Axing tipped wages could impact 70,000 employees
Restaurateurs clash with lawmakers over minimum wage issue
In a major tug of war, restaurants and lawmakers are battling over whether the minimum wage should be increased for restaurant workers who receive tips.
For years, Connecticut has had a two-tiered system where about 70,000 tipped workers currently receive a reduced minimum wage as their tips boost their overall compensation beyond the minimum wage.
But Democrats on the state legislature’s labor committee are pushing to gradually eliminate that system by July 2027 and pay workers the regular minimum wage that is currently $15.69 per hour in Connecticut. The federal minimum wage remains at only $7.25 per hour, and workers argue that Connecticut needs increased wages as a high-cost state.
Opponents argued that the proposed change would amount to a 125% wage increase over several years to be paid by Connecticut restaurants. Advocates, though, counter that the wage has been stagnated for so long that a large increase is necessary.
State AFL-CIO president Ed Hawthorne, who represents 250,000 workers in a variety of industries, says that restaurants have benefitted greatly by keeping the subminimum wages that they pay to their workers frozen since 2017.
“If tipped subminimum wages had continued to be tied to the full minimum wage, servers would be earning $9.92, and bartenders would be earning $12.79,” Hawthorne said. “That means employers are saving $3.54 per hour, per server and $4.56 per hour, per bartender. That’s a 36% wage discount. Put another way, employers of tipped workers pay them just 40% of the minimum wage. No other industry profits as much on the backs of its workers.”
As the economy has rebounded sharply from COVID, restaurants are back in business after suffering huge blows during the pandemic when many customers stayed home for fear of health impacts.
Connecticut would not be the first to change the system. Seven other states, from California, Oregon, Washington and Nevada to Minnesota, Montana and Alaska, and places like Washington, D.C., Chicago, and Flagstaff, Arizona, have passed the phaseout of the subminimum wage.
But businesses are pushing back
sharply on the idea.
Andy Markowski, state director of the National Federation of Independent Business, said the measure will backfire on small businesses.
“Facing high utility costs, taxes, continuously rising costs in health care, the fluctuating costs and availability of food products, reduced customer demand, and ongoing staffing shortages, the struggle for many small employers in the food and hospitality services industry has reached a critical point,” Markowski said in written testimony. “In an industry that has very tight margins, any state mandated increases in labor costs and the changes in policy contemplated in this bill will result in fewer hours and fewer jobs, as small businesses express reluctance to increase prices for consumers.”
Scott Dolch, president of the Connecticut Restaurant Association, said that a survey of more than 200 restaurants conducted by the restaurant association last year showed that “the average server in Connecticut makes $33 per hour,” and the average bartender makes $38 per hour.
“Both figures are more than double the current minimum wage and prove that the system works and should not be changed,” Dolch said.
On the morning of the public hearing, Dolch released a new survey of 446 bartenders and servers that was conducted during the past 10 days.
The poll, Dolch said, showed that 96% of those surveyed favor the tip system, while 95% of those surveyed “feel that servers and bartenders will earn less income if this bill were to pass.” In addition, 91% in the poll currently earn more than $20 per hour — with 61% earning more than $30 per hour. Those polled included many veteran workers, including 55% who said they had 10 or more years in the restaurant business.
“In summary, this bill will negatively impact the very people it’s seeking to help,” Dolch said. “The current system works, and it works for both employers and their employees.”
But Hawthorne, from the AFL-CIO, said the employees are working in an often-difficult industry.
“Connecticut’s nearly 70,000 tipped workers are 69% women and 28% workers of color and experience particularly high rates of sexual harassment on the job,” Hawthorne said. “They are forced to tolerate inappropriate comments or sexual behaviors because they need the tip to survive. Ninety percent of female tipped workers have experienced some form of sexual harassment or assault in the workplace and 60% of transgender workers report experiencing “scary” or “unwanted” sexual behavior from customers.”
The restaurant business exhibits a sharp dichotomy in how workers are treated, he said.
“Restaurant employers may point to staff who work at high-end restaurants selling entrees costing $40 or more with expensive bottles of wine, suggesting they earn a good living on their tips,” Hawthorne said. “That may be true, but their experience is the exception, not the norm. The overwhelming majority of Connecticut restaurants are not fine-dining establishments. They are casual or fast casual restaurants, bars, diners, cafes, and family eateries where meals are served at affordable prices.”
The lowest tips, officials said, are often paid in well-known chains such as IHOP and Denny’s, while the highest tips are at upscale restaurants.