Laura Zastrow
When Michelle Nourse moved to Madison in 2011, she took a job working at Taco Bell, where she made $8 an hour.
Although she was earning 75 cents above the minimum wage, it was a grueling lifestyle.
"I'd be there all day, sometimes open to close.
"Working at Taco Bell was just draining. When I came home from work, I was just tired," Nourse says. "I didn't want to do anything but sleep, let alone take care of my daughter."
For a while, Nourse was hoping to move up to management in the chain, and she did get some small raises. But when she was passed over for a promotion, Nourse went looking for another job. Last July, she found one at Culver's restaurant on Todd Drive, just off the Beltline.
Her starting pay rate was $11.50 an hour -- and the job came with complete health, dental and life insurance benefits. The restaurant also recently began offering a 401K retirement plan, with matching contributions from the employer. For the 29-year-old Nourse, who doesn't have a college education, the perks are remarkable -- especially in the fast-food industry.
Although the extra pay and benefits have been great, Nourse says the real perk is the extra time she's able to spend with her 10-year-old daughter, as well as her boyfriend.
"After I get off here, I can go home and cook her dinner and not be tired, not be stressed out," she says. "I've had a chance to teach her how to cook now. I taught her how to make gravy from scratch, spaghetti. We taught her how to fry chicken last night. We made a peach cobbler last weekend."
There's been a lot of debate over whether the federal government and Wisconsin should raise the minimum wage from $7.25 an hour to $10.10 or even $15. Opponents claim such a hike would cause widespread job loss among the working poor, as businesses would be forced to cut costs. Proponents expect a higher wage to lift all boats, putting more money into the hands of the low-income, who would spend it and move more money through the economy.
But while this debate rages on, one local businesswoman is quietly proving that employers can pay living wages and still turn a profit.
Susan Bulgrin owns the Culver's Restaurant where Nourse works. It is the top performing Culver's in Wisconsin. Bulgrin is co-owner of two other Culver's and is working on opening a fourth in the Chicago area. She also recently bought the controlling share of the Echo Lounge with her daughter. She pays above minimum wage at all her restaurants.
Bulgrin does so primarily because she believes it's the right thing to do, and she cares about her employees. But she adds that her business benefits from offering higher wages.
"It pays in the long run because you have people who know what they're doing, they're happy to be here, and you don't have to train [new] people," she says. "Once you get a cohesive group of individuals who understand each other's strengths and weaknesses, you've got it made because you don't have to go out there and search."
"There is a cost to that," she says. "But the cost is far outweighed by the benefit, by having these very skilled individuals coming happily to work."
Working for a living
Susan Bulgrin didn't start out as a restaurateur. She initially was a nurse, running a rural clinic and later working for the state Department of Health.
That early career informs her perspective on running a restaurant. "I saw people working very hard, who struggled," she says of her time as a nurse. "I just realized that there are people in need and that it's not because they haven't worked hard, it's because of the circumstances they're in."
"I had committed that should I ever have any ability to impact [people's lives], I'd do my best to be fair to individuals and help them live a good life for the work they do, which includes not only wages, but also benefits."
Although she enjoyed being a nurse, Bulgrin always had a dream of running her own business. "When I looked at the areas of which I had some knowledge, I realized it was in the hospitality industry."
Bulgrin had worked in restaurants for seven years, helping to pay her way through college, so she knew something about the business. She grew up in Baraboo, and her family knew the Culver family. Everyone she talked to within the community raved about the restaurant. She also liked that the chain is local and involved in the community. So she obtained a Culver's franchise and opened her first restaurant, at Todd Drive, in January 1996.
She kept the commitment she'd made to herself about helping those who work hard. "One of the first things I did was shop around for health care, dental, disability and life insurance, and we've just added a retirement account," she says. "I knew that benefits were part of it, but I also knew that paying a decent wage was critical for people to want to come here and ultimately work hard and have the retention needed to run a successful business. That's why I started people above minimum wage."
Within the year, Bulgrin had hired a 21-year-old named Brian Haugen, who was looking to move to Madison from Viroqua, where he worked at a Culver's.
"I interviewed at a few Madison Culver's," he says. "I found I liked Susan best out of the all the owners. She paid more.... I just felt this was more of a welcoming environment."
He started out as a crew person -- an entry-level employee who learns the basic tasks around the restaurant, including working in the kitchen and the register. Haugen worked his way up through the system. Eighteen years later, he's still at the restaurant, now as its general manager. Haugen and Bulgrin have a breezy relationship, anticipating each other's jokes and stories.
"We both know what each other is thinking," Haugen says. "We have a lot of the same thoughts. You don't want to settle, you always want to keep growing and improve and make this place the best."
Haugen clearly admires his boss. "Susan reinvests in the company and the building and sticks a lot of money into all of us," Haugen says. "She pays very well, pays for insurance, everything."
The pay differs slightly among Bulgrin's restaurants, depending on the co-owners and managers, who all have input. But she pays above minimum at all of them. At the Todd Drive restaurant, workers' starting wages depend on how much experience they have. Teenagers who are 14 to 16 years old and are limited in how many hours they can work each week start at $8 an hour, Haugen says. People 16 to 18 are making $8.50 to $9 an hour, with a few making $10.
Adults start anywhere from $11 to $15 an hour, based on their availability and experience. Managers are paid a lucrative salary, between $40,000 to $80,000.
Mark Greene, a financial adviser with Merrill Lynch, helped set up the restaurant's 401K plan. "It's something I haven't seen for that kind of business," Greene says. "It's something you'd see set up for professional organizations, like a health care group."
Even some of those professionals groups don't match contributions to the plan, he adds. "It just shows that she really takes care of her employees."
"Susan isn't out to get rich," Haugen says. "Susan doesn't come to work and say, 'How much money did I make yesterday?' She could suck all the money out and pay employees minimum wage and just go through employees."
The value of work
Early attempts to pass minimum wages were found unconstitutional by the U.S. Supreme Court. It ruled in the landmark 1905 case Lochner v. New York that an attempt to regulate working hours of bankers was an "unreasonable, unnecessary and arbitrary interference with the right and liberty of the individual to contract."
Some states attempted to work around the court rulings by passing laws requiring employers pay a "living wage," says William P. Jones, a UW-Madison history professor with an expertise in labor.
Wisconsin was one of the first states to adopt a living wage law, in 1913, but it only applied to women and children, "on the basis that they were particularly vulnerable," Jones says. "Supreme Court rulings deemed labor laws void unless they focused on women and children."
That eventually changed when the first federal minimum wage was passed during the Depression in 1938 as part of the Fair Labor Standards Act. The first minimum wage was 25 cents an hour.
It has been raised periodically since, the last time in 2009. Both the federal government and the state set the minimum wage at $7.25 an hour, although tipped employees can be paid as little as $2.13 an hour. Some states have higher minimums, with California, Connecticut, Massachusetts, Oregon, Rhode Island, Vermont, Washington state and Washington, D.C., all requiring $9 or more an hour.
Jones says that for workers, the big problem with the minimum wage is that it's not adjusted for inflation. "So the value of the minimum wage has declined," he says. "People say 'I worked for the minimum wage when I was a kid, and I was fine; I put myself through college on minimum wage.' Those memories forget that the value of the minimum wage is much lower now."
Adjusted for inflation, the minimum wage was highest in 1968, when it was $1.60 an hour -- or the equivalent of $10.71 in 2013 dollars, according to CNN Money. Even the 1956 rate of $1 was worth $8.56 in 2013 dollars -- $1.31 more than today's minimum.
The employment Effect
Whether you believe the minimum wage should be raised or not, you can find an economist to support your views.
"There's a fair amount of disagreement, and it's sharp disagreement," says Christopher Taber, the John and Tashia Morgridge Chair in Economics at the UW-Madison. "I don't want to say hostile, but it's sharp elbows."
Economists used to generally agree that increasing the minimum wage suppressed job growth and led to layoffs. But in 1992, economists David Card and Alan Krueger looked at what happened when New Jersey increased its minimum wage from $4.25 to $5.05 an hour, while Pennsylvania remained at the $4.25 wage.
They found that the New Jersey wage hike slightly increased employment there. The study set off a major debate among economists.
"It is true this remains debated, but I'm not alone in thinking that this study changed the conservation," says Laura Dresser, an economist with the Center on Wisconsin Strategy (or COWS), a UW-Madison think tank.
But Andrew Hanson, an economist at Marquette University, has the opposite impression. "The Card and Krueger paper has pretty well been established that it's not correct."
Dresser did a study for the Center on Wisconsin Strategy estimating that increasing the minimum wage to $10.10 an hour by July 2016 would give 587,000 workers a wage increase. Of these, 57% are women and 87% are above the age of 20.
Meanwhile, Hanson did a study for the free-market Wisconsin Policy Research Institute that paints a different picture. He estimates that although the wage increase would help some low-wage earners, anywhere from 12,000 to 55,000 workers would lose their jobs as employers reduced costs. "Some people will lose their jobs," he says.
The Congressional Budget Office has also looked at the impact, estimating that raising the minimum to $10.10 an hour would reduce employment nationally by 500,000 and that 16.5 million workers would see a raise.
In Wisconsin right now there are about 2.9 million people with jobs -- which is about 2% of the 147 million people employed nationally. That means if the CBO's estimate that 500,000 jobs would be lost is correct, about 10,000 workers here would expect to lose work -- less than Hanson's range of 12,000 to 55,000 jobs. If the CBO's worst-case scenario of 1 million jobs being lost nationally is correct, the job loss in Wisconsin climbs to 20,000 -- at the lower end of Hanson's estimated range.
There is another way of helping the working poor that doesn't involve the minimum wage -- it's called the Earned Income Tax Credit. And it's an idea that is favored by many economists, both liberal and conservative. Hanson is an enthusiastic fan.
This credit is a subsidy for the working poor that fluctuates depending on how large a family is and how much they make. In 2014, a single person who made less than $14,590 could get up to $496 from the federal government and more from the states. A couple with three or more children who made less than $52,427 could get up to $6,143.
"You might pay zero taxes but get this money on top of that," Taber says. "And you don't get it if you don't work."
It's gotten attention from some conservative politicians -- like U.S. Rep. Paul Ryan (R-Janesville). But Gov. Scott Walker shaved $16 million off of the state credit in his 2011-2013 budget. His proposed 2015-2017 budget doesn't change the tax credit.
Taber likes the Earned Income Tax Credit better than the minimum wage. "Not all minimum wage workers are poor. Some minimum wage workers are teenagers with relatively wealthy parents," he says. "Some minimum wage workers are second earners in a family where the family is making a good wage. Some minimum wage workers are single parents trying to raise three children on the minimum wage. The earned income tax credit directly targets that third group."
Getting ahead
When Jackie Doyle moved from Iowa to Madison about six years ago, she applied to work at the Todd Drive Culver's. She grew up in Prairie du Chien, where she'd worked at a Culver's, and figured the experience might bring a higher wage. She boldly asked to be paid $11 an hour.
"Knowing that it was a really busy store, I thought [the pay] would be a little higher, but I was surprised I got what I asked for," says the 36-year-old Doyle.
She is now making $12.50 an hour and says the higher wages make a huge difference in her life. "I got my car loan paid off and some other bills that I had," she says. "It was really nice to be able to do that, because I didn't think I'd be able to get things paid off that fast, because I didn't think I'd be making that much."
Just as important to Doyle, who has an associate degree in arts and sciences, are the generous benefits. "I had to go to the emergency room last week; [I had a] $100 copay, and everything is covered," she says. "I had my wisdom teeth taken out over the summer and all I had to pay was $88.80. It's just amazing.
"The benefits alone are enough to keep me here. Just having those benefits and knowing it's covered -- that's the greatest part."
The higher pay has also meant more security for Nourse. At Taco Bell, she often needed to pick up overtime to make ends meet. But sometimes business was slow, or other workers needed hours, which meant Nourse might not be able to pay her bills. Although Nourse was given raises at Taco Bell, these were often canceled by being put into a higher income bracket and losing public assistance, like food stamps. Her Culver's wages are high enough that she's able to pay her bills without public assistance.
"I can work 36 or 37 hours [a week] here and make the same amount as if I worked four to five hours of overtime at Taco Bell," she says. "I'd have to work a lot harder there to come up with the same amount I'm getting here, but I'm not stressed out as much."
Doyle has followed the minimum wage debate, and although she wants it to be raised, she thinks some of the proposals are too high. She doesn't think that high school kids should be making $10.10 or $15 an hour.
"They're working the job for a different reason than we are," she says. "We're doing it to pay our bills, and they're doing it to make extra money for the weekend."
Bulgrin herself supports raising the minimum wage, but favors a tiered system, where minors would make a lower minimum. She worries that putting adults and teenagers at the same level would force employers to lay off teens.
"If the minimum wages was raised to $12.50 or higher, they would eliminate positions for minors and hire adults for those positions," she says. "That would be troublesome. We have [teenagers] here who come to work so they can help their families pay their bills."
Family first
When Bulgrin walks into a restaurant or business, she can usually tell how well the employees are treated.
"If people are happy in the workplace, they're going to treat you well as a guest," she says. "A lot of it is just behavioral. You see if they're smiling and if they're happy working together."
That's the vibe she tries to create at her restaurants. And it starts with treating her employees with respect.
The high pay and benefits also haven't hurt Bulgrin when it comes to recruitment. "We've never had a situation where we don't have a lot of applications. We are always flooded with applications, which is delightful," she says. "I feel very fortunate that I had people who want to come to work with me, some of those seasoned individuals who had worked at restaurants for a while."
She hates thinking about workers as "employees," and would rather call them "colleagues," for it connotes that everyone is part of the team.
"I have never met a person who walked through this door who didn't have a skill set we could use someplace. You have to look at the individual and determine what they bring to the table," Bulgrin says. "That's a different philosophy from some who are looking for that perfect person. No, you have to say 'how can I work with this person to have them help us?'"
Turnover is very low. Bulgrin delights in telling stories about employees who worked at her restaurant for years and moved on to bigger things. "We recently just had a young man who started in 2000, worked here through high school, UW, got his master's, and just left last month." He's now working as an actuary.
That doesn't mean that the restaurant never has problem employees. They have had to fire people, Haugen admits, for regularly missing work or stealing money.
None of those incidents have made Bulgrin cynical about her workers.
"For anyone going into business, you have to think about what are your priorities. Are your priorities running a good business and taking care of the individuals you work with, or is your priority making a lot of money?" she says. "I believe you can live a very comfortable lifestyle by taking care of those individuals who take care of you every single day. Because obviously I would not be able to run this business if I did not have everyone here who works so very hard."
