Pizza shop that paid ‘fair wages’ closing 2 years after it opened — not enough money to stay in biz

Two years ago, a popular pizza shop in Boston opened its doors promising fair wages to its employees. On Wednesday, Dudley Dough announced it will close at the end of the year, the Boston Globe reported.

A fair wage, also called a living wage, is a wage that is high enough to provide a normal standard of living.

Regulars at the restaurant say they’re losing a community resource and a singular business based on a premise of economic justice and healthy food, according to the Globe report.

What’s the story?

The restaurant pitched itself as “pizza with a purpose,” according to the Globe, the restaurant offered above-average pay as well as culinary and leadership training.

Dudley Dough is an offshoot of Haley House, a nonprofit organization based in Boston’s South End and Roxbury neighborhoods, that provides food and housing to low-income residents.

The shop is popular among residents in the area, but it’s not breaking even and that puts stress on Haley House.

“The challenge for Dudley Dough was to support itself,” Bing Broderick, Haley House executive director told the Globe. “The pizza shop attempted to put a social enterprise model into action.”

An analysis of the business’s operations and trends, the Haley House board determined that it could not continue to subsidize the pizza shop without jeopardizing its own efforts, according to The Globe.

“I don’t think anyone is looking at it as a failure,” said Luther Pinckney, a team leader at Dudley Dough, which is in the Bruce C. Bolling Municipal Building. “It’s an experiment, and some very good things came out of that, such as skill-building for staff and being in this building at this time of gentrification and change in this community.”

The wage battle

A fair wage is just one piece of the social enterprise model that has businesses and employees, and politicians, pitted against each. Other issues include paid leave and other benefits.

Currently, the federal minimum wage is $7.25 an hour and it hasn’t increased since 2009, according to the Department of Labor. Some states and areas have higher minimum wages, with the highest being $12.50 in the District of Columbia. Businesses in states with higher state minimums are required to pay employees at the higher adopted rate.

You probably remember in 2012 when about 200 fast-food workers in New York City took to the streets demanding higher pay.

Outside a Burger King on 34th Street, several dozen workers and their supporters chanted, “How can we survive on seven twenty-five?” the New York Times reported.  Minimum wage in New York state was $7.25 at that time.

New York raised its minimum wage to $8 in 2014. It has incrementally increased annually since. The current minimum wage varies across the state from $9.70 to $13 an hour based on geographical location and, in New York City, employer size. More increases are set through 2021, according to the National Conference of State Legislatures.

Can the fair wage model work?

It depends on so many factors that it’s hard to say. Factors include the size of the business, its location and number of employees.

Last month, Target announced an increase to its minimum hourly wage.

“All employees will be paid at least $11 an hour, starting next month, up from the current $10, and will see it rise to $15 by the end of 2020,” USA Today reported.  The Minneapolis-based chain said the increase also applies to seasonal workers.

The chain’s last major wage increase was in 2016, according to USA Today, when it went to $10 an hour.

“We care about and value the more than 323,000 individuals who come together every day with an absolute commitment to serving our guest,” CEO Brian Cornell said in a statement.

Walmart cashiers start at $9.17, Costco cashier assistants at $12.56 and Amazon fulfillment center workers at $12.42, reported USA Today.

But what about Chipotle’s recent announcement?

Chipotle’s fast-casual restaurant chain is struggling.

Besides its food safety problems and natural disasters in some parts of the country causing setbacks, some say the chain’s biggest problem is its labor costs.

CNBC reported last week that Bank of America Merrill Lynch downgraded Chipotle and cut its earnings targets for 2018 and 2019, citing high labor costs as the company’s biggest issue.

The average hourly wage for a Chipotle crew member is $9.54, according to Indeed.

What’s the solution?

You decide. Many say minimum wage jobs aren’t meant to be a career.

Proponents of fair wages say higher wages increase employee loyalty and yield happier workers. But higher minimum wages can put stress on businesses causing them to close, which puts people out of work.

Dudley Dough is a popular place, according to the Globe, and its employees are being paid a fair wage. However, being popular isn’t going to keep its doors open or its people employed.