Commentary: A tip-credit would be more fair than wage hikes

The state’s minimum wage increase is working against many in restaurants. Here’s a better idea.

By Simone Barrone and William S. Beavers

Across the country, the full service restaurant industry has received a lot of scrutiny lately.

Here in Washington state, it began with implementing the $15 standard minimum wage in SeaTac. This wage increase was championed by labor activists including the Service Employees International Union, the Restaurant Opportunities Center and Socialist Alternative among others. Those organizations claim to have the best interest of restaurant employees in mind, but many of us who actually work in that industry argue otherwise. These organizations came up with clever slogans like “One Fair Wage” and “$15 Now” which sound good, but what do they really mean?

Raising the minimum wage for full service restaurant industries has actually caused more harm than good. Right now, our hourly wages surpass what any minimum wage would be. These labor groups believe they know what is best for us and speak as if they’re a part of us, but the policies that they’re advocating for will reduce my hours and income substantially. If they really asked us what we wanted and actually had our interests in mind, they would be advocating for tip-credit policies.

A tip-credit allows restaurant employers to pay tipped employees less than the minimum wage with the assumption that when their tips are added in, their hourly wage will be equal to or surpass the standard minimum wage, which for most servers, is usually the latter. In the event that an employee’s tips do not exceed the minimum wage, the employer is required to make up the difference.

Restaurants traditionally run on a very slim profit margin, typically 3 percent to 5 percent. Mandating a standard minimum wage for the entire staff, without tipping, shreds that margin and upsets the sustainability of the entire business model. Restaurant owners would be forced to increase menu prices, reduce the amount of servers, or even eliminate tipping altogether. Implementing a tip credit would create a sustainable future for the full service restaurant industry.

Last year, researchers from the University of Washington backed up the fears of restaurant owners and workers with a study commissioned by the city of Seattle, citing that the $15 minimum wage caused a reduction in hours for servers and that there would be 5,000 more lower-wage jobs in Seattle had the law not been implemented.

These facts don’t lie, and as servers in the restaurants you patronize, we’ve seen firsthand our fellow servers lose money and hours as a result of the increase in the minimum wage. We have seen restaurants close and workers lose jobs because of the minimum wage increase with no tip credit. With every marked rise in the minimum wage, another marked change happens, and service industry employees are paying the cost.

Because of of the negative consequences of minimum wage increases and other laws now burdening the restaurant industry, we are seeing factions of worker’s band together to fight to preserve their income and their jobs. Organizations like Restaurant Workers of Maine, Service Industry Staff for Change Minneapolis, and the Full Service Workers Alliance of Seattle are popping up in cities all over the country. Now, the newly formed Restaurant Workers of America brings tipped workers across the country together to educate one another, advocate for our financial sustainability, and fight for the freedoms and flexibility the industry affords us on a daily basis.

Those of us whose livelihoods depend on tips are finding ourselves in a very grim fight. Here in Seattle, where we are ground zero for the policies that are pushed by special interests, it is time that service employees stand up for what we really want and push back against these organizations that do not represent what we want.

If we are to retain our income and allow for owners to free-up capital to pay higher wages to back-of-house workers, a tip credit is an absolutely necessity.

Simone Barrone and William S. Beavers have worked in the restaurant service industry for years. Barrone is a founding member of the Restaurant Workers of America.

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