The debate over whether to enact a higher minimum wage has reached a tipping point — literally — in the District of Columbia, with those for and against higher wages centering their arguments on the role tips play in the restaurant industry.
On Monday, labor union leaders met to discuss a ballot initiative that would raise the minimum wage to $15 an hour by 2020 and increase it each year after that in proportion to the Consumer Price Index. But the bill would also alter the wage for tipped workers, who currently make at least $2.77 an hour, plus tips. If passed, the amendment would increase the minimum wage for those employees to $5 an hour by 2020, and to 50 percent of the minimum wage in each year thereafter. A previous version of the bill looked to raise the tipped minimum to $7.50 by 2022.
On Tuesday, the city council approved a citywide $15 minimum wage.
But it was that second portion of the bill — the increase of the tipped minimum wage — that had both industry insiders and workers concerned.
It would require that restaurants completely rethink their compensation model.
"Many of our members say $15 is not as much of an issue," says Kathy Hollinger, CEO of the Restaurant Association of Metropolitan Washington (RAMW), who testified at a D.C. City Council hearing on the initiative in May. "But $7.50, numerically, just doesn't work. What it would do is require that restaurants completely rethink their compensation model."
Though tipped workers in the District currently earn a base wage of $2.77, the law requires that their overall compensation add up to at least $10.50 an hour, the city's current minimum wage.
In preparation for the November ballot, labor groups had been preparing their own measure, one that would require employers to pay all workers $15 an hour, including those who earn tips.
After meeting on Monday, though, labor groups appear to be divided over their next course of action. Some have decided to abandon the measure, arguing that a $15 minimum wage, and a smaller wage for tipped workers ($5), is still a step in the right direction. A representative of the Service Employees International 32BJ, told The Washington Post "he was comfortable with $5 an hour for tipped workers, because employers would still be required to make up the difference for employees to earn $15 an hour."
Those groups agreed to abandon their own measure if the D.C. City Council approves a $15 minimum wage for most (i.e. non-tipped) workers. On Tuesday, the Council approved the citywide $15 minimum wage for non-tipped workers. Under the approved measure, tipped workers will make $5 an hour.
Representatives of labor group Restaurant Opportunities Center (ROC), told Eater the group "will continue to fight for $15." In a statement, the group called the $15 minimum wage enactment "a positive step for many workers in the area," albeit one that was "made on the backs of over 29,000 hard working women and men, and many people of color, in the restaurant industry."
As a representative for restaurant owners in the area, Hollinger says that many of the servers that are members of RAMW make much more than minimum wage. "Servers in D.C. make anywhere from $17 to $66 an hour according to some of our members." She argues that an additional $4.73, per tipped employee, per hour, would be detrimental to a restaurant's bottom line.
An additional $4.73, per tipped employee, per hour, would be detrimental to a restaurant's bottom line.
If a $15 minimum wage bill is enacted for workers across the board, Hollinger predicts restaurants will "get rid of the tip system, pay all of their servers a fixed, hourly wage, and institute a mandatory service charge — and the house would have say over how that money is used and distributed [i.e servers wouldn't necessarily receive any additional compensation]."
Teo Reyes, the National Research Director at ROC — the group behind the bulk of the Fight for $15 protests — says waiters who earn $60 an hour are few and far between. "At a casual restaurant, tips are not high," says Reyes. "People don't leave big tips at IHOP and Denny's."
He says ROC's studies suggest that, in states where minimum wage has gone up, the results have been overwhelmingly positive. "We looked at growth patterns in D.C., San Francisco, and Seattle," he says. "Seattle and San Francisco have already moved to increase minimum wage and those restaurant industries are thriving."
In states where all workers earn the same minimum wages, Reyes says waiters and bartenders "earn about 20 percent more" than in other states. His study also found that in Seattle, bartenders at the 90 percentile of earnings earn 29 percent more than the same bartenders in D.C. In San Francisco, top-earning bartenders take home 43 percent more in earnings than their counterparts in D.C.
Server Jessica Martin, who also testified at the city council meeting Thursday, moved to D.C. after living in San Francisco, where she said higher wages meant she could go to the occasional movie, pay her rent on time, and even pay off a student loan. "Once I moved to D.C., I was just working as many hours as I could, trying to make ends meet."
Martin disagrees with the initiative aiming to pay tipped workers $7.50. As a member of the D.C. chapter of ROC, Martin is in favor of the ballot initiative that would institute one $15 minimum wage across the board.
Female tipped workers are "almost three times as likely to live in poverty in D.C." as other D.C. workers.
"It's interesting to me that Mayor Bowser's initiative is called the 'Fair Shot' amendment," says Martin. "Telling a class of your workforce that they're only worth half of the rest of the workforce... there's nothing fair about that."
Minimum wage costs affect a wide swath of people in the service industry — bartenders, dishwashers, restaurant owners, and servers — but perhaps none are more affected by low wages in the restaurant industry than women. According to a new study from ROC, women tipped workers are "almost three times as likely to live in poverty in D.C." as other D.C. workers. Sexual harassment, which is prevalent among tipped female workers, further compounds the issue.
Martin says she has dealt with sexual advances from customers, and fellow restaurant workers, nearly her entire career. "In the restaurant industry, female workers are on the menu," she says. "But in a situation where the majority of your money is dependent upon tips, you kind of ask yourself, 'Am I willing to wear red lipstick to pay for my rent?' Usually the answer is that I'm willing to wear a tighter pair of slacks in order to feed myself."
Reyes says ROC has found that workers who earned $2 an hour were much more likely to experience sexual harassment than workers that make a full minimum wage.
"Those who earn tips are twice as likely to experience sexual harassment," he says. "It has to do with this environment with catering to the customers' needs. It's harder to stand up for yourself when you need a tip."
The pattern extends to D.C., where ROC surveyed 50 tipped workers, finding that over 90 percent of them had experienced some form of sexual harassment on the job.
Tipped workers in D.C., says Reyes, live in higher rates of poverty than the rest of the workforce. That's according to estimates from the Bureau of Labor Statistics though, which Hollinger says doesn't provide an accurate estimate, as it doesn't take tips into account.
Of course, the income of a minimum wage, non-tipped employee, isn't exactly high either. "The median income in D.C. is $110,000. The current wage for a waiter or waitress will give you $26,000 — with the proposed wage, servers will make $31,000," notes Martin. According to the Bureau of Labor Statistics, the median income in D.C. is actually $80,150, with waiters and waitresses earning approximately $27,360 per year. "That's less than one-third of the actual median income of this area. Realistically, asking for $15 an hour is a severe compromise."
Update 6/7/2016 2:09 p.m.: This post has been updated to reflect that the D.C. City Council has unanimously approved a $15 minimum wage for non-tipped workers. The tipped minimum wage will rise to $5 an hour by 2020 under the bill. Mayor Muriel Bowser has pledged to sign the bill once it reaches her desk. The bill will raise the wage gradually until it hits $15 in 2020.