Recent proposals to raise the minimum wage in New York state and the Big Apple have threatened to eliminate the tip credit, which mostly affects tipped restaurant employees’ ability to earn substantial income. Advocates argue eliminating the tip credit in New York City and beyond would bolster recovery from the job losses experienced by the restaurant industry during the pandemic. Yet a comparison of employment data shows that NYC’s full-service restaurants, those employing the majority of tipped workers, have already rebounded faster than other California cities, where the tip credit has already been eliminated.
Following the shutdowns creating massive employment loss due to COVID-19, New York City still remains roughly 37,000 jobs lower than pre-pandemic levels, with 80% of these lost jobs belonging to the full-service restaurant industry. In terms of recovery in the years since 2020, full-service restaurants are also adding the majority of restaurant jobs.
Between 2019 and 2022, New York City’s restaurant and other eating places industry (NAICS 72251) has lost 36,533 jobs. Of that remaining loss, 29,058 are among full-service restaurants (which employ the majority of tipped workers), and 7,475 are among limited-service restaurants. New York City’s full-service restaurants drove 67% of net recovered total restaurant jobs in 2021 and 70% of net recovered total restaurant jobs in 2022. These gains top a state like California, which has eliminated its tip credit, which has only seen full-service restaurants driving 62% of job gains since the pandemic.
|
2018 |
2019 | 2020 | 2021 |
2022 |
|
| Employment Change in All Restaurants |
1,113 |
1,320 | -110,200 | 23,508 |
50,158 |
| Employment Change in Full-Service Restaurants |
-2,599 |
-2,501 | -79,642 | 15,683 |
34,900 |
| Full Service Employment Growth As A Percent of All Restaurants |
-234% |
-189% | 72% | 67% |
70% |
|
2018 |
2019 | 2020 | 2021 |
2022 |
|
| Employment Change in All Restaurants |
21,934 |
19,724 | -297,325 | 108,217 |
145,050 |
| Employment Change in Full-Service Restaurants |
2,245 |
922 | -220,800 | 67,242 |
89,517 |
| Full Service Employment Growth As A Percent of All Restaurants |
10% |
5% | 74% | 62% |
62% |
When looking at which areas have recovered full-service restaurants “faster” – New York City’s full-service employment growth has rebounded more than two times faster than California’s, including comparable cities such as San Francisco and Los Angeles.
In terms of closing the employment gaps in the restaurant industry to restore pre-pandemic levels, New York City is 9.3% down from January 2020 full-service employment levels, while California cities San Francisco and Los Angeles are much further behind (13.7% and 12.3%, respectively). New York statewide even has a smaller full-service employment gap, compared to the state of California.
Lawmakers and wage hike advocates should approach the tip credit with caution – New York’s restaurants don’t need another barrier to recovery from the pandemic, and don’t need to end up like California.