Albany must abolish the tip credit and low pay for restaurant workers

New York has long been the epicenter of labor rights. In fact, the first-ever Labor Day parade took place in Union Square in 1882. Yet, despite our history, New York still allows for a two-tiered wage system — a minimum wage, and for tipped restaurant workers, a subminimum wage.

Today, New York restaurant owners can legally pay their workers below minimum wage — $10 per hour in New York City, and even less in other parts of the state. That means, working a full 40 hours a week, a restaurant worker in New York City may make less than $1,800 a month. For reference, the average monthly rent in Manhattan is more than triple that, at a new high of $5,588.

Customers, of course, are supposed to make up the difference in tips. Spoiler alert — they often don’t. People hate tipping. Following the pandemic-prompted recession, two-thirds of Americans have a negative view of tipping, and one-third say it has gotten “out of control.” Tip fatigue has even become a popular meme.

Even before COVID, reliance on tips was bad for restaurant workers — especially for women and moms, who power much of the service industry. While men still hold the lion’s share of senior restaurant roles, women work the majority of tipped jobs, making up 58% of bartenders and 70% of waitstaff. The expectation for “service with a smile,” falls largely along gendered lines, leading to a near-constant barrage of sexual harassment. The wage gap persists among tipped workers, too — women make 78 cents for every dollar their male counterparts make.

Part of the reason for this disparity is that tipped workers at fine-dining establishments are disproportionately white and male compared to the average restaurant. While people of color hold nearly half of tipped positions in casual restaurants, they work less than a third of those same jobs at fine-dining ones — part of a larger trend of racial discrimination in fine-dining.

It’s no surprise that subminimum wage both targets, and disproportionately affects, marginalized communities. The policy is a direct legacy of slavery: a holdover from Emancipation, when white restaurant owners wanted a loophole so they could underpay their Black workers — or just not pay them at all. One out of every five servers in New York City use SNAP benefits; more than a third likely live near or below the poverty line.

New York has the power to change that. Right now, there’s legislation on the table to phase out subminimum wage policies. State lawmakers just need to pass it. That’s one initiative One Fair Wage, an organization committed to organizing service workers and moving legislation to end these subminimum wages, is fighting for. And Moms First, the movement I founded to support parents, is right behind them.

The governor, too, has an important role to play here. While in office, Andrew Cuomo used his executive authority to end subminimum wage to end subminimum wage for all other tipped services, leaving restaurant workers behind. There’s no reason Gov. Hochul, who said she supported a “solid, full wage for restaurant workers” while serving as Cuomo’s second-in-command, couldn’t finish the job the same way.

In the wake of pandemic induced labor shortages, restaurants are struggling to replenish their understaffed teams. The industry lacks almost half a million workers to fill its vacancies post pandemic. Abolishing the subminimum wage would change that. Not to mention, restaurants in fair wage states actually report higher sales growth than those in states where the subminimum wage is still legal. A fair wage is the key to a thriving service industry.

There’s certainly a lot more we must do to help working New Yorkers (especially moms and women of color) reach economic security. If restaurant workers can’t rely on their employers for a living wage, they certainly can’t rely on them for benefits like affordable health care, child care, and paid parental leave. But given this is the very role of government, they shouldn’t have to. Our legislative branches should codify those benefits at a state and federal level for all of us.

Paying one fair wage is simple. With executive authority on the table, ending subminimum wage could happen nearly overnight.

New Yorkers should make their voices heard and know where their representatives stand. New York lawmakers, we have a tip for you: before you march in parades or take out your bullhorns, plant yourself firmly on the right side of history. Labor Day and every day, we urge you to support the policies you campaigned on, the people who elected you, and the restaurant workers who take care of you.

Saujani is the founder of Girls Who Code and Moms First.