Does eliminating tips help wait staff? Early indicators point to yes.
After San Francisco and Seattle enacted a $15 minimum wage for all workers, employees in? the restaurant industry saw improvements, according to a study by the Economic Policy Institute released on Wednesday. The study compared those two cities to Washington D.C., where a similar policy has been proposed. It found Washington, D.C. and other cities would benefit from a “one fair wage policy.”
“Tipped workers are unambiguously better off in cities where tipped workers are paid the regular minimum wage, regardless of tips,” said David Cooper, senior economic analyst at the Economic Policy Institute.
The D.C. Council is considering overturning Initiative 77, a measure passed in June that would gradually raise D.C.’s tipped minimum wage over eight years until it’s equal to the federal minimum wage in 2026, under pressure from the restaurant industry.
The National Restaurant Association and the Metropolitan Washington Area Restaurant Association have argued raising the minimum wage for restaurant workers would lead to layoffs, closures, and a decrease in pay to employees due to a decline in tipping from customers. “We believe that this initiative would deal a huge blow to our local industry and would make it more difficult to build and sustain the kinds of safe and professional work environments we believe should be the standard,” a “Vote No 77” campaign launched by Washington, D.C. bar owners said.
Restaurant owners also argued costs could go up for customers as well. The Vote No 77 campaign said most restaurants in the D.C. area would be forced to raise prices and add a mandatory service fee to menus to offset increased costs. It said tipped workers will likely be paid less if customers are unwilling or unable to tip them due to higher prices. Some restaurants in San Francisco and Seattle eliminated tipping, but added service fees after the new minimum wage went into effect.
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However, the EPI analysis showed tipped workers would be better off with a standard minimum wage, even if it meant smaller or no tips. Cooper said overturning the measure would do a “disservice to some of the city’s lowest income workers.”
The EPI report found servers and bartenders in San Francisco earn 20% more per hour than their counterparts in D.C., and servers and bartenders in Seattle earn 7% more than their counterparts in D.C.
The poverty rate of tipped workers in D.C. is more than three times the poverty rate of non-tipped workers at 13.7%. The wage gap between workers of different races is also pronounced in the tipped workforce in D.C. — at $16.40 per hour, the median white tipped worker earns $3.72 more per hour than the median black tipped worker, who receives only $12.68 per hour, and the median hourly wage for Hispanic workers is $13.46.
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Another issue supporters of Initiative 77 seek to address through the policy is sexual harassment in the restaurant industry. Some 66% of female restaurant employees have reported being sexually harassed by managers and tipped workers are more likely to experience harassment than non-tipped workers, a 2015 study published by the Canadian Journal of Law and Society found. The measure would lead to better gender equality in the workplace, according to the National Women’s Law Center.
“Restaurant servers, bartenders and all other tipped workers will finally know they have a paycheck they can depend on even when they have a slow week,” Emily Martin, general counsel and vice president for education and workplace justice at the National Women’s Law Center, said. “It will also make workers less vulnerable to sexual harassment that is routinely part of the job when nearly your full income depends on customers’ whims.”
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