Leave Tipped Earners’ Wages Alone

In April, Mayor Muriel Bowser released her proposal to raise the base wage for tipped workers gradually through 2022, when it would be set thereafter at half the minimum wage (which she also proposed to gradually increase to $15 by 2020). The proposal, called “Fair Shot,” is her response to President Obama’s call to raise the national minimum wage. It is intended as a progressive move, to make sure that low-wage workers are paid fairly.

However, the proposal has garnered almost no fans in the restaurant industry, from waitstaff to owners. As the system currently works in D.C., tipped workers are paid a base wage of $2.77 per hour (the “federal tipped minimum wage” is $2.13), with the remainder of their pay coming from diners’ tips, usually 15 to 20 percent of the cost of a meal.

If the sum of these two does not meet the minimum wage, averaged over a week, the employer must make up the difference. But in most cases the base pay plus tips is well above the minimum wage, around $17 to $22 nationally, and the majority of restaurants report that they have never had to make up the difference.

If the base pay is raised, that pay comes directly out of a restaurant’s bottom line. The average restaurant operates on a 5- to 10-percent profit margin, with labor already accounting for 30 percent of expenses. That translates to higher menu prices, reductions in staff size and hours and more strain on remaining staff. In areas where the base pay has been raised to the minimum wage, workers have reported lower tips overall (since consumers may believe that tips are no longer as important).
All of this leads to less server attention, a lower quality dining experience, narrower or non-existent margins and the closing of businesses that are now barely profitable or unprofitable.

“My payroll will skyrocket — fast-forward to a $15-per-hour minimum wage. I can’t afford it,” said Billy Martin, owner of Martin’s Tavern. From dishwashers to managers, there will be a domino effect, with each job category in the pecking order seeking a higher wage than the other, he said.

The tipping system for restaurant servers has worked for over a century, with many people having lifelong careers in the field. Their pay is merit-based, and those that are good at it make a good living. City and state governments should not mess with a system they clearly do not understand well. There is the risk of upending untold livelihoods, from the lower-wage workers to the high-end waiters and waitresses to the owners and investors — not to mention the impact on the increasingly high quality dining options in the District. Menu prices would go up, worker pay and profits would go down and eventually owners will close existing restaurants and stop investing in new ones.

This legislation does no one any good, including those it is meant to help. Tipped workers are already covered by the District’s minimum wage laws. Leave well enough alone.