The wrong time for tip legislation

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In the legislative hopper, this year is a proposed bill that will raise the minimum wage for tipped workers from $2.23 an hour, about two-thirds of the minimum wage, which is currently $9.25 and will increase by another dollar an hour in October.

The bill comes when proposed federal legislation supported by the Biden Administration calls for the eventual end of the tipped wage and a path to a $15 an hour minimum wage.

Many of us, don’t know the law’s ins and outs regarding the tipped wage. As things stand, tipped workers are paid $2.23 an hour and keep the tips above that amount. If tips don’t add up to the minimum wage, the employer plugs the gap.

Supporters of the bill note that the state’s tipped wage has not increased since the 1980s. Before that time, the wage was based on the two-thirds rule. There is also skepticism about some managers and owners not paying the gap between the tipped and minimum wage.

It is no surprise that the hospitality industry and some tipped workers oppose the measure. Margins are often non-existent, and a rising minimum wage could mean higher costs and fewer work hours.

The higher minimum wage could also widen the gap between front and back of the house workers.

Tipped staff, minus a tip pool, can take home double or triple what a dishwasher makes. That is already the case at some higher-end restaurants. Sadly, many of these restaurants have closed, with former wait staff and their families struggling to keep a roof over their heads.

We could also see the misperception that tipped restaurant workers are already receiving the minimum wage, with patrons cutting their tips.

None of this should be viewed as a defense of the tipped wage. Many first-world nations moved on from tipping for all but exceptional service and there’s no denying that current practices are part of our troubled race relations history.

Unfortunately, the restaurant industry’s business model comes with a dependence on tips, with little ability to raise prices. Tips are also embedded in the fast-growing “gig economy” with an online tip jar a key part of Uber/Lyft and food delivery service apps.

It can’t be denied that tips have helped many people get through college and contributed to the rise of the civil rights movement thanks to the struggles and long hours of Black Pullman Porters and others who clawed their way into the middle class.

There are sound arguments in favor of moving away from a tipped economy, but this proposed legislation will do only make things worse for workers and owners in a struggling industry. – Doug Rainey, chief content officer.

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