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Tipping the pay scales: Initiative 77 could dramatically alter D.C. restaurant culture

Signs in restaurant windows in the District carry a sentiment opposing Initiative 77. The ballot measure would require restaurants and bars to pay tipped workers a full minimum wage in the nation’s capital. (Dayna Smith for The Washington Post)

UPDATE: D.C. Council takes initial vote to overturn Initiative 77 - four months after voters approved it

Thea Bryan was shocked by how her bartending income plunged by half when business was slow at Indique in Northwest Washington. Tired of depending on tips on top of $5 an hour paid by her boss, the single mother is fighting to make D.C. restaurants and bars pay workers like her the full minimum wage.

The pros and cons of surviving on tips: The Washington Post talked to servers, bartenders, restauranteurs and citizens about Initiative 77

A few miles away, Frank Mills also makes $5 an hour as a bartender at Jack Rose Dining Saloon and doesn’t want a raise. He earns as much as $36 an hour with tips — and says Bryan’s efforts could hurt his bank account.

Bryan and Mills are on opposite sides of Initiative 77, which aims to shake up the relationship between customers, workers and restaurant owners in the city’s thriving dining scene. The question may be the most contentious — and confusing — issue on the ballot Tuesday in the District’s primary election.

It also is a fight that extends beyond the nation’s capital, playing out in statehouses, city halls and polling places around the country as the restaurant industry and labor advocates tussle over how servers should be paid.

How restaurant workers in D.C. are paid

The District and most states exempt workers who earn tips from the standard minimum wage — allowing employers to pay servers, bartenders, bellhops and others just a few dollars an hour, on the assumption that gratuities will pump up their pay. In the District, tipped workers must be paid at least $3.33 an hour, and if their tips do not bring that up to $12.50 an hour, employers are required to make up the difference.

But some employers don’t. The D.C. agency that enforces wage laws found violations affecting 5 percent of tipped workers at nearly 600 businesses audited since 2016. Some servers, particularly women, say they have to tolerate harassment from customers to get tips — an affront that seems especially glaring in the #MeToo era. After tips, most front-line workers pocket more than the busboys, dishwashers and line cooks in the back of the house, cementing inequity.

The ballot initiative would phase out the lower hourly tipped wage and require businesses to increase pay over seven years so that all workers earn at least $15 an hour by July 2025. Then the city would have one minimum wage that rises with inflation. The measure says nothing about whether diners should still tip.

The Restaurant Opportunities Center (ROC) United is behind the effort to get rid of the tipped wage this year in the District, New York and Michigan. The New York-based nonprofit organization, funded in part by the Ford and Rockefeller foundations, has run campaigns around the country to help restaurant workers recover stolen tips and wages, and win protection from sexual harassment.

Interview with Saru Jayaraman on the problems with tipping

In the District, where 2,267 restaurants employed more than 50,000 people as of 2016 according to the Bureau of Labor Statistics — making them the third-largest sector of private employers — a restaurant trade group is waging a fierce political battle to kill Initiative 77.

Mayor Muriel E. Bowser (D) and nearly all other elected leaders are opposed to it, along with — maybe surprisingly — many of the restaurant workers the ballot question is supposed to help. Those workers call the measure a threat to their livelihoods. They have organized on social media for the “Save Our Tips” campaign and handed diners campaign literature along with restaurant tabs.

Owners say the current system works: Restaurants with thin profit margins can survive while workers can earn more than the standard minimum wage.

If District voters pass the measure, at least three things will probably happen, according to restaurateurs and researchers. Some diners will still tip. Restaurant prices will rise, probably more than the 20 percent that diners normally tip. And some restaurants won’t survive the changeover to higher labor costs that come with a one-wage system.

“What’s proposed is not negligible in any way, shape or form,” said Kimberly Grant, chief executive of ThinkFoodGroup, a company with a dozen local restaurants under the auspices of José Andrés, a prominent name in D.C. hospitality. “This would be really devastating,” she said.

The National Restaurant Association, the Restaurant Association of Metropolitan Washington and individual business owners have raised $340,000 to fight the measure. The campaign includes a hodgepodge of consultants from across the political spectrum. It includes firms linked to Cornell Belcher, an expert on African American voters who has worked for the Democratic National Committee, and Richard Berman, who has run corporate campaigns including one that attacks health concerns over mercury in fish and another that fought Mothers Against Drunk Driving over its crusade to lower the legal limit for blood alcohol content.

Meanwhile, the fight to pass Initiative 77 has raised $270,000 and run a more muted effort, with few servers willing to publicly make the case for the measure. Advocates say low-wage workers and immigrants in the restaurant industry support the measure but fear retaliation from employers.

Why Mayor Muriel E. Bowser, a majority of Council oppose Initiative 77

The debate over Initiative 77 has perplexed voters in a heavily Democratic city with some of the most labor-friendly laws in the country.

“I just don’t understand the politics of it. . . . It seems easy to me; why not give people a chance for a wage increase?” said Randall Meyers, a 44-year-old Northeast Washington resident who is leaning toward voting yes. “But the quiet I hear from wage staff and people who would benefit most from this has been sort of surprising, which then makes it difficult to judge.”

A national wage fight

Tipping, which has European origins, took hold in post-Civil War America in restaurants and on railroads. Congress has allowed businesses to pay a portion of their wage obligations with customer tips for more than 50 years. In 1996, it established a $2.13 federal minimum wage for tipped workers, which hasn’t changed since.

ROC United was formed to help restaurant workers at Windows on the World who lost their jobs after the collapse of the World Trade Center towers on Sept. 11, 2001. The organization expanded beyond New York as it took on the issue of wages.

Trump administration tip-pooling proposal draws fire

Saru Jayaraman, its founder, said the campaign in the nation’s capital has drawn fierce opposition because her ultimate goal is to eliminate the federal tipped wage. If the ballot measure passes, and members of Congress see that it does not harm the District’s restaurant industry, it will help the federal effort, she said.

“We are seeing a bigger pushback from the Restaurant Association, more money spent, more bullying because they know how important D.C. is in showing federally elected officials that this can be done,” Jayaraman said.

Kathy Hollinger, who leads the Restaurant Association of Metropolitan Washington, says ROC United is interfering in local affairs. “Workers and operators by the hundreds are saying that this is not something that works and will not work well,” she said. “Then why are we listening to an outside group coming into our market to say this is what we think is better?”

Initiative 77 impact

California, Oregon, Washington, Alaska, Nevada, Montana and Minnesota have had laws for decades requiring businesses to pay all workers the same minimum wage regardless of tips.

Restaurateurs in those states, as well as researchers, say diners continue to tip despite higher menu prices designed to cover the increased labor costs.

“Servers that fear tipping will go away, that’s a misplaced fear,” said Michael Lynn, a professor at the Cornell University School of Hotel Administration who researches tipping. What’s not misplaced is the fear that restaurants will take a financial hit under Initiative 77, he said.

Eliminating the tipped wage doesn’t just increase labor costs; it also raises insurance premiums and payroll taxes. Taken together, these increases will amount to more than the 20 percent tip that diners pay to help cover a server’s salary.

“We ran the numbers, and it would impact the bottom line so drastically that we would have to change our whole business model,” said Jamie Leeds, owner and founder of the JL Restaurant Group, which includes Hank’s Oyster Bars in the District.

She expects to raise prices up to 40 percent if the initiative passes, which would mean Hank’s signature lobster roll would cost $35 instead of $25. Part of the price bump would go to her cooks, Leeds said, to maintain a kitchen hierarchy. If a dishwasher is now hired at $15 an hour, you can’t pay the same amount to a senior line cook, she said.

Florida Avenue Grill, a landmark that bills itself as the city’s oldest soul-food restaurant, is one of the few that supports Initiative 77.

“It’s a complicated issue,” said owner Imar Hutchins, who is on the board of ROC United. The office of the District branch shares the same address as Hutchins’s Northwest Washington restaurant. “We care about the people who work for us, and we’re trying to create the best workplace for them. ”

Across the country, some restaurateurs have experimented with new business models that either eliminate tipping or automatically add a service charge to a bill to cover labor costs. Some attempts have been controversial.

Famed restaurateur Danny Meyer, Momofuku boss David Chang and others are fighting a lawsuit in federal court in California that claims they violated antitrust laws by ending tipping. The complaint claims the restaurateurs have promoted the plan to better compensate kitchen workers as social justice but the real aim and effect is greater profit at the expense of workers and consumers.” Meyer declined to comment through a spokesman.

Amanda Cohen, chef and owner of the vegetarian restaurant Dirt Candy in Manhattan, had trouble finding cooks willing to live on the meager salaries paid to back-of-the-house employees. Her solution in 2015 was to add an “administrative fee” to checks — money that she could split with all her staff, whether in the front or back of the house. (Tips, by contrast, can be legally shared only with employees who receive them, such as servers, bartenders and bussers.)

Eventually, however, Cohen ditched the fee and just raised prices so she could pay her staff more. Her servers now make about $25 per hour; cooks bring in about $18 an hour. The pay disparity between staffers in the front and back of the house is narrower at Dirt Candy than at many other restaurants, where the difference can be as much as $20 or more per hour.

Initiative 77 supporters argue that restaurants have been able to absorb other price shocks, such as rising food costs. And they note that the tipped wage would be phased out over seven years, not immediately.

“It’s a Chicken Little problem,” Jayaraman said. “Anything that comes up — raising minium wage, paid sick leave — there’s always this ‘Sky is going to fall!’ reaction. And it never happens.”

A noisy battle

The political fight over Initiative 77 has gotten ugly.

Private Facebook groups have devolved into furious comment threads and invectives. Several public debates over the initiative have devolved into raucous gatherings.

Bryan, the bartender who favors the measure, was shouted down multiple times as she spoke at a recent public forum. The vitriol is so intense that Bryan spoke on the condition that The Post not name her current employer because she fears harassment at work.

Bryan, who is 48 and bartends while attending graduate school, said at times her income doesn’t cover bare necessities. “$3.33 is just ridiculously low — it wasn’t meant to be free labor,” she said.

Should D.C. end tipped wage? Ballot measure debate gets tense

Mills, the Jack Rose bartender, wants to keep the current system because it allows him to earn double — sometimes triple — the minimum wage and afford his $2,100 rent after a decade of climbing up the industry.

“The economics here are not easy,” said Mills, 32, who grew up in the District.

If Initiative 77 passes, Mills said he worries that happy-hour regulars from Maryland and Virginia would disappear, turned off by higher prices, or that customers would stop tipping if they were to find a service charge on their bill. “To tell me all of a sudden we need a change when we’ve been thriving is backward thinking, truly,” Mills said.

Even though Tuesday’s is a primary election, the vote on the ballot question will be final; it will not appear again on the November ballot.

But the battle may continue. Ten of 13 D.C. Council members have publicly opposed Initiative 77 and at least one said that lawmakers will consider overturning the measure if it passes.

“You have to hold us accountable and you need to come back to us and say, ‘Make this right if it does pass,’ ” D.C. Council member David Grosso (I-At Large) told workers rallying against the initiative last month.

That may be easier said than done, said Diana Ramirez, who leads the District effort for ROC United. “It is a democratic process,” she said. “If the council overturned this, the message they are sending is a trade lobby is more powerful than their constituents.”

Read more:

Perspective: You don’t need to tip for counter service. But here’s why you should.

Opinion: Hating tipping is easy. Fixing it is almost impossible.

Danny Meyer: Tip distribution isn’t the problem. Tips are.