If you’ve dined out in the District lately, you may have run into a sign urging local diners to “Save Our Tips” and “Vote No on Initiative 77.” This campaign is partially supported by the other NRA: the National Restaurant Association, a powerful, deep-pocketed lobbying organization that opposes higher minimum wages. Their goal is to convince voters that there’s a sinister plot afoot to deprive workers of their earnings.
Well, there is a deceptive plot afoot. It comes from the NRA and others opposed to Initiative 77, which would raise the pay of low-wage, tipped workers. Here are the facts of which voters should be aware.
In 2016, D.C. lawmakers set in motion a gradual increase to the city’s minimum wage to $15 by 2020. Because of pressure from the U.S. Chamber of Commerce and restaurant industry, however, the city’s tipped workers — food-service workers, hairstylists, hotel workers, taxi drivers and other employees for whom tipping is customary — got a substantially smaller increase. Their minimum wage, which is $3.33, will rise to only $5 an hour by 2020. Initiative 77 would, over the next eight years, phase out this subminimum wage for tipped workers such that by 2026, the city’s minimum wage for tipped workers would match the city’s regular minimum wage.
Under the law, tipped employees are still supposed to receive the minimum wage. If there’s a slow week at the hair salon and a hairstylist’s base pay plus tips works out to lower than the minimum wage, the salon is supposed to make up the difference. The problem is that the law is hard to enforce. Too often, workers in tipped industries who do not receive the added pay from their employers are unable to fight back because of fears of retaliation.
As the U.S. Labor Department’s former chief economist Heidi Shierholz has noted, 4 out of every 5 full-service restaurants the department investigated between 2009 and 2015 were violating wage and hour laws, with one of the most common violations being the failure to adequately compensate tipped workers. Tipped workers are significantly more likely than untipped workers to report that their hourly wages, including tips, are below the minimum wage.
Initiative 77 targets this problem, one which is extremely costly for many of these economically vulnerable workers. In the District, the poverty rate for tipped workers — who are disproportionately people of color — is twice the poverty rate for other workers.
The initiative is particularly important for the two-thirds of all tipped workers who are women (among waiters and bartenders, that share rises to 70 percent). When workers are forced to rely on tips for the bulk of their income — which the subminimum wage for tipped workers ensures — they are often put in the situation of deciding whether to tolerate inappropriate behavior from their customers or to risk losing tipped income by standing up to or reporting harassment.
In a recent New York Times feature about harassment of tipped workers, one waitress told of how, while serving a family, the husband slipped her a note to call him “any evening after 9 [when his wife] goes to bed.” She told the Times, “I wanted so bad to go tell his wife, but he was the one filling out the credit card slip. I needed the $20 tip.” Nobody should have to make that choice.
Echoing the more well-known NRA (“guns don’t kill people; people kill people”), the restaurant lobby argues: “Tipping does not cause sexual misconduct. Sexual predators cause sexual misconduct.” But while tipping isn’t the reason sexual harassment exists, a subminimum wage for tipped workers facilitates sexual harassment in a way that paying workers one fair wage does not. There’s even evidence that less harassment occurs in states that have eliminated the tip credit.
As with minimum wage increases in general, the best way to gauge the impact of this policy is to see what’s happened in places that have implemented it. Eight states have already abolished the subminimum wage for tipped workers: Alaska, California, Hawaii, Minnesota, Montana, Nevada, Oregon and Washington. Several cities have, too. The results are that poverty has come down, pay has gone up, and employment remains stable.
For untipped workers, poverty rates are comparable across states whether they maintain a subminimum wage for tipped workers (see figure). But poverty rates for waiters and bartenders are substantially lower in the eight states that have one fair wage for everyone than in other states. Restaurant workers in these eight states also make about 20 percent more than their counterparts in states where the tipped minimum wage is $2.13 an hour (the federal tipped wage floor).
In addition, the restaurant industry is doing well in the eight states without a tipped minimum wage. Employment growth and sales are strong, and tipping continues apace.
To be clear, it isn’t only the restaurant lobby that opposes Initiative 77. Some tipped workers, especially those whose tips take them far above the minimum, fear that, were the initiative to pass, customers would tip less, and workers would end up worse off. But even if these well-tipped skeptics were the norm — and they’re not — the evidence to date indicates that their fears are unfounded.
We’ve been involved in these minimum wage debates for many years, and they’re always the same. The opposition argues that paying low-wage workers more money will be bad for them (tax cuts for the rich, on the other hand, work great). Common sense, and a lot evidence, suggests otherwise (here’s the website of the One Fair Wage DC campaign). Such common sense, supported by facts, is what should drive D.C. voters’ understanding of what’s at stake here.