New York lawmakers reintroduced a so-called “One Fair Wage” bill earlier this year, threatening to eliminate the state tip credit in just a few years. If enacted, the bill would raise the base wage for tipped restaurant workers from $10 per hour upstate and $10.65 per hour downstate up to $17 per hour across the board.
Unfortunately for workers, “one fair wage” is a misleading description that stands to upend the livelihoods of thousands of New York servers and bartenders.
Under New York’s current tip credit system, local servers and bartenders earn as much as $40 per hour through their tips. Threatening this system means significant increases in restaurants’ labor costs in an industry with minimally thin profit margins. As restaurants elsewhere have tried to adapt to rising minimum wage mandates, they are forced to make other changes: including menu price increases, adding mandatory service charges to customers’ checks, downsizing staff, or shutting down completely.
New York’s tipped employees have already suffered consequences at the hands of New York’s history of downsizing the tip credit. In 2013, the state began increasing the minimum wage for tipped food service employees every year.
- The Empire State went from having the highest full-service restaurant employment growth in the region in 2012, to experiencing negative employment growth even before the toll of the pandemic.
- In 2018 and 2019, New York lost over 12,000 full-service restaurant jobs.
- In the same period, the state also lost nearly 1,000 full-service restaurant locations, while neighboring states maintained positive restaurant growth.
These aren’t flukes. Economists have studied decades of tipped wage hikes across the country and concluded:
- Raising the tipped minimum wage causes job loss for servers and bartenders.
- Raising the tipped minimum wage reduces tips and overall earnings for servers and bartenders.
- Raising the tipped wage increases the likelihood that restaurants close.
In fact, these consequences are playing out under a similar proposal pushed by One Fair Wage in Washington, D.C.
- Full-service restaurant employment is already down 4 percent in less than a year.
- Over 250 local restaurants have implemented mandatory service fees added to customer checks – creating widespread confusion for diners over whether or not to tip.
- As a result, employees say their tips have gone down, with one employee reporting his take-home earnings have been cut in half.
- The rate of restaurant closures is growing – 52 locations shut down in 2023. Many local operators have announced they won’t expand inside the city or are looking to move to neighboring Virginia or Maryland.
Local tipped servers and bartenders have fought against similar proposals for fear of losing more jobs and tip income. In 2018, thousands of tipped restaurant workers successfully rallied, urging then-Governor Cuomo to abandon tip credit elimination.
In the wake of a new threat on their livelihoods, Assemblywoman Carrie Woerner (D-Round Lake) said tipped workers in her district are speaking out, and don’t want the system to change: “There is a sense from the service workers themselves that this wage structure has not disadvantaged them in any way.”
“One Fair Wage” may sound like a winning slogan, but in reality has only left affected employees worse off. New York lawmakers should listen to years of employee pushback: the current system isn’t broken.