You’ve seen the signs for and against: “Better Wages, Better Tips” and “SaveOurTips, Vote NO on #77.”
But what is Initiative 77?
In a nutshell, tipped employees (mostly your servers and bartenders) make $3.33/hour, versus the current DC minimum wage of $12.50/hr (increasing to $13.25/hr on July 1). Tipped employees make up the difference between the two wages in tips. For those employees who don’t hit the $12.50/hr through tips, restaurants are required to make up the difference.
Initiative 77 would do away with the lower tipped wage, replacing it with an incremental increase to the DC minimum wage by 2026. The minimum wage in DC will increase to $15/hr in 2020. If the initiative doesn’t pass, current law will increase the tipped wage to $5/hr by 2020.
Supporters of the initiative, including Restaurant Opportunities Center United and the OneFairWage coalition, argue that the tipped wage system leads to financial insecurity that particularly hurts women and minorities. ROC asserts that eliminating the tip credit will ensure a living wage for restaurant employees, particularly women who are more subject to sexual harassment working for tips, and minority employees who face discrimination. Supporters also note that while current wage and hour laws should reduce harassment and discrimination, both women and minority employees working for tips are less likely to speak up against management for wage theft, or against customers for harassment. A flat wage instead would give them more control to not put up with harassment.
Opponents of the initiative, which include Restaurant Workers of America and the Restaurant Association of Metropolitan Washington, argue that most tipped employees earn far more than the minimum wage through tips, and that many of them rely on that increased income above the minimum wage. Opponents say eliminating the tip credit and moving to a flat minimum wage would result in increased customer costs via higher menu prices or a fixed service charge, reductions in staffing, resulting in fewer jobs, and restaurant closures. They also believe customers will stop or significantly reduce tips if the cost of meals and drinks goes up.
Opponents of the measure also argue that eliminating the tip credit will lead to other cost increases. One issue has to do with the fact that some restaurants have percentage rent. This means they pay a percentage (generally 6 to 8 percent) on gross revenues above a certain dollar amount determined in the lease. Increasing menu prices to pay for higher wages will increase gross sales, which will in turn increase the amount a restaurant may be paying to the landlord. It’s a cost that consumers could also see in their bills.
The tipped wage has been eliminated in 7 states – Alaska, California, Minnesota, Montana, Nevada, Oregon, and Washington. Maine passed a ballot initiative in November 2017 that eliminated the tip credit, among other minimum wage changes, but the Maine legislature and governor restored the credit on January 1, 2018.
So what has been the impact in other states?
Per an article in Washingtonian:
“… each side has its take. ROC United likes to point out that the restaurant industries are thriving in cities like Seattle and San Francisco, which are gradually moving to a universal $15 minimum wage. They say that change has largely not led to the elimination of the tipping system or reduced tipping. One oft cited statistic: the number of food and drink business licenses in Seattle has increased by six percent since the city adopted its $15 minimum wage.
Now, the other side paints a less rosy picture. One recent study of Seattle from the University of Washington found that while the pay went up for low-wage workers, employers reduced hours, resulting in an average loss of $125 per month. The report also estimated the change in law resulted in 5,000 fewer low-wage jobs.”
Why are we voting on this now, in a primary? Shouldn’t this be a general election topic?
The DC Board of Elections approved this ballot initiative in March, and under DC law, the initiative needs to be scheduled at the next available election – which is June 19.
Where can I learn more?
The Washington City Paper has had great coverage of the discussion, including a debate at the Black Cat last month. I encourage anyone who wants to learn more about this ballot initiative to check out their coverage below.
Washington City Paper initial article: https://www.washingtoncitypaper.com/food/young-hungry/article/21004275/fear-mounts-in-restaurant-industry-as-dc-prepares-to-vote-on-the-tipped-minimum-wage
Further City Paper articles:
A few other resources:
ROC-DC (supporters): http://rocunited.org/
Save Our Tips (opponents): https://saveourtips.com/