Voters in Portland, Maine voters will decide Question D in the November general election, which proposes to eliminate the city’s tip credit. Tip credits serve as the backbone of the current tipping system for many front-of-house restaurant employees such as servers and bartenders.
Tipped employees themselves are drawing attention to the harm caused by tip credit elimination. Restaurant Industry United, a new collective led by Portland restaurant employees and owners, launched their campaign to educate voters this week about the negative consequences of Question D.
The ballot measure would raise the city’s minimum wage up to $18 per hour (making it the highest local minimum wage mandate in the nation), and eliminate the tip credit, which is the amount of employee tips an employer may count toward the main minimum wage requirement. This would raise the minimum wage for tipped restaurant employees in the city by a whopping 176 percent.
The current tipping system of the base tipped minimum wage (currently $6.50 per hour in Portland) plus tips is required by federal and state law to ensure customer-facing employees earn enough tips to make at least the hourly minimum wage rate (currently $13 per hour). Economic research and employee testimonials demonstrate that many tipped employees actually earn well above the minimum wage when their tips are factored in.
RIU has gathered stories from current Portland tipped employees who say the tip credit system that allows them to earn substantial wages beyond the minimum wage doesn’t need fixing. Testimonials explain the harmful impacts of the ballot measure proposal:
“By raising the minimum wage to $18 an hour and removing the tip credit, you’re going to force employers to have to make decisions to staff, how much they can have on at a time, and ultimately…[they] are going to have to close.” (via RIU instagram)
“…Not only will it affect my income directly…but I think one of the effects of this will be things becoming automated…and that will take away my job.” (via RIU instagram)
“…In an industry already so short on labor, this is going to make employees earn less in the long run.” (via RIU instagram)
Their concerns are echoed in economic research: many economists have studied the impacts of eliminating state and local tip credits, finding doing so causes restaurants squeezed by the industry’s characteristically low profit margins to adapt to labor mandates by reducing employment of tipped workers. For those that remain employed, research shows customers’ tip percentages fall when tipped minimum wages rise, resulting in reduced tips and overall earnings for employees compared to the tip credit system.
This is not the first time tipped workers have had to fight for their earnings in Maine. In 2017, a bipartisan group of state legislators repealed a statewide ballot measure to eliminate the tip credit when restaurant employees turned out in droves to express their concerns. Similarly, employees in states across the country have joined the fight to save tip credits and their tips.
Learn more about the Portland ballot measure and tipped employees’ efforts at RestaurantIndustryUnited.com.