A controversial proposal to change the pay structure for servers and other workers at Washington’s bars and restaurants goes before voters Tuesday, four years after approval of an identical ballot issue that was later overturned by the D.C. Council.
Initiative 82 would eliminate the so-called tipped wages system in which restaurant owners pay certain staff members well below the $16.10 minimum hourly wage on the assumption that the difference would be made up through customer tips.
Currently, restaurant managers pay some staffers salaries as low as $5.35 per hour. If the employees’ tips for the night don’t raise that income up to the minimum, the employers make up the difference.
The proposal would gradually eliminate the two-tiered system, requiring employers to pay every staffer the $16.10 minimum by 2027.
The issue spawned fierce debates among the hospitality industry in 2018, and its revival has done the same this year, with campaign placards for and against it alongside those for mayoral or council candidates.
The council and Mayor Muriel Bowser drew heavy criticism for reversing the 2018 initiative, and several council members who voted to overturn the previous initiative have publicly stated they would not do so again if the new one succeeds.
While some states have set higher minimums, the federal “tipped minimum wage” has stagnated at $2.13 an hour since 1991 — while inflation has steadily eroded its purchasing power to less than half. Despite federal law requiring restaurants to ensure tipped workers end up with the current federal minimum wage of $7.25 by making up the difference when tips fall short, violations are rampant.
Pennsylvania raised its monthly tip threshold in March from $30 to $135, meaning that employers can pay tipped employees less the state’s minimum wage of $7.25 an hour, to as low as $2.83 an hour, only if they make at least $135 a month in tips.
Supporters of the Washington proposal claim the change will offer protection and equal footing for all employees, while opponents — including the local restaurant association — warn that the extra expense will drive up costs, force smaller independent restaurants to close and lead to extra charges that would drive away customers and discourage high-end tipping.
Danny Meyer, CEO of the upscale Union Square Restaurant Group, announced in 2020 that his restaurants would be moving away from a five-year-long no-tipping policy when they reopened in March of that year. The company, which owns Gramercy Tavern and Union Square Cafe, laid off more than 2,000 workers after New York ordered restaurants to close during the pandemic.
Concerns that workers wouldn’t return without the lure of gratuities were a big factor in the decision to reinstate tipping, Meyer said on LinkedIn at the time.
Illusion of change
The dynamic is more complex than merely labor vs. management; the debate has divided the staffs of restaurants and bars. Many waiters and bartenders oppose it since they currently earn well above the minimum on tips and fear those tips would shrink if an extra service charge is imposed.
Geoff Tracy, a prominent local chef with two restaurants in D.C., opposes the measure, but he stops short of predicting it will lead to layoffs or restaurant closures. Rather he described it as providing the illusion of change without actually accomplishing much.
Tracy said servers and bartenders in his restaurants make below $6 per hour, but after tips the servers average $36 per hour and the bartenders make more than $40. He predicted that adding another $10 per hour to their base pay would simply force a new service charge, drive down tipping and, in the end, everybody would be making about the same amount or less.
“I’m not really a big fan of raising prices on my customer base,” Tracy said. “Really the only beneficiary will be the District of Columbia, which is going to charge 6% taxes on all these new service charges.”
Ryan O’Leary, one of the leaders of the pro-Initiative 82 campaign and a former tipped server, said the initiative was meant to protect some of the most vulnerable members of the hospitality industry. O’Leary said the strongest internal opposition has come from “really well-established bartenders who are at the top of the pecking order.”
