Pittsburgh City Paper
Close

The restaurant industry is now the Pittsburgh region’s biggest employer. Can anything be done to ensure that wages grow too?

“Raising wages is going to provide a boost in the local economy and that is important.”

Ryan Deto Oct 11, 2017 4:00 AM
CP photo by Jake Mysliwczyk
Bar Marco co-owner Justin Steel

With Pittsburgh’s economic rebirth fully underway, new nicknames have been emerging to replace its “Steel City” moniker. One of the most popular is “Roboburgh,” a nod to the city’s growth as a tech, robotics and artificial-intelligence hub. But a more accurate nickname might actually be Restaurant-burgh. 

Restaurants and bars are now providing the most jobs of any industry in the Pittsburgh region, according to Idaho-based labor-market analytics firm Emsi. (Emsi broke down the region’s job numbers according to the North American Industry Classification System, used by the U.S. Bureau of Labor Statistics.) From 2010-2016, the restaurant-and-bar industry added more than 7,300 jobs and surpassed local government as Pittsburgh’s top job-provider. In 2016, the Pittsburgh region had 87,300 restaurant jobs. 

Other industries providing large amount of jobs fall into Pittsburgh’s oft-cited “eds-and-meds” and tech sectors, namely educational services, hospitals, and scientific and technical services. But these large industries, which have also seen significant growth, have one major difference with the restaurant industry: earnings. Jobs at hospitals, schools, and tech and science firms all pay well over the Pittsburgh region’s 2016 average income of $32,582, with tech jobs doling out a 2016 average of more than $96,000 per job. 

On average, by contrast, restaurant-industry jobs pay $19,330 (not including tips), the lowest of any industry in Pittsburgh. This discrepancy has led labor unions and workers’-rights groups to demand higher wages and additional benefits for employees of the area’s restaurants and bars. Some restaurants have even taken it upon themselves to provide better wages. Pittsburgh City Council has attempted to assist these workers too, but has run into legal opposition backed by restaurant-industry lobbying groups. All the while, statisticians hint that Pittsburgh could be due for even greater restaurant growth in the near future. But broad-based benefits for the workers of this industry have yet to materialize. 

Even with the restaurant industry now offering the largest number of jobs here, says Emsi economic-development director Josh Wright, Pittsburgh’s restaurant growth is actually quite low compared to other metro areas. The added 7,300 jobs accounted for only a 9 percent increase from 2010-2016, while most metro areas saw at least a 20 percent increase in restaurant jobs over this same time period, according to Wright. 

But Wright says that the relatively low growth of Pittsburgh restaurant jobs might not remain so in the future. He says that other industries here are growing faster, and that that growth could lead to more growth in the restaurant industry. For example, tech and science firms added 12,200 jobs from 2010-2016, and now provide some 78,000 jobs in the region. Wright says workers in those tech jobs, with their higher-than-average salaries, could feed more demand for eating and drinking establishments.  

“Pittsburgh could be due for more,” says Wright. “The theory suggests as you bring in more outside income to the region, the more discretionary income people will have. And the more they will spend at restaurants.”  

Wright says that Pittsburgh’s restaurant growth, despite its slow pace, is encouraging because most of the growth consists of full-service restaurants jobs, as opposed to jobs at fast-food establishments or take-out joints. The Pittsburgh region added about 4,200 full-service restaurant jobs from 2010-2016, compared to about 1,800 jobs at limited-service establishments (as well as a handful of other jobs at food trucks and shacks) over the same time period. 

Wright says that full-service restaurants tend to compensate their employees better, and statistics back him up. In 2016, full-service workers earned $21,000 a year, before tips, compared to $15,700 a year for limited-service workers. 

Bar Marco was one of those full-service restaurants that has opened since 2010 and it is one that’s unusually focused on providing good wages to its employees. The Strip District restaurant made national headlines in 2015 when it decided to adopt a no-tipping model, with all restaurant employees making at least $35,000 a year, with paid time off and health insurance.

Bar Marco co-owner Justin Steel says he doesn’t regret converting to a no-tipping model, and he believes it has actually helped his restaurant succeed. 

“Why have we been successful? It came down to our employees,” says Steel. “This is what they want to do as a career. It has enabled us to be a lot more efficient and do our jobs better.”



Noteworthy, too, is the success of Dinette, in East Liberty, where chef-owner Sonja Finn has been paying her employees a living wage for years, while racking up restaurant awards.

Steel says that since he opened up Bar Marco in 2011, he has seen Pittsburgh’s restaurant industry continue to grow, especially the past couple of years. That growth, he adds, means it’s not always easy to find the best employees, and he’s glad his restaurant offers an incentive to attract the workers that not many other restaurants match. 

In October 2016, Finn told the Pittsburgh news website The Incline that her wages have helped retain staff, when other restaurants have had trouble filling vacancies.

Since Bar Marco started its no-tipping policy, Caselulla, on the North Side, and Dinette have adopted similar policies. Steel says it’s important that his employees feel working at Bar Marco is a career and not a job, and that his restaurant has avoided higher turnover rates because of this.

But working at restaurants like Bar Marco isn’t the only way for restaurant-and-bar employees to make good wages. Even though tipped servers typically earn only the minimum wage of $2.83 an hour, some restaurant jobs can be quite lucrative. In 2016, for instance, Jared Lordon, manager of Social at Bakery Square, in Larimer, told the Pittsburgh Post-Gazette that because of tips, most of his servers “make on average $20 to $25 an hour.”

However, there are still plenty of restaurants in the area where good earnings are hard to come by. Bobbi Linskens, a server at Eat’n Park in Belle Vernon, says that some nights she can make $60 in tips, but on slower nights, she might only take home $20 in tips. She works part time now, but even when she was full time, it wasn’t uncommon for her to make $500-600 every two weeks, after taxes were taken out and tips were included. 

Linskens, who has been working at Eat’n Park for about six years, says she hasn’t seen many benefits from the growth in Pittsburgh’s restaurant industry. “I have not seen any better pay or better working conditions since I started working here,” she says. “It really hasn't changed much, feels like I am just working harder if anything.”

Linskens is a member of the labor-rights group Restaurant Opportunities Center in Pittsburgh. She notes that while servers at some restaurants can make decent wages when tips are included, many restaurant workers, like cooks and dish-washers, don’t share in tip income. 

“Ultimately what I would want is to see a living wage for everyone,” says Linskens, “and see a fair wage of $15 an hour.”  

But organizations like the Pennsylvania Restaurant & Lodging Association believe that increasing restaurant employees’ wages will hurt restaurants, and could cost jobs. Requests to the PR&LA for comment on this story were not returned, but a 2014 PR&LA study says the state could lose 31,000 jobs if Pennsylvania increased its minimum wage to $10.10 an hour. 

“Raising wages is an admirable goal, but the evidence suggests that accomplishing this goal with a blunt wage mandate could do more harm than good,” reads the PR&LA study.

But Steel, of Bar Marco, says such statements tend to serve the interests of chain restaurants and hotels (which make up most of PR&LA’s membership), more than small businesses like his. Before owning Bar Marco, Steel worked as a bond trader. He says that financially, offering his employees higher salaries has “not been bad for business or our bottom line.” 

Pittsburgh City Councilor Corey O’Connor (D-Squirrel Hill) also recognizes the powerful economic force that restaurants have become. In 2015, city council approved legislation championed by O’Connor to provide paid sick days to part-time workers. PR&LA and some area restaurants challenged the ordinance, and it was blocked in state courts. (The case could potentially be appealed up to the state Supreme Court.)

Regardless of whether city council can get paid sick days for restaurant workers, O’Connor says the city must continue to ensure that employees in this industry get better working conditions. “We pushed the envelope and we rightfully should,” says O’Connor. “I grew up in the industry; I know what they went through on a day-to-day basis.” 

O’Connor says raising restaurant workers’ wages is important not just for the employees, but also for owners and the region’s economy overall. “When you get the right employees and you get less turnover, owners save money in the long haul. Raising wages is going to provide a boost in the local economy, and that is important,” says O’Connor, noting that workers are likely to spend their extra income at other businesses in the area.

But raising wages isn’t up to city leaders. State laws restrict how much the city of Pittsburgh can do with local-wage laws, and the Republican-controlled state legislature has little interest and, given the current budget stalemate, ability to increase the minimum wage. O’Connor says this is frustrating given that city leaders believe they know what’s best for the local economy. 

Wright, of labor-market analytics firm Emsi, agrees. He says Emsi has studied more than 370 metro-area economies in the U.S. and each one is unique and nuanced. “The U.S. economy is so huge that you can’t make broad assumptions about it,” says Wright. “When you dive into each [Metropolitan Statistical Area], even they break down by each town and neighborhood.”

Wright says that each region’s economy tends to be “pretty self-sufficient,” and that giving more control to municipal officials could bring economic benefits, because federal and some state governments are proving ineffective at passing laws that adapt to changes in the economy.

“There has been an upsurge in giving more control to mayors, especially with gridlock at the national level,” says Wright. “A lot of what has been done happens at the local level.” 

In the meantime, O’Connor says the city can increase efforts to appeal to restaurants, bars and other businesses like Bar Marco that are dedicated to providing their employees good wages. He cites his ordinance that provided free advertising for businesses that provide all their workers at least a $10.10-an-hour minimum wage. Local craft distillery Wigle Whiskey took advantage of this program in 2016. 

“Maybe it is free promotions, maybe it is tax shelters,” says O’Connor on how the city can convince service businesses to offer good wages. “The money we offer is going to come back to us. Why not offer those businesses incentives? We can be a leader to show that Harrisburg can do this too.”