On Sunday night, British television host John Oliver dedicated an episode of Last Week Tonight to the subject of tipping.
What started as a humorous jab at consumer frustration over tipping in places like self-serve frozen yogurt stands then took aim at tipping culture in America’s restaurants. The remainder of the 25-minute segment bashed restaurants and restaurant workers from an anti-tipping European perspective, using primarily anecdotal evidence and borrowed talking points from the labor group One Fair Wage. Oliver even urged viewers to call their state and federal legislators to support eliminating the tip credit.
Apparently, the British are still coming–this time, for our tips.
Behind his fast delivery, Oliver delivered a bevy of misleading or false information. Let’s break down the worst offenders here:
#1: “[Servers] can make as little as two dollars and thirteen cents an hour.” False.
The median server in the U.S. made $27 an hour with tips factored in, according to data from the National Restaurant Association. This figure is likely conservative: Tipped workers report that they can earn as high as $50 per hour or even more. With earnings like this, it’s little surprise that an empirical study by University of California-Irvine economists finds tipped restaurant workers are significantly less likely to be in poverty than other non-tipped minimum wage workers.
That’s one of the main reasons servers and bartenders overwhelmingly support the existing tip credit system, by a 90/10 margin. They don’t want to see it changed to a higher flat wage alternative with an uncertain outcome on tips. These workers have rallied by the thousands across the country – in Maryland, Maine, New York, Michigan, DC, New Mexico, Ohio, Arizona, and other states in between – to save the existing system. Most recently, Massachusetts voters defeated a tip credit elimination ballot measure by a 2-to-1 margin – following opposition from the Democratic governor herself, who cited her own career in the restaurant industry.
#2: “Only seven states and a handful of cities have the same minimum wage for tipped and non-tipped workers alike, meaning everywhere else, the expectation is workers can be paid less.” False.
In fact, the data suggests tipped workers are worse off in states without a tip credit. The impacts of raising the tipped minimum wage (i.e. slashing the size of the tip credit) on employment, earnings, poverty rates, and gender pay gaps have been studied empirically, using decades of government data. The studies show that servers’ employment has suffered, and earnings have not risen enough to offset the employment declines.
Academic research and other data sources conclusively show tips are lower in states without a tip credit.
- Michael Lynn of Cornell, who is perhaps the country’s foremost expert on tipping, studied the data and concluded: “states with higher tipped minimum wages have lower average tip percentages in restaurants.”
- The Census Bureau similarly did its own study (see page 8) and found the same thing: Tips are lower in states without a tip credit.
- Most recently, the restaurant payment platform Toast released data which showed that so-called “One Fair Wage” states have some of the lowest tipped percentages in the country.
#3: “That’s why in some places where the subminimum wage has been eliminated, it’s been done gradually, so restaurants can figure out the approach that works for them, like adding a service charge or raising prices slowly.” False.
No state has eliminated its tipped wage in more than 30 years, so the only evidence we have is from a handful of localities that have done this. And the evidence doesn’t look good.
Washington, DC is one of the most recent jurisdictions to eliminate its tip credit – and employees are already seeing negative effects before the law is even fully implemented.
- The city has lost thousands of restaurant jobs since the policy began in May 2023.
- There’s also substantial supporting evidence from a survey the Restaurant Association of Metropolitan Washington conducted of its membership base. Based on that survey and supplemented with other government data, the District faced a record 74 restaurant closures in 2024, surpassing the number of closures in both 2023 and 2022.
- Servers and bartenders are reporting lower tips and lower earnings than they made prior to the tip credit elimination law – with some saying their earnings have been slashed in half.
- More than 300 DC restaurants have now added some sort of automatic service charge or fee, which has prompted confusion for diners, opposition from employees, and headaches for operators. Employees in DC report that guests don’t or can’t tip on top of a service charge, which is not the same as a tip.
#4: “In Washington, DC is now two years into its phase out, so it’s still too early to know the full impact, but the numbers don’t show any obvious problems…” False.
To make his case, Oliver ignores the substantial available evidence on the disaster in DC, instead pointing to a single sentence in an election guide that Tufts University released in advance of the Massachusetts vote on tip credit elimination. Looking at the May 2023 release of the Bureau of Labor Statistics’ Occupational Employment Survey (OES), Tufts remarked that there were “no obvious problems” with industry employment in the District.
- The Tufts University analysis bases its assessment on the much larger DC-Maryland-Virginia- West Virginia metropolitan area, including vast portions of the region that are not governed by DC’s tip credit law, and in fact all have robust tip credits. The dataset was also primarily collected prior to DC’s tip credit elimination. Looking at DC versus the rest of the surrounding area, the District has seen full-service restaurant jobs fall more than double the rate of the surrounding region.
The show’s producers had access to the research and facts above, through extensive communications with EPI. It’s a shame the show failed to include these components and instead tout an anti-tipping activist organization who couldn’t even make tip credit elimination work in a restaurant they created.