Soon after Mainers voted last fall to approve a referendum to raise the minimum hourly wage from $7.50 to $9 in 2017, a sign appeared on the counter at Selah Tea Cafe on Main Street in Waterville.

“The new minimum wage law does affect us at Selah Tea Cafe. I anticipate the only change to mitigate the mandatory increase in expense will be price changes to our menu items,” it read.

The small downtown eatery, which serves tea, coffee and food, raised its prices in phases, culminating in an across-the-board increase of 7 percent – plus 1 percent for other expenses.

Bobby McGee, who owns Selah Tea along with his wife, Rachel, said he’s not against increasing the minimum wage but has to make changes somewhere in his business to make ends meet.

“I feel like my employees could live comfortably around $15 an hour or so,” Bobby McGee said, but added that he isn’t making enough revenue to pay that. “What I would like to do and what I can do, unfortunately, are two different things.”

Other locally owned businesses in Maine are facing the same predicament: How do they make up for a 20 percent increase in wage expenses while preparing for the larger increase coming by 2020?

The initiative passed by voters will raise the minimum wage by $1 every year after the initial hike until it reaches $12 in 2020, when annual raises will be doled out based on cost-of-living increases. It also will raise the wage for service workers who receive tips from $3.75 to $5 in 2017, with annual $1 increases until it reaches $12 by 2024, a plan that some worry will stop customers from tipping servers.

Critics say the wage is increasing too quickly and that the elimination of the tip credit will hurt servers’ earnings rather than help them. Supporters say those fears are unwarranted, and the increase already is helping the workers who hadn’t seen a raise in eight years.

Bobby and Rachel McGee pose Thursday at their restaurant, Selah Tea Cafe, in Waterville. Bobby McGee says their staff deserves a living wage, but the minimum wage increase has forced them to raise their prices. Staff photo by David Leaming

“What we have seen is an immediate boost to a lot of paychecks,” said Mike Tipping, communications director for Mainers for Fair Wages. “When you put money in the pockets of people who are just scraping by, … they’re going to spend it locally.”

Putting the wage increase together with the tax increases associated with it, McGee at Selah Tea figured out how much his expenses were going to increase – and what he would have to change to keep up.

McGee wasn’t against an increase in the minimum wage, but like others, he thinks the proposal was too much, too soon.

“I’m excited that the staff makes more money,” he said. “I felt it was definitely too aggressive, too fast; but at the same time, there’s no time like the present.”

McGee employs 12 people, four of whom were making $7.75 to $8.50 an hour before the increase took effect. The rest were making $9 to $11 an hour.

He increased everyone’s wages Jan. 1 to maintain the pay scale, he said, and is now nervous about the coming years and subsequent increases. If he can’t grow the business, McGee said, how will he offset those expenses?

‘PEOPLE SHOULD GET A LIVING WAGE’

Joe Giardello, the owner of Jorgensen’s Cafe on Main Street in Waterville, said the first increase won’t really affect his business. Of his 15 employees, two were affected by the new law – their wages increased by 50 cents per hour.

Giardello paid his employees $8.50 to $14 per hour, he said, and he recently started an incentive program to give regular $1 raises based on sales.

At this point, he’s not planning to raise prices. Instead he’s looking at other ways he can make up the difference, such as staffing more efficiently and choosing different vendors to lower his cost of goods, which always has been “a little high.” But as the minimum wage continues to increase, he’ll continue to review the business’s finances. “I’m trying to see how it will impact things,” Giardello said.

On average, he’s able to pay $2 more than the minimum wage, but he said he’s not sure he’ll be able to do so once the minimum is $12.

Waitress Bonnie Hollander checks a table at the Liberal Cup. Servers’ base pay will rise to $12 an hour by 2024, but some fear tips will decrease as a result. Staff photo by David Leaming

Still, Giardello said he’s in favor of the increase. “I believe people should get a living wage,” he said. “My primary concern is the implementation of it over a four-year period, where it is jumping roughly $4.50 over a four-year time frame.” “This is the first wage increase in eight years, and prices at businesses have gone up every year,” Tipping said.

Data don’t show that paying low-paid workers more causes a significant price increase, he said, but the difference in the workers’ lives is “huge.”

Kathy Rondone, 73, of Augusta said she started working a minimum wage job with Spectrum Generations, a federally funded organization, because Social Security benefits didn’t cover her costs. Her husband, who has Alzheimer’s disease, is in the Maine Veterans’ Home.

Before, Rondone had to choose between cutting her food and gas expenses for weeks or not getting her car fixed. “I went for weeks with it leaking power steering fluid,” she said.

$1.50 RAISE: ‘A LITTLE BRIGHT SPOT

Now she makes an extra $120 each month, which has helped her afford new windshield wipers when snowstorms hit, as well as shots for her dog.

“To most people, ($120) is nothing. It’s not a big deal,” she said. “To me it’s a big deal. It’s taken a load off my shoulders emotionally, stress-wise.”

Rondone said the extra money she makes goes back into the community – her local mechanic, veterinarian and pharmacy.

While she’s worried about what will happen to Social Security and Medicare as well as dealing with recent family tragedies, this $1.50 increase has been “a little bright spot” for her.

McGinley Jones said the benefits a higher wage provides to people in communities around Maine, such as Rondone, are what people should focus on.

“There’s a lot of fear around this issue … but it’s not actually based in fact,” she said.

Jones owns two businesses in Lubec with her husband, Gale White. They’ve owned the Sunrise Cafe and Bakery for four years and the Lubec Brewing Co. and Taproom for nearly two, and servers at both are paid $10 per hour.

A living wage in Washington County is $9.96 per hour, Jones said, and after running the numbers themselves, they realized no one could live on less than $10 per hour. Adding all basic monthly costs up for the winter months, Jones said there’s only about $30 left over with a $10 hourly wage, but their servers make tips on top of that.

“I used to be a server, and it’s an incredibly difficult job, because your pay is directly based on the person you’re serving,” she said. “To have someone’s mood or their whim or their personality dictate someone’s pay isn’t right.”

It’s important to Jones and White that they pay their employees the living wage, especially since they live in such a small community, she said. While they could make more money paying the subminimum wage, they choose not to, she said, and they’re still operating in the black.

“Our business model is set with the precedent that if we take care of our employees and take care of our customers, then the money we need to exist will come, and that’s proven to be true,” she said, adding later, “If you have a sandwich and your friend’s hungry, you give them half, right?”

Jones also said their servers still get tipped normally, even though their small community knows they’re paid a fair wage.

“If it’s possible to do this in Lubec, it’s possible to do this anywhere,” Jones said.

Tipping points to states that don’t have a separate minimum wage for servers but still have thriving restaurants, such as Minnesota, California and Montana. Soon, he said, Maine will have data on how the change so far is playing out.

As of May 2015, the Bureau for Labor Statistics said Maine servers’ median hourly wage with tips was $9.06. The change is also gradual, which is why more than 60 restaurants and 600 small businesses in the state endorsed the referendum, Tipping said. However, some say the stakes are higher for servers, so they’re pushing to change the legislation.

Some people in the industry disagree with bureau’s estimate and say that servers make much more than $9 an hour with tips. When they get a $12 minimum wage, some are afraid patrons no longer will feel obligated to leave tips, which will hurt their incomes.

A SMALL DIP IN A SERVER’S TIPS

Jarron Conti, 27, a server at Bucks Naked BBQ in Freeport, said that over time the effect will be “detrimental” to servers. He estimates that he makes about $25 per hour with tips.

“That’s what I live off of. That’s how I pay my mortgage. That’s how I pay my car payments,” said Conti, who also works another job full time, though he said he makes more serving.

Conti also said he’s noticed a small dip in his tips over the past few weeks. While he usually makes about 20 percent, lately it’s closer to 18 percent.

“Anybody in the restaurant industry, especially a tipped server, isn’t into this,” said Casey Hynes, front-of-house manager at The Liberal Cup, a restaurant and microbrewery pub in Hallowell.

While Hynes wouldn’t say how much his 20 servers make per hour with tips, he did say that they make “more than any other member of the staff.” “There’s not a server out there that’s any good that’s making $7.50 an hour,” he said.

Hynes said the increase in the servers’ minimum wage means the business has less money to spend on non-servers – such as the chefs – which strikes him as “a little backwards.” The restaurant hasn’t raised prices to deal with the increase, Hynes said, but “nothing’s off the table.”

Greg Dugal, director of governmental affairs for the Maine Restaurant Association, said that while the association wasn’t against a minimum wage increase, it was against the elimination of the tip credit — the amount between what a server is paid and the minimum wage that should be covered by tips. “It just increases the cost of business for small restaurants,” Dugal said.

Madeline St. Amour can be contacted at 861-9239 or at:

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