Protect restaurant employees
New Jersey’s restaurant industry is in for quite a wakeup call if the legislature passes the proposed tip credit elimination bill.
Bill A-1972, which was introduced today by Assemblymembers Sumter, Egan, Mosquera, Wimberly, will raise the state’s tipped minimum wage by over 300 percent. One might be thinking, “What server wouldn’t want this raise?” The answer: we the workers. Thousands of tipped employees who’ve been fighting against eliminating the tip credit for years. For us, this isn’t a “raise,” it’s actually a pay cut.
Let me start off by explaining how the tip credit works. Most tipped employees in New Jersey are paid a base wage of $2.13 an hour. If our hourly pay, including tips, doesn’t equal the minimum wage, our employer is required by law to make up that difference. And even that circumstance is rare. Servers and bartenders usually make well over the standard minimum wage through tips alone. (I earn roughly $28 an hour with tips.) Ultimately we are always guaranteed to make at least the minimum wage.
By voting to eliminate the tip credit, New Jersey Assemblymembers may be hoping to give tipped employees a raise. In reality, they’ll only be cutting our pay and putting our livelihoods in jeopardy.
This is because most restaurants usually work on razorthin profit margins which range between three and five percent. When the cost of labor rises exponentially, restaurant owners are forced to make tough decisions such as reducing staff, raising menu prices, or even closing altogether.
Just look to San Francisco. Researchers with Harvard Business School found that each dollar increase in the Bay Area’s minimum wage increased median rated restaurant closures by 14 percent. Other full-service restaurants are now turning into simple counter service eateries by replacing staff labor with customers to collect and take away their own food. And in New York where the tip credit increased in 2015, the Empire State saw its first year of decline in restaurant growth since the Great Recession. What’s even more surprising, it’s not even tipped employees pushing to eliminate the tip credit. The group behind the effort is the Restaurant Opportunities Center (ROC). ROC has formulated its own agenda to eliminate the tip credit in every state and replace it with their preachy sounding “one fair wage.” ROC believes that the tipping culture results in increased levels of sexual harassment from restaurant and bar patrons. ROC’s research doesn’t even back up that claim. In fact, data from the Equal Employment Opportunity Commission shows that states that don’t have a tip credit actually have the same number of sexual harassment reports as the states that have a tip credit.
New Jersey assemblymembers who are considering voting for this bill should look to Maine, Michigan, New York, and Washington, D.C. where thousands of tipped employees have rallied together to push back against ROC’s agenda. We started in Maine where we successfully gained support from both sides of the aisle (which is almost unheard of today) to repeal ROC’s harmful agenda. We learned quickly that ROC doesn’t speak for our industry which is why tipped employees from across the nation came together to form the Restaurant Workers of America (RWA).
Flash forward to our battles in Michigan, New York, and D.C. where our supporters have voiced their concerns to city council members and state legislators. And as I write this, the D.C. Council has officially repealed the misguided initiative to eliminate the District’s tip credit and the Michigan state legislature is expected to similarly adopt a measure that would reinstate the tip credit.
Now, we’re going to take our fight down to New Jersey, where state Assemblymembers need to know that ROC doesn’t speak for tipped employees. I encourage any state assemblymember to go to their local diner or bar and talk to tipped employees, ask them about how eliminating the tipped wage would affect their income and livelihoods.
I can almost guarantee you that these tipped employees aren’t looking for help because they never asked for it, and they certainly don’t want to be saved.
Joshua Chiasson is a server from Maine and the co-founder of the Restaurant Workers of America (RWA), an employee advocacy organization dedicated to the preservation of tip income.