Voters in the nation’s capital approved a ballot measure Tuesday that would gradually phase out what’s known as the tipped minimum wage, requiring restaurants in the city to pay the same base wage as other employers.
Initiative 82, as the measure is known, would eliminate the “tip credit” that allows employers to pay tipped workers just $5.05 per hour, so long as gratuities get them up to the standard minimum wage of $15.20 per hour. The credit would disappear by 2027, at which point the same wage floor would apply to everyone.
The initiative’s passage is a significant victory for the “One Fair Wage” labor campaign, which seeks to get rid of the tipped wage floor through legislation and ballot measures. Seven states already have no tip credit, with more likely to follow suit.
Supporters of eliminating the tip credit say its presence makes workers’ pay more erratic and leaves a larger share of them in poverty, since they’re so dependent on diners’ tips. The restaurant industry by and large opposes changing the system, saying it will force restaurants to raise their prices or close their doors.
Federal law sets a minimum wage of $7.25 per hour and allows employers to pay tipped workers as little as $2.13. While most states and D.C. have their own laws requiring higher regular and tipped minimum wages, the $2.13 rate before gratuities is still standard in some states, including much of the South.
Under tip credit rules, if a worker isn’t receiving the full minimum wage after tips, the employer is supposed to make up the difference. But critics of the system say that part of the law often goes unenforced, and many workers are reluctant to press their employers for more pay when they don’t get enough in gratuities.
“Supporters of eliminating the tip credit say its presence makes workers’ pay more erratic and leaves a larger share of the workforce in poverty.”
Restaurant groups urged diners to vote against the D.C. initiative, saying the city’s typical server or bartender already makes well above the minimum wage. In a Washington Post op-ed, Kathy Hollinger, president of the Restaurant Association of Metropolitan Washington, wrote that “most tipped employees fear that a higher base wage will impact their earning potential and, in the end, they will end up earning less than they earn now.”
One Fair Wage countered that the current system may work well for employees in high-end restaurants, but the law would impact a much larger and more vulnerable workforce.
“The majority of tipped workers in D.C. are people of color and immigrants who actually work in very casual restaurants, and also nail salons, carwashes, parking attendants,” Saru Jayaraman, the group’s president, told Washingtonian.
Restaurant groups tried and failed to keep the initiative off the ballot, arguing in court that the city’s elections board didn’t properly count the voter signatures for the referendum.
This isn’t the first time D.C. residents have tried to ditch the tipped minimum wage. Voters approved a similar referendum in 2018, but the city council then overturned it. This time, however, the will of the voters appears more likely to stand, with councilmembers showing less appetite for repeal.