Tipped Workers Want In on Push for Higher Minimum Wage

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By Rhonda Smith

June 15 — The campaign by fast-food workers to boost the minimum hourly wage to $15 is gaining momentum, but a similar push to increase hourly pay for tipped employees is moving at a slower pace.

Many tipped workers face unique challenges tied to poverty, discrimination and sexual harassment, making their need for higher wages as important as that of their counterparts involved in the Fight for $15 campaign, advocates such as Saru Jayaraman told Bloomberg BNA June 13. She is a co-founder and co-director of Restaurant Opportunities Centers United.

A BNA Graphic: Minimum Wages for Tipped Employees, Jan. 1, 2015

ROC United is working to boost the pay of an estimated 4.3 million U.S. employees who rely primarily on tips. The goal of its One Fair Wage campaign is to eliminate the distinction in pay between tipped and other hourly employees so the minimum wage—whether at the federal, state or local level—is the same for all workers.

The federal hourly minimum for tipped employees, which includes those who serve food, park cars and polish nails, has been $2.13 per hour since 1991.

“The main groups that are with us are women’s rights groups and civil rights groups, who see this as a women’s equality issue,” Jayaraman said. The restaurant industry is the largest employer of minimum-wage workers, and women make up about two-thirds of the employees who work for tips in that industry, ROC United and other groups said.

Advocates, who've been working for about three years to increase the $7.25 per hour federal minimum wage, weren't focused on tipped employees until recently, said Jayaraman, who also is director of the Food Labor Research Center at the University of California, Berkeley. “Now, there is an unwillingness to compromise away the women” who rely on tips in the restaurant industry, she said.

‘Kissed, Grabbed, Hugged and Groped.'

Proponents of raising the tipped minimum wage recently told Bloomberg BNA that leaving it at $2.13 per hour for 25 years contributes to higher poverty rates among women and families and exposes a disproportionate number of workers to sexual harassment and discrimination.

“I have been kissed, grabbed, hugged and groped by dozens of male customers,” Abby Dunn, a food server in Washington, D.C., said in a report released in May by ROC United and the National Employment Law Project.

“This has ranged from cornering me at the host stand and kissing my cheek to grabbing my ass while I was pouring wine for a table,” Dunn said. Washington's tipped minimum wage is $2.77 per hour.

In addition to ROC United and NELP, the AFL-CIO, the umbrella federation for 56 U.S. unions, the National Women’s Law Center and the Economic Policy Institute support the gradual elimination of the current tipped minimum wage, according to a report ROC United released this month.

Opponents: One Size Doesn't Fit All

The National Restaurant Association, state chambers of commerce and many small business owners oppose raising the tipped minimum wage too high and too quickly.

“What a lot of advocates are looking for is a drastic increase in the tipped wage,” Christin Fernandez, a spokeswoman for the Washington, D.C.-based association, told Bloomberg BNA June 13. “But a one-size-fits-all policy like that does not work for the restaurant industry.”

On average, tipped food servers make hourly wages from $16 to $22, counting both tips and their employer-paid cash wages, Fernandez said. If the wage system changes, they might make much less. The wage data are based on research the restaurant association conducted but hasn't released yet, she said.

The median hourly wage for waiters and waitresses in May 2015 was $9.25 per hour, according to Bureau of Labor Statistics data.

State Minimum Wages Vary

Many states, though few in the South, require hourly wages for tipped workers that are higher than the federal $2.13 minimum. Seven states require employers to pay tipped workers the same minimum wage that applies to all other hourly employees. On top of that, employees in those states also can receive tips.

The states with a single statewide minimum wage are Alaska, California, Minnesota, Montana, Nevada, Oregon and Washington, according to Labor Department figures released in January 2015.

Jayaraman, author of a recently released book, “Forked: A New Standard for American Dining,” and other proponents of one minimum wage for all workers, said various studies prove such policies are helping restaurants and local economies, not holding them back.

ROC United has said that because a two-tiered wage system depresses tipped workers' wages, they progress financially at a slower pace even as local jurisdictions and states enact laws that raise their hourly minimum wage.

For example, in early April, California Gov. Jerry Brown (D) signed a bill (S.B. 3) raising that state’s minimum wage to $15 an hour by 2022. This means tipped workers’ hourly wage in the Golden State also will rise to $15 that year.

New York Gov. Andrew Cuomo (D) signed a similar measure (S. 6406) in April. It raises the hourly minimum wage for many workers there to $15 by 2018, but tipped workers' hourly minimum will increase at a slower pace, ROC United's June report noted.

“As the country moves toward establishing a minimum wage of $15 per hour, two paths have emerged: that followed by California, in which all workers are on a single track to earn a basic minimum wage of $15 per hour,” the report said, “and a second path exemplified by New York, which passed $15 minimum wage legislation, but reaffirmed a two-tiered wage system in which tipped workers continue to be left behind.”

Dueling Proposals in D.C

During a recent D.C. Council hearing on raising hourly wages, Kathy E. Hollinger, president and chief executive officer of the Restaurant Association of Metropolitan Washington, said a significant jump in the tipped minimum wage would boost operating costs for businesses.

Restaurants would be forced to re-examine staffing levels and hours available to work, and menu prices likely would increase, she said at the May 26 hearing.

“As an association, we take no position on what is the best method of compensation for servers, be it a tip system, a service charge or an all-inclusive pricing method,” Hollinger said. “However, we do take the position that restaurant owners in the District should be free to choose whatever system works best for them and benefits their employees and patrons, as long as there is compliance with law.”

Andrew J. Kline, general counsel for the RAMW, echoed Hollinger during his testimony.

“No one is claiming the sky will fall if you pass a radically higher tipped minimum wage,” he said. “We do think, however, the sky will look radically different.”

“The big guys will figure it out and you will likely have plenty of Applebee’s, IHOPs, Denny’s and even Chili’s and Cheesecake Factories,” he said. “What you won’t have are the places begun by budding entrepreneurs with a new idea for a hospitality establishment, a dream, the willingness to work hard and a little bit of capital saved up from their shifts as servers or bartenders.”

The 13-member D.C. Council on June 7 unanimously approved a proposal that would by 2020 raise the minimum wage in the district to $15 per hour for most workers and to $5 for those who earn tips.

The council must vote on the bill a second time before it can advance to Mayor Muriel Bowser (D), who supports it.

‘A Disrespectful Drop in the Bucket.'

But on June 14, ROC United refiled a ballot initiative with the D.C. Board of Elections that the group previously proposed. It calls for all hourly workers in D.C. to receive the same minimum wage.

Proponents of the proposal are gathering signatures and hope to have the initiative placed on the D.C. ballot in 2017 or 2018, Tim Rusch, a spokesman for ROC United, told Bloomberg BNA June 15.

ROC United supporters described the D.C. Council's current plan as “a disrespectful drop in the bucket toward the equity and dignity they deserve for their hard and valuable work.”

In addition to the District of Columbia, lawmakers in Baltimore are considering legislation that would gradually increase the minimum wage for all employees and eliminate the distinction for tipped wages altogether by 2024. In that year, tipped workers would receive the full minimum wage directly from their employers.

In Maine, voters will consider a ballot initiative in November that would lead to a $12 hourly minimum wage for all employees by 2024.

“We are supporting state campaigns in Maine and Washington, D.C., that are pushing for one fair wage,” Laura Huizar, a staff attorney at the National Employment Law Project, told Bloomberg BNA June 13.

Three federal bills that address the minimum wage, including for tipped workers, have been introduced during the current Congress. But none are expected to advance anytime soon.

“The right decision is to eliminate the tipped minimum wage,” Huizar said, “and it’s very likely going to happen at the federal level, eventually.”

To contact the reporter on this story: Rhonda Smith in Washington, D.C. at rsmith@bna.com

To contact the editor responsible for this story: Susan McGolrick in Washington, D.C. at smcgolrick@bna.com

For More Information

Text of the reports about employer liability and Washington, D.C.'s tipped minimum wage are available at http://src.bna.com/fWE and http://src.bna.com/fWD, respectively.