The tipping wars come to DC

This year, voters in the District of Columbia will be asked to decide the fate of a proposal called Initiative 77. This bill would phase out wages for restaurant and bar industry servers which are below minimum wage. The change would take place over seven years, with all servers earning a $15 per hour minimum wage by 2025. Of course, if you ask most of those workers, it will also phase out their tips as customers have to pay more for food and drinks while learning that the servers are no longer earning below scale. The unions are pushing mightily to pass this measure but they’re getting surprisingly little support from the actual workers it’s supposed to benefit. (WaPo)

In the District, where 2,267 restaurants employed more than 50,000 people as of 2016 — making them the third-largest private employers — a restaurant trade group is waging a fierce political battle to kill Initiative 77.

Mayor Muriel E. Bowser (D) and nearly every other elected leader are opposed to it, along with — maybe surprisingly — many of the restaurant workers the ballot question is supposed to help. Those workers call the measure a threat to their livelihoods. They have organized on social media for the “Save Our Tips” campaign and handed diners campaign literature along with their checks.

Owners say the current system works: Restaurants with thin profit margins can survive while workers can earn more than the standard minimum wage.

If D.C. voters pass the measure, at least three things are likely to happen, according to restaurateurs and researchers. Some diners will still tip. Restaurant prices will rise, probably more than the 20 percent that diners normally tip. And some restaurants won’t survive the changeover to higher labor costs that come with a one-wage system.

Under the current system in DC, servers have to be paid at least $3.33 per hour. That’s not enough of a wage to pay your bus fare with, but there’s a catch. If their tips don’t bring them up to $12.50 per hour, the employer has to kick in the rest. The linked report claims that they’ve discovered some employers who are failing to do that (in as many as 5% of cases) but isn’t that a law enforcement issue rather than a failed policy issue? If the servers work in a poorly patronized outlet or don’t deliver the sort of service which generates bigger tips they can still make minimum wage. If they are good enough to land a job at a good eatery and they are a talented server, they can earn far, far more. (One server interviewed about this proposal says he earns up to $36 per hour and he opposes the measure.)

The article lists a number of predicted effects which consumers will notice if the measure passes. Food and beverage prices will rise. Some restaurants will evolve to accomodate the changes and alter their business model. Others won’t be able to absorb the higher labor costs and will go out of business, eliminating jobs for servers. But there’s one other factor they’re not taking into account: The quality of service in restaurants and bars will go down. As tipping is banned (or simply abandoned by customers), servers have less incentive to excel at their jobs. Why put in the extra effort if you’re just going to get minimum wage anyway? The really top-notch servers will disappear.

With all this in mind, who is fighting for this change? The workers don’t want it. Local DC politicians oppose it. Business owners hate it. It will come as no surprise that the cash funding the promotion of this initiative is largely coming from groups backing the unions and the Fight for 15. DC is one of the most liberal, union-friendly spots in the country as well as being a powerful totem for passing new legislation. If they can drive it through there, advocates feel it will be a significant win in their battle.

And if they wreck the careers of a bunch of waiters and bartenders? Well, sometimes when you’re making an omelet you have to break a few eggs, I suppose.