Restaurant Employees Continue to Oppose Measures to Scrap Tip Credits

Despite a $25 million campaign dedicated to removing tip credits across the country by pro-union group One Fair Wage, counter-campaigns to save tip credits are popping up too – and led by tipped restaurant employees themselves.

This year, tipped restaurant employees are mobilizing in Portland, ME and Washington, DC to save their tipping systems. Restaurant servers and bartenders have led the way in the last several years, sharing their experiences of flexibility and profitability under the existing tip credit system with voters and lawmakers. In fact, tipped restaurant workers have successfully rallied in the past to save tip credits in Maine, New York, Virginia, New Mexico, and the District of Columbia.

One Fair Wage sounds like a promising slogan, and the organization’s leadership says they advocate on behalf of restaurant employees. Yet tipped employees represent the main opposition to One Fair Wage’s tactics – why?

1. Tipped workers say existing tipping systems allow them to earn much more than the minimum wage. Tip credits allow restaurant employers to factor tip earnings into the existing minimum wage requirements – i.e. they can pay tipped workers a lower cash wage if they ensure workers earn enough in tips to meet or exceed the hourly minimum wage requirement. A survey of states that abide by the federal tipped minimum wage of $2.13 per hour found employees reported average earnings of $15.51 per hour. Another analysis of employees’ economic status found that tipped restaurant workers are significantly less likely to be poor than other hourly minimum wage earners.

“With tipped income, I make on average between thirty five and fifty dollars an hour depending on the day. I would never want to go to a flat hourly rate.”

“We are a tip based industry. It allows servers and bartenders to remain the commission based sales people that we consider ourselves to be.”

“[People] can make a decent living for themselves and their families. No other industry really offers that. I’m making, on the low end, 40 bucks an hour, on the higher end, 45-47 bucks an hour.”

2. Tipped workers say tips will decrease as the required minimum wage increases. One Cornell University study found as tipped minimum wages rise, customers’ tip percentages decrease. As a result, other analysis by the U.S. Census Bureau finds that tipped restaurant employees’ tip income and earnings fall. The most recent study by University of California-Irvine economists finds every $1 increase above the federal $2.13 tipped minimum wage could cause up to 5.6% decreases in quarterly employee earnings.

“Anybody that thinks they are helping us by taking away the opportunity to make tips, it’s gonna hurt a lot of people, because we depend on our tips. I don’t want $15 an hour, I can make more than that.”

“I have made an excellent living…we make it off the tips…when you switch to $15 an hour there’s alot of people that are going to be making alot less money.”

“If we were to go to an hourly rate where they don’t tip, we would not be happy and all service would go down.”

“I fear for my fellow employees because if the tipping wage is raised to meet the actual minimum wage I feel that the likelihood of getting tipped regularly will decrease dramatically.”

3. Tipped workers say hours, shifts, and even jobs available will decrease as tipped minimum wages increase. Analysis by economists at Miami and Trinity Universities found in states with severely compromised (or eliminated) tip credits, tipped employees represent an 18% lower share of total employment and 19% fewer hours worked in full-service restaurants than in states with more robust tip credits. The University of California-Irvine study from this year also concluded that a $1 tipped wage increase could cause up to 6.1% lower tipped restaurant employment.

“The dangers of eliminating the tip credit…would be restaurant closures, or you’re going to have counter service where you don’t have anyone waiting on you anymore. It’s bad for workers, restaurants, distributors, suppliers, the general public…”

“This city’s minimum wage is rising to $16.39 an hour on Jan. 1. Instead of receiving a bigger paycheck, I’m left without any pay at all due to the policy change. That’s because the restaurant where I’ve worked for six years is closing as a consequence of the city’s harmful minimum-wage experiment.”

“If the tip credit is removed, many restaurants will eliminate tipping and move to an hourly wage system. Tipped employees would likely earn far less than they currently do and restaurants would be forced to reduce employee hours or operate with fewer employees.” 

While union activists and other advocacy groups claim to speak for restaurant employees – actual tipped employees have set the record straight. Maggie Raczynski, a server from New York who led the fight to save the Empire State’s tip credit, puts it plainly:

“My message for lawmakers and the general public is to listen to your tipped worker.”

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