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What You Need to Know About Washington, D.C.'s Initiative 77 and the Minimum Wage

Wednesday, June 20th, 2018

On Tuesday, Washington, D.C., voters will have an opportunity to vote on Initiative 77, a ballot measure supported by a wide array of progressive and labor organizations that would eliminate the subminimum wage for tipped workers and give many working families a much-needed raise.

Initiative 77 would increase the tipped minimum wage to match the full wage: If it passes, the initiative would phase out the tipped minimum wage, leaving a flat $15 per hour minimum wage for D.C. workers. This would be phased in between now and 2025, giving restaurant and bar owners more than enough time to adjust to the change.

Tipped workers aren’t limited to restaurants and bars: Many other workers get tips, too, including manicurists/pedicurists, hairdressers, shampooers, valets, taxi and rideshare drivers, massage therapists, baggage porters and others. Very few of them get anywhere near the 20% standard you see in high-end restaurants and bars.

The current law is changing, but it will still leave tipped workers behind: The current minimum wage in D.C. is $12.50 an hour, with a minimum wage of $3.33 for tipped workers. If tipped workers don’t earn enough from tips to get to $12.50, employers are supposed to pay the difference. After existing minimum wage increases are fully implemented, the full minimum wage for D.C. will be $15 an hour, while the tipped minimum will increase to $5. The cost of living in D.C. is higher than every state in the United States except Hawaii.

D.C. has a particular problem with the minimum wage: As one of the places in the United States with the highest costs of living, low-wage workers are hit harder by discriminatory laws. D.C. has the largest gap in the country between its tipped minimum wage and its prevailing minimum wage. Tipped workers in D.C. are twice as likely to live in poverty as the city’s overall workforce. Tipped workers in D.C. are forced to use public assistance at a higher rate than the overall population, with 14% using food stamps and 23% using Medicaid.

Wherever tipped wage jobs exist, they are typically low-wage, low-quality jobs: Nationally, the median wage is $16.48 and tipped workers median wage is $10.22. Nationally, 46% of tipped workers receive public assistance, whereas non-tipped workers use public assistance at a rate of 35.5%. Workers at tipped jobs are less likely to have access to paid sick leave, paid holiday leave, paid vacations, health insurance and retirement benefits. Seven of the 10 lowest-paying job categories are in food services, according to the U.S. Bureau of Labor Statistics.

Tipped workers are more likely to end up in poverty: In states where the tipped minimum wage is at the federal standard of $2.13, the lowest in the country, the poverty rate for all workers is 14.5%, which breaks down to 18% for waitstaff and bartenders and 7% for non-tipped employees. What day of the week it is, bad weather, a sluggish economy, the changing of the seasons and any number of other factors completely outside of a server’s control can influence tips and make a night, a week or a season less likely to generate needed income.

The predictions of doom and gloom about raising the minimum wage or the tipped minimum wage never come true: Eight states already have eliminated the tipped wage and the restaurants in those states have higher sales per capita, higher job growth, higher job growth for tipped workers and higher rates of tipping. In fact, states without a lower tipped minimum wage have actually seen sectors where tipping is common grow stronger than in states where there is a subminimum wage. This is consistent with the data from overseas where countries have eliminated tipping and subminimum tipped wages. In states without a subminimum tipped wage, tipped workers, across the board, earn 14% higher. Increased minimum wages lead to employers seeing a reduction in turnover and increases in productivity. And, while there are certainly some exceptions, tippers in states without subminimum wage don’t tip less.

Tipped workers are more likely to be women, making lives worse for them and their families: Of the 4.3 million tipped workers in the United States, 60% of them are waiters and bartenders. Of that 2.5 million, 69% of them are women. Furthermore, 24% are parents, and 16% of them are single mothers. Half of the population of tipped bartenders and waitstaff are members of families that earn less than $40,000. Increasing the tipped minimum wage lets parents work fewer nights and have more time at home with their families. It also helps provide for a more steady, predictable income. Since 66% of tipped workers are women, a lower tipped minimum wage essentially creates legalized gender inequity in the industry. These lowest-paid occupations are majority female. More than one in four female restaurant servers or bartenders in D.C. live in poverty, twice the rate of men in the same jobs.

Harassment and objectification are encouraged by the tipped system: The stories about harassment in the restaurant industry are legion. Servers are forced to tolerate inappropriate behavior from customers in order to not see an instant decrease in income. This forces them to subject themselves to objectification and harassment. Workers in states with a subminimum tipped wage are twice as likely to experience sexual harassment in the workplace. In D.C., more than  90% of restaurant workers report some form of sexual harassment on the job. Women’s tips increase if they have blond hair, a larger breast size and a smaller body size, leading to discrimination against women that don’t have those qualities. Nearly 37% of sexual harassment charges filed by women to the EEOC come from the restaurant industry. This rate is five times higher than the overall female workforce. LGBTQ serversalso face a higher rate of harassment in order to obtain tips. Sexual harassment of transgender employees and men is also high in tipped environments. Some 60% of transgender workers reported scary or unwanted sexual behavior. More than 45% of male workers reported that sexual harassment was part of their work life, as well.

The subminimum tipped wage harms people of color: Research shows that tipping has racist impacts, too. Nonwhite restaurant workers take home 56% less than their white colleagues. Research shows that if the minimum wage had held the value it had in 1968, poverty rates for black and Hispanic Americans would be 20% lower. While many restaurants and bars claim to be race-neutral in hiring, the evidence shows that race often has an impact on who gets hired for jobs that directly interact with customers. And fine-dining environments, the ones where servers and bartenders make the most in tips, are much more likely to hire white servers and bartenders, particularly white males. Also, customers, generally speaking, tip black servers less than white servers. For instance, black servers get 15-25% smaller tips, on average in D.C.

The people behind the opposition to 77 are not worker- or democracy-friendly: Public disclosures show that the Save Our Tips campaign that opposes Initiative 77 is heavily funded by the National Restaurant Assocation. This particular NRA represents the interests of, and is funded by, big corporations, such as McDonald’s, Yum! (which owns Taco Bell, Pizza Hut & KFC), Burger King, Darden Restaurants (which owns Olive Garden, Red Lobster and others) and more. The group spends as much as $98 million to oppose minimum wage increases, safety and labor requirements and benefit increases and requirements. Meanwhile, the CEO of the NRA, Dawn Sweeney, took home $3.8 million in total compensation.

The Save Our Tips campaign is managed in part by Lincoln Strategy Group. In 2016, the group did $600,000 worth of work for the Donald Trump presidential campaign. Lincoln Strategy is managed by Nathan Sproul, a Republican consultant and former executive director of the Arizona Christian Coalition. Sproul has a history of being accused of fraudulent election-related activities, including destroying Democratic voter registration forms and creating a fake grassroots effort to undermine the Consumer Financial Protection Bureau.

Another corporate-sponsored group, the Employment Policy Institute, has come out strongly against the initiative and created a website to attack it and ROC. The Institute is the creation of Rick Berman, a wealthy corporate lobbyist who runs campaigns against public interest groups like the Humane Society and labor unions.

Up until 1996, the tipped subminimum wage had been tied into being 50% of the prevailing minimum wage. That year, legislation decoupled the two and the subminimum wage for tipped jobs has stayed at $2.13 nationally, while some states have raised it. The NRA, headed up then by former Godfather’s Pizza CEO Herman Cain, who would go on to run for president, led the charge to separate the two minimum wages.

The separate tipped minimum wage is a burden on employers and invites misuse: The system of tracking tips and wages so that employers can make up the difference is a complex one that is burdensome for employers. The system requires extensive tracking and accounting of tip flows. Not only this, employers are allowed to average tips over the course of a workweek and only have to pay the difference if the average is less than the minimum wage. Tips can also be pooled among various types of restaurant employees. Tip stealing and wage theft are hard to prove and workers are often reluctant to report them out of fear that they will be given fewer shifts or fired.

Employers frequently fail to pay the balance to their employees: While the law requires to make up the balance when tipped wages don’t reach the full minimum wage, employers often fail to do so. The Department of Labor investigated more than 9,000 restaurants and found that 84% had violated this law and had to pay out nearly $5.5 million in back pay because of tipping violations. How many didn’t get caught?

Restaurants are using union-avoidance tactics to sway employees against the initiative: Numerous reports from workers at D.C. restaurants have made it clear that not only are employers singing on to public letters and posting signs against Initiative 77, they are trying to sway their employees, too. Tactics that have been reported are straight from the union-advoidance industry. Many employers are forcing employees to listen to their opinion on the measure. Others have instructed them to evangelize to customers. Some are sending instructions to their employees on how to volunteer at the polls against the Initiative. Others have shared explicitly political videos with employees. Some managers have gone as far as to speak negatively about community organizations advocating for Initiative 77.

This blog was originally published at AFL-CIO on June 18, 2018. Reprinted with permission.

D.C. servers and bartenders say the tipped wage system isn’t working for them

Thursday, June 14th, 2018

A ballot measure in Washington, D.C. that would raise the minimum wage for tipped workers has been at the center of a heated debate in the restaurant industry.

Tipped workers in the city currently receive a base wage of just $3.33 an hour. On June 19, D.C. voters will vote on whether to change that. Initiative 77 would raise those workers’ minimum wage gradually, so that it matches the city’s minimum wage by 2026.

Bartenders and servers who spoke to ThinkProgress said they support the ballot measure because they want to have a more consistent income and feel less susceptible to putting up with harassment. But there’s a lot of misinformation out there.

The heated debate over Initiative 77

Over the last few months, “Save Our Tips” signs have been spotted inside restaurants and in windows throughout the city due to the opposition from many employers in the restaurant industry.

Last year, the Restaurant Association of Metropolitan Washington (RAMW) created a committee called “Save Our Tip System Initiative 77” to campaign against and spend money on legal challenges against the initiative. The committee is managed in part by the Lincoln Strategy Group, which was responsible for canvassing work for Trump’s presidential campaign, according to The Intercept. The campaign has also received donations from many restaurant groups, including the National Restaurant Association, which successfully lobbied against increasing the minimum wage for tipped workers in the 1990s. The group gave the campaign $25,000 of the $58,550 it has raised so far, The Intercept reported.

“Servers are compensated very well,” Kathy Hollinger, the president of the Restaurant Association of Metropolitan Washington, told WAMU last year. “They make far more than minimum wage because of the total compensation structure that works for a server.”

Most of the servers and bartenders ThinkProgress spoke to said employers oppose Initiative 77 and made their views known. Some employers have even gone so far as to advocate against the ballot measure in discussions with servers and to ask them to tell customers about the measure.

On the other side of the debate are the D.C. branch of Restaurant Opportunities Center United (ROC) — which is in charge of the national One Fair Wage Campaign to get rid of the tipped wage system — and many workers who the ballot initiative actually affects.

Although under law, tipped workers are supposed to receive the minimum wage, they say enforcement is another issue entirely. (Workers spoke to ThinkProgress on the condition that we do not publish their real names, out of fear of retaliation from their employers.)

Jamie, who works at a midsize restaurant in Petworth said, “Theoretically, we already have that level playing field, because restaurants are obligated to make up the difference if wage and tips doesn’t come out to minimum wage for workers, but most restaurants are non-compliant and don’t explain this policy to workers.”

Melissa, who works as a server at a restaurant on U Street, said it’s about making things more consistent and enforceable.

“I just think everyone should have that security of knowing they are going to have that paycheck that is going to equal at least a certain amount and it’s a lot more easy to enforce,” she said. “We’ll have tips on top of that and the service as we know it isn’t going to change.”

Michelle, who works as a bartender, said there are Save Our Tips signs on the walls and windows of the restaurant she works at. The restaurant group that owns the restaurant she works for, sends a weekly newsletter to employees, which provides links to instructions on how to volunteer at polls and anti-Initiative 77 videos.

She has heard from servers that they are encouraged to talk to customers about it and “make sure they know the server are against it and that it affects their livelihood and that they should vote against it.”  

Jamie said their employer posted signs that read “NO on 77” and encouraged workers to vote against it. “My managers have also made a point to speak negatively of community organizations that advocate for [Initiative] 77,” they said.

Melissa said she doesn’t have a problem with restaurant owners making their views known as long as they aren’t “lecturing workers on company time” about the ballot measure or spreading misinformation.

“This Save Our Tips campaign has so much fear mongering and misinformation. People believe so many inaccurate ideas because their bosses have said, ‘This is what’s going on,’” she said. “I just think they should have the correct information. I don’t think that’s happening right now.”

Melissa said she thinks workers are being misled when they’re told by employers that people will go eat in Virginia or Maryland instead or that restaurants will close, when in reality, the ballot measure allows the change to take effect gradually. She said some people have told her that they believe ROC is a union and that they will have to pay union dues.

“It’s just a shame they’re being given so many reasons to be afraid,” she said.

NAJ said a lot of people who support the ballot measure are afraid to say anything at their workplace for fear of retaliation.

“Some of those employees are doing so by choice, either because they’re against it or don’t understand it,” they said. “A lot of them can’t come out in support of it because they could lose their livelihoods. They could lose their jobs.”

Many places have already gotten rid of the subminimum wage for tipped workers, including California, Minnesota, Hawaii, Montana, Oregon, Alaska, Washington, and Nevada, and a number of cities. According to the Economic Policy Institute, poverty rates for servers and bartenders are much lower in states that don’t allow a subminimum wage.

Michelle moved to D.C. from California, where they got rid of the subminimum wage, and said she shares her experience working in California with other tipped workers.

“The differences have been pretty striking to me in terms of take-home money, the consistency of a paycheck or the consistency of what I make in a week to two weeks, and also the overtime that is expected of you in a non-tipped wage state,” she said. “I’ve really noticed the difference.”

Michelle said she has asked coworkers who wear No on 77 buttons to tell her more about their opposition to the ballot initiative.

“They’re like, ‘I don’t want to lose my tips’ and I’m like, ‘Oh is that what you believe is going to happen?’ and they say yes. I ask where they’re getting their information from. The only source they have is management and coworkers,” she said. “But they seem to be responsive when I tell them how it was for me when I worked in California and I had a regular paycheck. It wasn’t paying much but at least I could depend on the paycheck every couple weeks that I knew was coming and it was a consistent income as opposed to one week making a difference of $200 to $300 dollars a week depending on tips.”

Workers in support of Initiative 77 say the most privileged voices are the loudest

Servers and bartenders ThinkProgress spoke to said that although some tipped workers who oppose Initiative 77 seem uninformed, others appeared to oppose it because they benefit the most from the current system.

“Most of the white male bartenders I work with are very strongly anti-77,” Michelle said. “Mostly men and white guys are becoming voice of No on Initiative 77 and they are the loudest voice speaking for tipped workers. They aren’t my voice. And the people of color I know in the industry, they are not their voice either.”

NAJ said they don’t see enough people from marginalized groups represented in the debate in the media over Initiative 77.

“The idea that the experience of highest-tier people making the most money should be the representative experience is insulting to people who work in these positions who, for whatever reason, could not move into field of choice because of marginalized identities or whatever it is,” they said. “They are having their livelihoods affected by policies and by business models that literally privilege already privileged people.”

Melissa said people’s opinions seem to be divided along class lines, with people who make more money in the industry opposing the initiative, whereas people who suffer more from wage theft, make lower tips, and work several jobs tend to support it.

“They’re the ones being hurt by the current system,” she said.

Sexual harassment, queerphobia, and racism also needs to be part of the discussion on Initiative 77, servers and bartenders say.

ThinkProgress spoke to queer tipped workers, tipped workers of color, and tipped workers who have experienced sexual harassment. Although servers acknowledge that Initiative 77 won’t eliminate discrimination and sexual harassment from customers, they won’t be as worried about customer biases and behaviors affecting their ability to pay rent or buy groceries — or their ability to push back against harassment.

“I have been kissed by customers against my will. I have been groped. I have had my ass grabbed while I was pouring wine for a table,” Melissa said. “I have had so much inappropriate behavior that I was expected to put up with both by customers and by management because hey, it was a slow night and I needed the money so I guess I’m going to let you grope me if you’re going to tip me.”

Melissa said that even with tables she feels more comfortable talking to, she worries about outing herself as queer because she doesn’t know how her customers will feel.

“I have friends who present queer, much more than I do, who have faced discrimination from customers. I don’t want that to happen to me,” she said.

“White men consistently get tipped better than people of other races and genders — I don’t just mean statistically, but I mean that my own experiences have shown this to be the case,” Jamie said.

Michelle said, “As a bartender you’re likely to let a lot more stuff slide that you would otherwise call people out on when you know you’re not as dependent on tips.”

NAJ, who identifies as a Black femme, said, “I most certainly won’t be tipped by a homophobe or someone who is racist. Disabled workers experience this and transgender servers and bartenders experience this.”

“One of the arguments against 77 is that it will affect highest tipped workers in the business,” they added. “Many of them are from privileged groups, usually white men, usually straight appearing, and conventionally attractive and so they’re able to exploit a system that oppresses a certain class in order to make what they consider to be a fair wage. But a black trans woman working at IHOP can’t make anywhere near that.”

This article was originally published at ThinkProgress on June 12, 2018. Reprinted with permission. 

About the Author: Casey Quinlan is a policy reporter at ThinkProgress covering economic policy and civil rights issues. Her work has been published in The Establishment, The Atlantic, The Crime Report, and City Limits.

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