Many tipped workers in the District see Initiative 77 as a shot at earning a predictable income. Tuesday’s ballot initiative would improve the economic security of roughly 30,000 tipped workers. Employers now only have to pay tipped workers a “tipped minimum wage” — $3.33 an hour — as long as workers receive at least the full minimum wage of $12.50 per hour when tips are included. While employers are supposed to make up the difference if the average wage falls below the minimum, in reality, they often don’t. Initiative 77 would gradually eliminate the two-tiered wage system by requiring employers to pay all workers the full minimum wage by 2026.
Living on tips does not provide sufficient, predictable income or economic security. Tipped workers — predominantly women — experience a poverty rate nearly twice that of other workers. According to the Economic Policy Institute, average wages for tipped workers are nearly 40 percent lower [epi.org] than for all workers. Currently, the annual median wage for bartenders and servers is approximately $31,000 and $25,000, respectively. The MIT Living Wage Calculator, which considers regional costs of living, estimates that a District worker with two children must make $32.50 per hour, or $68,000 annually, to adequately provide for her family — more than twice what a bartender makes.
The two-tiered wage system is confusing and invites mistakes and abuse.
People of color — who comprise 66 percent of the District’s servers — are often tipped less than white workers. Relying on customer tips leads to income volatility and exposes workers to sexual harassment or discrimination by the very customers they depend on for tips. A business model in which customers are responsible for supplying wages while letting employers off the hook doesn’t exist anywhere else.
Little evidence substantiates that paying tipped workers the full minimum wage would hurt employment growth. Seven states require employers to pay tipped workers at least the regular minimum wage. In recent years, these states have had faster growth rates than states with a tipped sub-minimum wage. And the restaurant industry predicts higher growth rates in these seven states than in those with sub-minimum wages. Cities such as San Francisco and Seattle, which are raising their minimum wages to $15 an hour, have strong restaurant industries with growing employment.
Since 2000, D.C.’s leisure and hospitality industry grew by 56 percent and is the second-fastest-growing sector in the city. This reflects a burgeoning restaurant scene that continues to add jobs. However, for these jobs to put D.C. residents on the path to the middle class, they must pay living wages. Contrary to restaurant industry claims, Initiative 77 would provide workers a higher base wage plus any tips from patrons, a system that can result in higher total earnings for tipped workers. In fact, a 2014 study on the need to eliminate the tipped minimum wage found wage hikes raise earnings without reducing employment.
Living on tips is not enough. Initiative 77 will provide much-needed security to an industry characterized by volatile wages.