Zingerman’s founder Paul Saginaw on his time with Obama, the importance of raising the minimum wage, and why business owners should invest in their employees instead of their lobbyists

Early last winter, when the National Restaurant Association issued a formal statement about how raising the minimum wage would kill their industry, Paul Saginaw, one of the co-founders of Ann Arbor’s iconic Zingerman’s Deli, felt compelled to respond, and argue in favor of raising the federal minimum wage from $7.25. “We would be irresponsible employers if the jobs we provided could not support housing stability and health security,” Saginaw said in an op-ed that ran in Detroit News. “A living wage is the path to a living economy and the antidote to the current suicide economy trajectory we find ourselves on.” For this reason, Sagninaw added, Zingerman’s management is “motivated to gradually raise wages to a ‘thrive-able level’ for all of our lowest-paid employees across the board.” And, perhaps not surprisingly, by coming out on the side of America’s lowest-paid workers, Saginaw has been pulled into the national debate… culminating in a meeting a few days ago with President Obama at Zingerman’s. Curious as to how it all went down, I reached out to Paul and we met up for dinner in Ypsi to discuss the various state and federal campaigns underway to raise the minimum wage, and his ever-expanding role in the fight to make it happen. Following, with his approval, are my notes.

[For those of you unfamiliar with the current initiatives aimed at raising the minimum wage, you might want to begin by reading the background material that I shared a few days ago.]

WHAT SET EVERYTHING IN MOTION? HOW’D YOU GET INVOLVED WITH THE MINIMUM WAGE DEBATE?

Everything started a while ago. I wrote an op-ed piece. I wrote it for Crain’s, but it ran in the Detroit News. The Restaurant Association had put out a piece about how raising the minimum wage would be bad for business. So I thought, “We’ve got an iconic business and it might mean something if I came out and said, ‘This is bullshit.’” I sent it to the people at ROC, the Restaurant Opportunity Center, in Detroit, and asked them to get it to Crain’s, and they must have sent it out to a few places. It ran in the News and got picked up elsewhere. So someone at Business for a Fair Minimum Wage must have seen it. They contacted me and said, “Hey, thanks for doing this. We’re working really hard to get an audience with the Secretary of Labor, Thomas Perez. Would you be willing to come to Washington?” And I said, “Hell, yeah. I’ve got friends there.” My friend, who owns the restaurant Busboys and Poets was running for Mayor of D.C. at the time… He ended up losing in a run-off… So I got to see him and visit my friends at Ben’s Chili Bowl.

SO, THAT LOCAL OP-ED LED TO A MEETING WITH THE SECRETARY OF LABOR?

I’ve now gone to D.C. twice. The first time was to meet the Secretary of Labor, who’s a wonderful man. Very engaging. He’d had groups of Republicans in to meet with him, and they’d told him why they thought that raising the minimum wage was a bad idea. But he wanted to hear from people who actually ran businesses. He wanted to know, “How can you have such a different perception of what raising the minimum wage would do?”

WHY’D YOU TELL HIM THAT YOU PAY MORE THAN THE CURRENT MINIMUM WAGE?

I gave him the business reasons. I mean, I do it because I think it’s the right thing to do, but there are compelling business reasons to do it also. It lowers your costs from the the standpoint of labor. And it raises the quality of your service. It allows you to have people who are more engaged. They’re not focused on how to get to work every day. They’re not worried about how their brakes are bad. They’re not thinking, “Please don’t pull me over, because I don’t have insurance.” They’re not worried about getting in an accident because they don’t have medical coverage. They’re also going to steal less. And they’re going to be more involved. And, for us, it’s part of a much bigger deal. It’s not just about wages. We’re also an open book company, and we’re sharing the profits.

AND, A COUPLE OF MONTHS AFTER MEETING THE SECRETARY OF LABOR, OBAMA’S SHAKING HANDS AT ZINGERMAN’S. DID YOU KNOW IN ADVANCE THAT HE’D BE COMING?

So, I knew that he was coming to Ann Arbor, and that I’d be somehow involved. The only thing I didn’t know was that he was going to eat at the deli. I knew that he knew what I’d done, and that they were connecting the dots. So I’d been in touch with different staffers at the White House. They called me. I’d get an email and it would say that I should be ready to get a phone call at a certain time. That’s how they do it. So they said, “You’re going to have a special ticket, and be at a meet and greet.” And that was how it started. And I said, “OK, you gotta get a ticket for my wife or else a 38 year old marriage will come to an end, and the blood’ll be on your hands.” And I said, “Look, there are other businesses in Ann Arbor where the owners have signed this petition. You’ve got to reach out to them.” And I gave them the list. And I called Matt and Rene Greff, and they hadn’t signed it, and I said, “Please sign it, I’m working on getting you a ticket.” And the White House people, instead of focusing on business people, picked two minimum wage workers from Detroit to meet and have lunch with the President, and I’m like, “Guys, this is why the Republicans kick our ass.” I told them, “You need to have him be up there with business people, not just a lot of students who are already in love with him. Get people who own businesses who have said, ‘This is a good idea’.” I couldn’t get tickets for anybody, though.

SO, NOT EVEN A HINT THAT HE’D BE COMING TO ZINGERMAN’S FOR LUNCH?

They called a couple days before, the White House did, and they said, “Hey, this is what’s going to happen. We want you and your wife at the deli, out in front, at 12:45. A White House ‘policy team’ is going to come, and you’ll have a kind of staged dialogue with them, and there will be some press there.” So I said, “OK, should I have a spot for them inside? Are they going to eat? Do they have a lot of time?” And the person I’m talking to says, “We’ll send you more details as we know them.” I should have known then (that it wasn’t going to just be a policy team). But you’re excited, you know? These kinds of things don’t happen all the time. So you’re not connecting all of the dots. So, then, I’m out there, waiting, and I get a text. “We’re five minutes out.” And then three vans pull up, and all of these Secret Service guys get out. And then the person I’ve been dealing with comes up and says, “The President has decided that he’ll be eating lunch here, if you want. You’ve got to make a decision right now. Here’s the Chief of Security, and he’ll explain it to you.” And the three young adults that were there… they didn’t know that they were going to be having lunch with him. One of them had been picked to introduce him at U-M. And the other two were minimum wage workers from ROC, in Detroit. They get all excited, and they start to pull their phones out. And she says, “Give me your cell phones right now. I’ll give them back to you afterwards.” And she says to me, “Tell your staff not to get on social media. If people start showing up, we’ll shut it down.” So the Chief of Security says, “All your customers who are here can stay, but they have to agree to be wanded, and they have to agree to stay until after he leaves.” I don’t think anybody left. Probably some people were a little unhappy, though, if they stayed, because it took a while… Maybe they had a job interview or something… So then you go, “Wow. This is kind of cool.” And they say, “We’ve got to see the person who will be taking his order and the person who’s going to be delivering it to him.” Then there are these two guys who look like all of the other security guys, but they’re from the Navy, and they’re the food security team. And they go into the kitchen… I think they’re more looking at sanitary stuff… And there’s an ambulance there… And I said to the guy making his sandwich, “Luis, don’t disappoint me… Don’t fuck it up.”

WHAT DID YOU TALK WITH OBAMA ABOUT?

When he comes in… They kind of have a script that they want you to run. But, as soon as he walks into the deli, he starts going behind the counter. He’s very personable. And easy going. And graceful… I said, “Welcome to Zingerman’s, Mr. President. I really hope you’re hungry. Do you know what you want? Do you need any help?” And he says, “No, no, I had the menu in the car. I did my homework.” And my wife Lori said, “Mr. President, I want you to know that every day you and Michelle are in the White House is a gift that I’m grateful for.” And he goes, “That needs a hug. Can I hug you?” And he gives her a big hug. And I said, “I’ve gotta’ say, I got a little taste of what it’s like to put yourself out there. You know, when I went out and met with the Democratic Steering Committee about this, there was an article. And I got a thousand comments, and only two of them were favorable.” And he said, “Really, you read the comments? Don’t ever waste your time reading the comments. I never read them.”

AND THEN HE GOT A REUBEN?

Yeah. So, he ordered. And then they were going to go upstairs to eat. Like I said, they’d picked out these three young people to eat with. But, before he goes upstairs… And you know that two or three days before they must have come in and scoped the whole thing out… They had two Secret Service agents at each door, one the inside, and one the outside. And, when the motorcade was pulling away, and I’m looking out the window, you start seeing the snipers coming down… But, before he walked upstairs, in the south dining area, where the garage doors go up, he walked in there and went up to every single customer.

I SAW QUITE A FEW PHOTOS FROM HIS VISIT TO ZINGERMAN’S BUT I DIDN’T SEE YOU IN ANY OF THEM.

My interest is the work. The fact that he’s there is thrilling, but I wanted our staff to be there, and enjoy it. I wanted him to engage with them.

WHAT DO YOU SAY TO THOSE WHO BELIEVE THAT RAISING THE MINIMUM WAGE WILL KILL THE ECONOMY?

The minimum wage isn’t really an economic issue at all. There’s no legitimate economist that believes that raising the minimum wage is going to slow down the economy, or job growth. It’s only a political issue. No one has shown any real study to the contrary.

HOW DO YOU RESPOND TO THOSE WHO WOULD SAY, “SURE, ZINGERMAN’S CAN PAY ABOVE MINIMUM WAGE, BUT THAT’S BECAUSE THEY CHARGE $16 FOR A SANDWICH?

People think that, because we charge what we do for a sandwich, we can pay more. What they don’t really know is that our margins are so much smaller than a McDonalds, or at a pizza place, or… You know what I mean?

Also, you know, it’s just the right thing to do. People worry about whether or not the chicken had a good life, but do they give a shit about the dishwasher? If they do, they should support this… And these aren’t just kids that are working for minimum wage… And it’s not a low-skill job. People work really, really hard in this industry. The bottom line is, if you come to work and you work full-time, shouldn’t you at least be able to meet your basic needs? If you can’t, we’re going to have food wars. We’ll have civil unrest. Why can’t they see that?

CLEARLY THE REPUBLICANS WILL KILL THE BILLS BEING CONSIDERED IN THE LEGISLATURE. WHAT IF WE WERE TO GET IT ON THE BALLOT BEFORE THE PEOPLE OF MICHIGAN, THOUGH?

If the Raise Michigan campaign is successful, and it gets on the November ballot, it would pass, absolutely.

WERE YOU CONCERNED ABOUT COMING OUT AND TAKING A PUBLIC ROLE IN THIS FIGHT? DID YOU THINK THAT IT MIGHT HURT ZINGERMAN’S BUSINESS?

The only concern I had was my obligation to my partners. I could go out and say, “This is how I feel,” but that’s not going to work. The listener believes that I’m speaking for the whole Zingerman’s organization. So I had to get the proxy of my partners.

HAVE THERE BEEN NEGATIVE RAMIFICATIONS?

The emails pour in, but I don’t believe so. They come in through the website, and they go to Zingerman’s Mail Order, because that’s at the front end of our portal. There’s some positive, but it’s almost all negative. On Facebook, people are more positive. They’re identified, and, as a result, there’s less of a tendency to be a total asshole. But people send emails saying, “You should be ashamed of yourself for letting that Muslim king piece-of-garbage politicize your restaurant. We’ve always enjoyed coming there, but we will never step foot in there again.” Most of them aren’t really customers. Sometimes they are. I say, “Hey, you know, there’s a lot of up-side and down-side to the capitalist system, but certainly a big part of the up-side is that we all have our own money, and we’ve got a lot of choices as to where we spend it. I appreciate your point of view, and I’ll miss your business.” Most of those emails have to do with abortion, though, and not the minimum wage. We’ve always been public supporters of Planned Parenthood. And every year that starts… They all have a script when they call… I always answer the first one.

YOU MENTION THAT, WITH ZINGERMAN’S, IT’S ABOUT MORE THAN JUST HIGHER WAGES. CAN YOU GIVE ME AN EXAMPLE OF WHAT ELSE YOU DO FOR YOUR EMPLOYEES?

Well, we have a community chest. Five-percent of all of our profit goes into an emergency relief fund for our employees. So, if you’re experiencing some financial crisis that isn’t the direct result of your fucked up behavior, we have a way to help. So, if it’s like, “I got really drunk and ran my car off the road, can you help me buy a new car?” We’d say, “No.” But, like, if your sister is dying in California, and you need to be there, to work with her through her death, and you don’t have enough paid time off, and can’t even afford a ticket out there… Then, we might be able to help… Or, “My spouse has been unemployed for 18 month and they’re going to foreclose on our house.” Most people who get into trouble, it’s because they were sick, or they had a sick child, and had to go to an emergency room. And now they’re $5,000, $10,000 or $15,000 in debt. They’re never going to wake up in the morning and find an extra $15,000 on the table. So that causes them to start making bad choices.

HOW DOES THE COMMUNITY CHEST WORK?

I have a coworker, Lynn Yates, who administers the community chest. She does the intake. So you would come to her, and she’d have you fill out an application. If you’re going to ask for assistance, we’re going to want a lot of information. You’re opening a door. And we’re going to step in, and it’s going to get personal. We don’t just want to assist in this crisis but we want to help get you on firm ground so maybe this doesn’t happen again. So, she does the intake, and she’s also aware of all of the agencies out there. She know what social services are out there, and how to access the safety net. Then I go over them with her, and, if they’re $750 or under, we can make the decision. If it’s over that, there are two other partners who are on the selection committee, and that rotates. They’re two year terms, and they’re staggered, so one of the two people is replaced each year. And we have a 24 hour turnaround. And we do it over email. There can be payback, but it’s structured as a gift. It goes in your W2 as salary. We’re not a private foundation, so we have to do it that way. But, if you’re in that position, you’re not really paying much in the way of taxes anyway. Or it could be a loan with very, very favorable terms. We charge what’s called the “allowable federal minimum,” so that it’s legitimate with the IRS. And we do payroll deduction. Or, like I said, it’s gifted.

WHAT’S THIS TAUGHT YOU ABOUT YOUR EMPLOYEES?

You have opinions about people. You think, because they don’t have money, that they make all of these stupid choices, that they’re spending their money on cable, and on this, and on that… My experience has shown that the reality is that they’re very aware of where every dollar is coming from and where every dime goes. You can’t get through the day without knowing that… We have classes where people can learn how to make a budget… for the first time in their life, sometimes.

HOW’D YOU COME TO THE DECISION TO RAISE WAGES?

When you do that budget with people, you realize that they’re fucked. When they’re bringing home this amount of money, and they have these expenses, which aren’t extravagant… they’re almost bare bones… you realize pretty quickly that it’s not sustainable. It could be that there was a divorce, or an accident, or student loans, or whatever it is, that got them into this position. And we really discovered that a modest increase in salary could make a difference. That’s when we really started to raise our entry level wage… We saw that you could make a pretty big difference in a lot of lives. That was eye opening.

Wages have been stuck, you know? If you take into account inflation, people are making what they did in the ‘50s and ‘60s. So you have the middle class dripping down, sliding down, into the poorer class. And the wealth is just being concentrated and concentrated at the top. And, for some reason, these people at the top need more. And they feel that they have a lot at stake. And, now, with the Supreme Court decision allowing unlimited campaign spending, it’s totally fucked. It’s insane.

WHERE’S YOUR ENTRY LEVEL WAGE NOW, AND WHERE WOULD YOU LIKE TO SEE IT?

Right now, our entry level is at $9, and we want to get that to $11 by next year. Are we’re really shooting for around $14 as entry level.

WHAT ABOUT YOUR TIPPED EMPLOYEES AT THE ROADHOUSE?

The servers are paid the tipped minimum. But they’re making $18 to $24 an hour at the Roadhouse. We brought forward the idea of becoming a non-tip restaurant and they revolted. But we might be able to revisit it in the future, as more new employees come in.

IS $10.10 A “THRIVABLE” WAGE?

No, not in Ann Arbor… Here’s the thing you have to understand with Zingerman’s, though. Our employees have a very good health insurance plan too. For single coverage, it costs around $15 a month out of an employee’s check, with the company picking up $335, or something. Then there’s gain sharing too.

HOW DO YOU DEFINE “THRIVABLE”?

We couldn’t, so we changed from “thrivable” to “wages up.”

IN THE WAKE OF THE PRESIDENT’S VISIT, WHEN THE HUFFINGTON POST DECLARED ZINGERMAN’S “THE BEST DELI IN THE WORLD,” DID YOU SEE AN UPTICK IN BUSINESS?

Yes. When the word went out that the President had eaten at the deli, and that he’d said that the reuben was “killer,” we started to get a lot of mail-order activity from people who had never heard of us before. And I don’t we experienced a local hit. The people who are yelling at us aren’t our customers. For them, it’s just one more thing to scream about.

DOES THE CRITICISM, EVEN THOUGH IT’S NOT FROM YOUR CUSTOMERS, CAUSE YOU TO DO ANYTHING DIFFERENTLY?

It reminds me that I have to keep trying to be a better employer. When you put yourself out there, you certainly don’t want it to come out that you’re a hypocrite. And I like that. It really forces you to be a good employer. It forces you to look at everything you’re doing. Because you’re saying, “We’re doing this, you can do it too.”

WHAT KIND OF CRITICISM ARE YOU HEARING?

People are saying, “Yeah, Paul Sagnaw is doing this because he wants to force his competitors out of business.” (Laughs.) …What are you talking about? We work so hard to force out competitors out of business that we teach our systems to everybody.

The first time I went to Washington, an article came out. I don’t even know how MLive got the story. They must have had a Google alert set or something, because I didn’t announce that I was going. So, quickly, three articles came out, and that generated a little over a thousand comments. I think that four were favorable. Rick Strutz, one of the managing partners at the deli, did some sleuthing, and went through it, and, at that point, 9 to 11 people accounted for 80% of it or something. They just go back and forth…. My wife has had training in compassion. I think I’m compassionate, but she’s actually gone to this training, about how to be present, and have a compassionate heart. And I tried to follow her example and turn that frustration into compassion.

I imagine the person who’s saying this stuff, and I believe they’re miserable, and they have a miserable life. And I tell myself that I should feel sorry for them. I picture somebody out of shape, with their boxer shorts on, and their t-shirt is torn and not quite covering a hairy underbelly. And they’ve got a big Cherry Coke slurpee, and a really big Costco-sized bag of Cheetos, and the orange cheeto dust is all over their face and their chin and their hands, and they’re sitting there at their computer, figuring out who to hate.

IT’S LIKE WHEN PEOPLE LEAVE COMMENTS ON MLIVE ATTACKING TEACHERS FOR THEIR “GOLDPLATED” BENEFITS INSTEAD OF FOCUSING ON THE CEOS WHO ARE MAKING BILLIONS. IT’S EASIER TO FOCUS YOUR ANGER ON YOUR NEIGHBORS.

The right wing is very, very good at getting their message across. They’re very good at getting their people to vote against their own interests. The Democrats just aren’t that good at it.

SO, WHAT HAPPENED AT U-M, AFTER OBAMA LEFT ZINGERMAN’S?

Lori and I had reserved seats with Debbie Dingell and Mark Schauer.

HAVING THE MINIMUM WAGE ON THE BALLOT WOULD REALLY HELP HIM.

This is going to help all of the Democrats… And Schauer, if you don’t know him, seems to be a good guy.

SO, OBAMA HAD A FEW GOOD LINES ABOUT ZINGERMAN’S AT THE EVENT.

When he said, “The first thing I did was go to Zingerman’s,” I was was like, “Wow.” He’s funny… And he called me out by name. He said “Zingerman’s owner Paul Saginaw flew out to Washington D.C. not to lobby for himself, but to… And we need more business owners who…” It was embarrassing at that point.

BUT IT’S GOT TO BE NICE TO BE RECOGNIZED FOR YOUR WORK, RIGHT?

We do things, I like to believe, for the right reasons. But, yeah, you like to think, if there’s any justice out there, you’ll get that recognition. And, you hope, if you do, that you have the humility to accept it with grace… But, yes, it’s cool that he he came here to Zingerman’s because of that work… You do a lot of digging. You do your work, you know? And eventually good things happen. In this case, the result was that the President came here.

WHAT DO YOU THINK WENT INTO THE CALCULATION THAT BROUGHT HIM HERE? IN ADDITION TO ZINGERMAN’S, AND THE BALLOT INITIATIVE, WHAT ELSE WENT INTO IT?

It was a confluence of various things. Gary Peters is in a tough race. So that was part of it. A lot of Democrats are afraid to bring Obama in, right? But Peters wanted him here. And it was a good time for Obama, as it had just been announced that more than 7 million had signed up for Obabmcare. And then you had Gary Peters saying, “Come on out and help me.” So it was timing, and some luck too.

AND NOW YOU’RE ALL OVER THE PRESS.

Yeah, I’ve been doing some other stuff with Business for a Fair Minimum Wage…. I’m available to them, if they want me… I just did a telephone press conference with Tom Harkin and Joseph Stiglitz, the Nobel Prize-winning economist. They just call me and tell me when they need me. And I’ve got my talking points all ready.

I did Mitch Albom’s show a couple of days ago. And I’ve got to tell you, they don’t like the guest trying to be the funny guy. I think I was pissing him off. He said, “So how does it work when the Secret Service comes in?” And I said, “I can’t tell you.” And he ask how many agents there were, and I told him there were 24 to 32. And he asks how that’s possible. “It’s pretty small in there,” he says. “How’d you fit them all in?” And I say, “Mitch, it’s been a long time ago that you wrote that biography on Bo, and used to come up every once in a while, but we’ve actually expanded quite a bit since then.” And he was like, “Why are you insulting me? I’m trying to give you some publicity here.” And I’m doing this interview on the phone, in Costco. I’m shopping with my dad’s live-in aide. And I’m in the detergent aisle or something. And I say something about Obama like, “He’s got a lightness to him. He’s got a nice graceful way of being in the world.” And Mitch says, “Oh my God, are you drinking the kool aid.” So I said, “Tell me, Mitch, where do you stand on the side of the argument here? How do you feel about the Fair Minimum Wage Act?” And there was total silence. And then he hung up.

The day before the President came, I get a call from someone at AnnArbor.com, and he asks if Obama is coming to the deli. And this is before I even know that I’m going to meet him. He said, “Do you think that the President coming will make a difference with how people vote on this?” And I thought that I was off-record. So I made the mistake of giving him a kind of lengthy, nuanced answer. I said, “You know, think about where the level of civility is in our society right now—is it even possible to have a meaningful dialogue? I think everyone comes to the table with their mind made up. It doesn’t matter which side you’re on, we all turn on the talking heads that are going to give us the messages that we want. And no one seems to be coming into a discussion with a willingness to listen, and a belief that, if I hear a compelling argument, I may change my mind. I just don’t think that’s happening anymore.” So an article some out with the headline, “Owner of Zingerman’s Says Obama Can’t Make a Difference.” So, the next morning, I get a call from the White House. The woman said, “What are you doing, Paul?” And I said, “But I didn’t say that.” And she says, “Don’t talk with anybody until after he leaves town.”

Oh, and my favorite line, which I came up with on the spot, during an interview I did with NPR’s Stateside, was some advice to the Restaurant Association members fighting the Minimum Wage Act… “Invest your money in your employees and not your lobbyists.”