maintaining a safe working environment when there is a non-negotiable commitment to doing so. Fourteen (45%) of the 31 employers interviewed reported that they were able to invest in workers by offering higher wages, training, and advancement opportunities, and still earn a profit. Employers taking the low road, however, undermine restaurants following the high road approach.

31. Chapter IV 25 A. Introduction and Methodology In order to obtain a better understanding of factors that drive workplace practices, the Chicagoland Restaurant Industry Coalitioninterviewed restaurant employers in Chicago. With the assistance of students and faculty from De Paul University and other Coalition partners, we conducted in-depth interviews with 31 restaurant employers, including owners and managers, from September 2008 to May 2009. 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 Chicago 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 Chicagos restaurant industry. Overwhelmingly, 100% of the 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 in-depth analyses of qualitative data from employers 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, 22.3% 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 Chicago 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. 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 two central factors that impact their business, workplace, and employment practices - the economy and the greening of consumer demand.

32. Chapter IV 26 TABLE 14: Chicagoland Interview Survey Sample by Attributes Industry Segment Number of Employers (%) Fine-Dini

behind the kitchen door: the hidden costs of taking the low road in chicagoland's thriving...

Health & Medicine

secretary janet napolitano

gross domestic product

entire private sector

nirupama jayaraman design

east bank club

il metropolitan division

food services sector

loyal customer base