Why Increase The Tipped Minimum Wage?

Don't DC Servers and Bartenders Make A Good Living? I Tip 20 Percent!

A:

Restaurateur Jeff Black might be seeing an uptick in job applications to his DC restaurants, Black Salt and Pearl Dive Oyster Bar, since Black told the Washington Post that servers at his establishments make between “$85,000 and $150,000 annually.”

 

That’s because tipped restaurant workers at most DC establishments earn far less than that and have not seen their earnings rise much over the past decade. Keep in mind, tipped workers include bussers and bar backs who assist servers and bartenders. They only earn a percentage of tips, and the percentage is not standard across the restaurant industry. Yet even the median wage for DC workers who identify themselves as waiters and waitresses was only $9.23 per hour in 2012, including both tips and hourly pay, according to the Bureau of Labor Statistics. Jeff Black’s restaurants are an outlier, as the chart below shows.

 

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And wages for DC’s tipped restaurant workers have not kept pace with DC workers in general. The median wage for all DC workers was $29.79 per hour in 2012, equal to $62,000 annually. While the median wage has jumped nearly $10 over a decade for all workers, the median wage has remained relatively flat for tipped workers.

 

If you’ve never worked in the restaurant industry, you might not understand how DC’s tipped minimum wage and “tip credit” works. Actually, it’s surprising to many who do. Under DC law, restaurants are required to pay workers who receive tips at least $2.77 an hour. If tipped employees do not earn the city’s minimum wage of $8.25 per hour over the course of a work week through the combination of tips and the tipped minimum wage, employers must make up the difference. In other words, tips need to average at least $5.48 per hour over a work week or employees are entitled to some or all of the “tip credit.”

 

The tipped wage was put into place to provide stable income for workers who rely on gratuities, which can fluctuate depending on the type of establishment you work for, the times you work, and various other factors, including the weather. Nationally, tipped workers have twice the poverty rate of the average worker and are more than three times as likely to rely on food stamps.

 

On the federal level, the tipped minimum wage was initially set at 50 percent of the regular minimum wage and then bumped up to 60 percent before being frozen at $2.13. Many states opt to have a higher wage, however.  

 

Unfortunately, DC falls into the bottom half of states when it comes to the tipped minimum wage. Maryland, for example, ties its tipped minimum wage to 50 percent of the state minimum wage. So if you work on one side of Western Avenue NW you get $3.63, but across the street in DC you earn only $2.77. 

 

And seven states, including California and Minnesota, do not differentiate and mandate even servers, bussers, and bartenders earn the regular minimum wage plus tips.

 

The full DC Council should reconsider an amendment proposed by Ward 3 Councilmember Mary Cheh, which would raise the tip credit for restaurants to 50 percent of the minimum wage. That matches the same percentage in the state of Maryland. Cheh's amendment failed in committee, though some members said they might vote for it if they had more information. I am happy to provide any councilmember with more information!

 

The goal of raising the minimum wage is to help ensure that workers can earn a decent living. Given the low pay of many restaurant workers in DC, raising the tipped minimum wage is an important part of achieving this goal.