Wisconsin Lawmakers Should Be Wary of Tip Credit Elimination Consequences

Last week, Wisconsin Sen. Chris Larson and Rep. Francesca Hong announced they would reintroduce a 2021 proposal to eliminate Wisconsin’s tip credit. This proposal would raise the tipped minimum wage more than 200 percent. But based on both Larson and Hong’s support for as high as a $15 minimum wage, this could have disastrous consequences for Wisconsin.

Analysis of tip credit elimination by economists Dr. William Even (Miami University) and Dr. David Macpherson (Trinity University) spell out the consequences for a potential $15 minimum wage in Wisconsin paired with no tip credit:

  • 9,282 tipped jobs lost;
  • $58.6 million in lost earnings statewide; and
  • As much as $3,095 in earnings lost annually for Wisconsin’s poorest households.

Economists agree tipped minimum wage hikes of any magnitude can hurt tipped employment and employees’ earning potential.

Employees across the country have led the fight to protect the tip credit and save their tips. Areas including Maine, New York, Maryland, New Mexico, Virginia, and Portland, ME have successfully saved the tip credit system due to employee pushback. That’s because employees often make far more than the regular minimum wage rate through their tips.