While District of Columbia residents celebrate the Independence Day holiday weekend, the city’s restaurants will be quietly saddled with yet another minimum wage hike.
On July 1, D.C. will raise the tipped minimum wage again up to $8 per hour, after a previous increase to $6 per hour just two months ago. For restaurants, this is a 33 percent increase in their wage bill, and represents a near-50 percent increase in wages this year alone. The wage hike is part of newly-enacted Initiative 82, a law that will completely eliminate the tip credit by 2027.
Ahead of these increases, the Employment Policies Institute surveyed over 100 restaurants in the District to understand the impact of the law on their businesses and employees. Key findings include:
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85 percent of restaurant operators said the law will force them to reduce the number of tipped staff in their restaurants by 2027. Two-thirds indicated they would downsize tipped jobs this year.
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70 percent indicated they would be forced to implement automatic service charges to customers’ bills. (A recent D.C. community Reddit thread shows this is already happening in more than 170 local restaurants.)
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Three out of four operators indicated the rising tipped minimum wage will limit raises for kitchen and other non-tipped staff.
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One in three operators indicated they would be forced to close.
What’s more: D.C. City Councilmembers considered a bill this week to accelerate the timeline of complete tip credit elimination. Councilmember Kenyan McDuffie’s bill would speed up the tipped wage hikes, fully eliminating the city’s tip credit by 2025 instead of the 2027 target in current law. But as restaurants are still figuring how to adapt to the original schedule of tipped wage hikes, further proposals to speed up this change could wreak additional havoc on the city’s restaurants.
Read the full report here.