It’s Time to End the Tipped Minimum Wage
Washington DC voted this week to eliminate a practice that leaves restaurant workers in poverty. The rest of the country should follow their lead.
We as a nation should be ashamed that our federal minimum wage is still just $7.25 an hour. But in fact, it’s worse than that: the real federal minimum wage is actually $2.13 an hour.
In 17 states and Puerto Rico, employers only have to pay tipped workers $2.13 an hour, so long as those workers make up the rest of the state’s minimum wage in tips. It’s basically a government subsidy for restaurant and nail salon owners at the expense of staff.
Most states have a tipped minimum wage of some sort. Even ultra-liberal Massachusetts—whose legislature this week passed a huge bill including a $15 minimum wage, paid family and medical leave, and other worker-friendly policies—still has a tipped minimum wage. (Under the new bill, tipped workers in Massachusetts will eventually reach a paltry $6.75 per hour.)
Thankfully, the tide is turning. Voters in Washington DC decided this week to eliminate the tipped minimum wage, defying a creepy conservative astroturf campaign that put a chokehold on local media. Sam Thielman at the Columbia Journalism Review wrote a great case study of the pro-tipped-minimum-wage campaign and all their dirty tricks that made the press complicit in their anti-worker agenda.
Here’s one such group, which has garnered mostly positive coverage in dozens of local and national outlets since it was formed late last year:
The name “Restaurant Workers of America” follows the pattern of a union (see, for instance, Communication Workers of America), and it is easy to scan their promotional material and decide that they simply represent one side of a complicated debate between tipped workers. Even The New York Times has mentioned them in passing. But it’s not clear that the group has any broad support from tipped workers, besides the obvious spokespeople. The group’s founder, Joshua Chaisson, said he did not “have the numbers in front of me” a phone interview.
In fact, the tipped minimum wage is terrible for workers. Tipping is a discriminatory practice which among other things promotes a culture of sexism. And it has measurable economic effects, too: tipped workers in states without a tipped minimum wage earn almost 17 percent more than their counterparts in tipped minimum-wage states. This chart from the Economic Policy Institute shows that a tipped minimum wage is a significant contributor to poverty rates—particularly in the food and beverage service industry:
Worse, we have plenty of evidence that a tipped minimum wage is completely unnecessary. Here in Washington state, we eliminated the tipped minimum wage decades ago. Employers must pay tipped workers the minimum wage—which is as high as $15.45 an hour in Seattle under certain conditions—and we’re doing okay. How okay? Just ask Bethany Jean Clement at the Seattle Times:
…Seattle had 2,696 restaurants as of the first quarter of 2017, according to Department of Revenue data — up 25 percent from a decade ago. (These DOR figures represent all food service businesses, including full- and quick-service places, trucks and carts, and caterers.) Contrary to the oft-quoted “fact” that half of all restaurants fail in the first year, the Seattle survival rate for restaurants has been hovering around 87 percent a year out (up from 83 percent in 2007). And the numbers for Seattle restaurants’ gross annual sales are startling: up 45 percent over the past decade, to a 2016 total of $2.9 billion. Yes, billion.
Incidentally, the only other city that regularly beats Seattle in terms of restaurant growth and saturation is San Francisco, which, last I checked, was part of California— another state with no tipped minimum wage.
Despite what business owners threatened in the run-up to the vote, the restaurant scene in Washington DC will not die. Restaurants will not shutter in massive numbers, or move out of the city. Yes, you will see anecdotal doom-and-gloom stories in local media when bad businesses close and owners blame their own ineptitude on the minimum wage. (That happened here in Seattle, too.)
But we have tons of evidence that it is entirely possible for both restaurant owners and restaurant workers to enjoy the prosperity of a high-wage economy. I’ve said it before and I’ll say it again: when restaurant workers can afford to eat in restaurants, that’s better for everyone.
Citizens in the other Washington made the right choice when they voted to end the tipped minimum wage. Let’s work to make sure the rest of the country follows suit.
