BOSTON — A union backed proposal to pay tipped workers the state’s minimum wage goes before voters in November, but critics say its passage would hurt Main Street bars and restaurants and drive up consumer costs.
Question 5 asks voters in the November election to decide if the state should require bars, restaurants, hotels and other hospitality venues to pay tipped workers the state’s $15 per hour wage floor, in addition to gratuities.
The plan calls for phasing out the tipped wage for workers over five years, allowing workers to earn up to $15 per hour and keep their tips. It would also allow restaurants to “pool” tips and distribute them equally among all workers, such as cooks, dishwashers and others who don’t interact with customers.
Supporters of phasing out the tipped-wage law — which includes labor organizations and worker advocacy groups — say it would improve wages for underpaid workers who are struggling to survive with the state’s high cost of living.
Saru Jayaraman, president of pro-Question 5 group One Fair Wage, said its passage would ensure that tipped workers “finally receive fair wages, giving them the financial stability they need to support themselves and their families.”
“Since the pandemic, restaurant workers have left the industry in droves. Many of them are tired of barely scraping by on poverty wages and tips that are unpredictable at best,” she said. “It’s time we end the injustice of the subminimum wage and create an industry that truly values and compensates its workers with dignity.”
But critics, like the Massachusetts Restaurant Association and “No on 5” Committee to Protect Tips, argue the plan would increase costs for bars and restaurants that already operate on narrow margins, and lead to higher prices for consumers.
“This would put a massive increase on the costs of small businesses at a time when they are still recovering from COVID,” said Chris Keohan, a spokesman for the “No on 5” opposition group. “This would increase the costs of the average restaurant by about $300,000 a year.”
He said the increased labor costs would push some bars and restaurants out of business or accelerate the shift away from full-service establishments, as employers hire less staff and move to automated operations like McDonald’s and Dunkin’s new self-serve kiosks.
Municipal leaders representing communities including Newburyport, Methuen, Haverhill and Gardner also oppose the proposal, arguing it would devastate Main Street restaurants that are still recovering from the economic effects of the pandemic.
Massachusetts law requires workers to be paid at least $15 an hour — under the “grand bargain” package the Legislature brokered to avert a proposal to cut the state’s sales tax and other proposals. But the 2018 law also allows bars and restaurants to pay tipped workers $6.75 per hour.
The state is home to some 50,000 waiters and waitresses, 20,000 bartenders, and 5,000 manicurists and pedicurists, according to the latest labor data.
If Question 5 is approved, Massachusetts would be the first state in decades to eliminate its tipped minimum wage, which observers say makes it hard to know how the transition will play out in the post-pandemic economy.
The closest example is the District of Columbia, which is two years into a five-year phase-out of its tipped wage, the report noted. Some Washington, D.C., restaurants have set-service fees — ranging from 3% to 20% — to offset the higher labor costs. Critics point to data showing some restaurants have closed in the law’s wake.
A recent report by Tufts University’s Center for State Policy Analysis said restaurants and other tip-dependent businesses will face higher costs from having to cover the full minimum wage, and will likely compensate for that with a mix of price increases, new fees, reduced hiring, and potentially lower profits.
But phasing out the state’s tipped wage will translate into higher pay for most service employees who currently depend on the extra money, according to the report.
In June, the state Supreme Judicial Court tossed out a challenge by restaurant groups alleging the proposal violates a requirement in the state Constitution that initiative petitions must contain only ‘related or mutually dependent’ subjects.
The justices unanimously concluded that Attorney General Andrea Campbell’s office correctly certified the question for the November ballot.
The Massachusetts Restaurant Association and Committee to Protect Tips filed a complaint with the state Ballot Law Commission alleging that backers of the ballot question submitted “fraudulent” signatures from people who aren’t registered to vote, among other claims.
But the groups withdrew their objections at the last minute, citing a lack of time to conduct a thorough review and make their arguments before the panel.