This week, One Fair Wage and aligned state lawmakers held a press conference rallying for Connecticut SB 221, which would eliminate the state tip credit by 2027.
Not only is this bill capable of causing serious harm to Connecticut’s tipped employees and restaurants, tipped servers and bartenders themselves reject the proposal.
Ahead of the press conference, the Connecticut Restaurant Association released a survey of over 400 local servers and bartenders, who overwhelmingly oppose the proposal in SB 221.
- 96% indicated they prefer the current tip credit system over a flat minimum wage;
- 91% reported they earn at least $20 per hour when tips are factored in, and 61% reported earning $30 per hour or more;
- 95% responded that eliminating the state tip credit would cause them to earn less;
- 83% responded that their customers would be unlikely to tip on top of a mandatory service charge.
View a full write-up of the survey results here.
Employees’ backlash to the proposal isn’t surprising: the economics behind tip credit elimination indicate the policy is bad for employees, restaurants, and customers. This crisis scenario is currently playing out in Washington, D.C.
Connecticut’s tipped employees know the economic truths behind eliminating the tip credit:
- University of California-Irvine economist David Neumark estimates every $1 increase in the tipped wage reduces tipped employment by 6.1%. In Washington, D.C. which began eliminating its tip credit in May 2023, full-service restaurant jobs have declined by 4.4% already.
- Neumark also estimates every $1 increase in the tipped wage reduces employees’ earnings by 5.6%. Servers experiencing tip credit elimination in D.C. have already reported fewer tips, and even indicated take-home pay has been cut in half.
- Miami and Trinity economists estimate eliminating CT’s tip credit could cost nearly 2,200 tipped restaurant jobs and nearly $8 million in lost employee earnings.
- High-wage markets have seen a rise in automatic service charges: in less than a year, over 250 D.C. restaurants have instituted mandatory service charges on customer checks to adapt to rising wage bills. In Chicago, where city lawmakers recently approved a tip credit elimination bill, restaurants are already implementing these charges to brace for tip credit elimination starting in July.
One Fair Wage has a track record of pushing bad policy in areas that don’t want what they’re selling. A similar proposal died in the Connecticut legislature last year after local restaurants voiced concerns that it would hurt their employees and endanger their survival. Tipped employees have led the fight to save tip credits across the country, including in Maine, New York, and Rhode Island.
Lawmakers should pay attention to local employees, not out-of-state activists.