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“The Algorithm Made Us Do It”: How Bosses at Instacart “Mathwash” Labor Exploitation

Thursday, December 19th, 2019

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Instacart is messing with workers’ tips, again. The company’s workers are so fed up hundreds of them are out on strike this week.

Instacart—a gig economy company for same-day grocery delivery—has had problems with tipping date back to 2016. At that time, Instacart removed tipping from the app, before being shamed into reinstating a tipping policy the next month. Then, in 2018, the company altered its policy again by counting customer tips toward workers’ guaranteed $10 base pay—leading to situations where customers were paying almost the full base, with little contribution from Instacart. Now, Instacart is taking aim at the default tip amount. When customers finish their Instacart orders, the app had previously suggested a tip of 10%. This was unilaterally discontinued and replaced by a 5% default.

In response to the default tip change, Instacart worker and organizer Vanessa Bain penned an impassioned Medium post last month which inspired a walkout of more than a thousand workers demanding reinstatement of the 10% default. Instead of improving conditions in the workplace, their collective action was met with discouraging news. Two days after the walk-out, Instacart slashed workers’ “quality” bonus pay—one of the only remaining pay incentives on the app, and an incentive that has been alleged to make up to 40% of the average Instacart workers’ already low income (some estimates put this between 30 and 35%). The company also did not respond to the concerns workers aired in the Medium post.

Starting December 16 and extending to December 21, over 300 Instacart workers are expected to strike again to challenge Instacart’s incentive cut, tip default changes, and declining work conditions generally, with events scheduled each day.

Amid mounting outrage, Instacart has attempted to deflect criticism by vaguely citing data. “During the last year, we offered a new version of the quality bonus and found that it did not meaningfully improve quality,” the company told shoppers over email in November, after the first walkout. “As a result, we will no longer be offering the quality bonus beginning next week.”

Through this statement, the company blamed unverified, unexplained metrics for the cuts, not its own exploitative model. The metric is presumably based on data, but workers and consumers are never given insight into that data. While the jargon is new, the underlying reality is not: A closer examination reveals this is just a justification for good, old-fashioned exploitation.

By what metric does Instacart measure whether an incentive can “meaningfully improve” quality? For an improvement to be “meaningful,” what quantitative or qualitative factors must be present? Is there a specific “quality” that is being measured, and how does it take into account worker quality of life? Furthermore, how does the company justify the gap between its lowest- and highest-paid employees? The average Instacart executive compensation is $279,596 a year—with the most compensated executive making $790,000. In contrast, the average Instacart worker is making between $9.81 and $12.96 an hour.

By brushing off worker complaints through references to unexplained data that is available to neither workers nor consumers, Instacart is attempting to utilize an insidious rhetorical tactic: “mathwashing.”

Coined by tech-entrepreneur Fred Benenson, the term “mathwashing” can be used to describe attempts to use math terms like “algorithm” to gloss over a more subjective reality. In the case of Instacart, algorithms are being used to justify poor work conditions, since a faceless algorithm is more convenient to blame than the greedy bosses behind the decisions. Benenson is clear in describing why this is a problem.

“This habit goes way back to the early days of computers when they were first entering businesses in the 1960s and 1970s,” he stated, in an interview with Technical.ly Brooklyn. “Everyone hoped the answers they supplied were more true than what humans could come up with, but they eventually realized computers were only as good as their programmers.”

Though Benenson originally used the term to describe how Facebook’s trending topics were not neutral, but instead manipulated by Facebook’s data engineers, it arguably applies to Instacart and a lot of the “don’t blame the bosses, blame the algorithm” language that is common across the gig economy. While other companies like Uber and AirBnb have relied on this rhetoric, however, Instacart is a particularly egregious abuser.

Talking with TechCrunch in 2016, CEO Apoorva Mehta relied on jargon and abstract language to defend workers’ low wages. He praised his workers’ “NPS score” and noted that wages were “not a zero-sum game” because “the problem that we’re trying to solve is very hard.”

Instacart’s process for deciding how to delegate orders is described by its website as a “Stochastic Capacitated Vehicle Routing Problem with Time Windows for Multiple Trips.” In describing delivery scenarios, Instacart’s website discusses using “time-based simulations” to replay “the history of customer and shopper behaviors with the existing algorithm and the new one.” The section shows colorful graphs and charts that fail to describe most of their variables, including one that simply lists “metric” instead of even pretending to have a quantity for measuring efficiency. The language is so loaded with jargon and italics that it is likely inaccessible to the average consumer or worker.

While this jargon conveys little, Instacart uses it to market the company’s “genius” design. To help readers understand that they are dealing with a company that is much smarter than themselves, Instacart includes a grocery-inspired illustration of Albert Einstein to accompany explanations of its black-box algorithim. Instead of leaving with a sense of awe, however, readers leave with a sense of having participated in a game of smoke and mirrors. The explanation reads less like a helpful primer and more like a desperate attempt to get consumers to believe anything other than the truth. Namely, that the company is the “despot” in control of its own algorithm.

This is not a marvel of technological innovation. It is a marvel of exploitation. You don’t need an advanced mathematics degree to know the score.

This article was originally published at InTheseTimes on December 18, 2019. Reprinted with permission.

About the Author: Audrey Winn is a Skadden Fellowship Attorney working and writing in New York City. She is passionate about workers’ rights, algorithmic transparency, and the inclusion of gig workers in the future of the labor movement.

Trump’s Labor Dept. Has Declared War on Tipped Workers

Wednesday, December 4th, 2019

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In October, the Trump administration published a proposed rule regarding tips which, if finalized, will cost workers more than $700 million annually. It is yet another example of the Trump administration using the fine print of a proposal to attempt to push through a change that will transfer large amounts of money from workers to their employers. We also find that as employers ask tipped workers to do more nontipped work as a result of this rule, employment in nontipped food service occupations will decline by 5.3% and employment in tipped occupations will increase by 12.2%, resulting in 243,000 jobs shifting from being nontipped to being tipped. Given that back-of-the-house, nontipped jobs in restaurants are more likely to be held by people of color while tipped occupations are more likely to be held by white workers, this could reduce job opportunities for people of color.

Employers are not allowed to pocket workers’ tips—tips must remain with workers. But employers can legally “capture” some of workers’ tips by paying tipped workers less in base wages than their other workers. For example, the federal minimum wage is $7.25 an hour, but employers can pay tipped workers a “tipped minimum wage” of $2.13 an hour as long as employees’ base wage and the tips they receive over the course of a week are the equivalent of at least $7.25 per hour. All but seven states have a subminimum wage for tipped workers.

In a system like this, the more nontipped work that is done by tipped workers earning the subminimum wage, the more employers benefit. This is best illustrated with a simple example. Say a restaurant has two workers, one doing tipped work and one doing nontipped work, who both work 40 hours a week. The tipped worker is paid $2.50 an hour in base wages, but gets $10 an hour in tips on average, for a total of $12.50 an hour in total earnings. The nontipped worker is paid $7.50 an hour. In this scenario, the restaurant pays their workers a total of ($2.50+$7.50)*40 = $400 per week, and the workers take home a total of ($12.50+$7.50)*40 = $800 (with $400 of that coming from tips).

But suppose the restaurant makes both those workers tipped workers, with each doing half tipped work and half nontipped work. Then the restaurant pays them both $2.50 an hour, and they will each get $5 an hour in tips on average (since now they each spend half their time on nontipped work) for a total of $7.50 an hour in total earnings. In this scenario, the restaurant pays out a total of ($2.50+$2.50)*40 = $200 per week, and the workers take home a total of ($7.50 + $7.50)*40 = $600. The restaurant’s gain of $200 is the workers’ loss of $200, simply by having tipped workers spend time doing nontipped work.

To limit the amount of tips employers can capture in this way, the Department of Labor has always restricted the amount of time tipped workers can spend doing nontipped work if the employer is paying the subminimum wage. In particular, the department has said that if an employer pays the subminimum wage, workers can spend at most 20 % of their time doing nontipped work. This is known as the 80/20 rule: employers can only claim a “tip credit”—i.e., pay tipped workers a base wage less than the regular minimum wage—if tipped staff spend no more than 20 % of their time performing nontipped functions; at least 80 % of their time must be spent in tip-receiving activities.

The protection provided by this rule is critical for tipped worker. For example, in a restaurant, the 80/20 rule prevents employers from expecting servers to spend hours washing dishes at the end of the night, or prepping ingredients for hours before the restaurant opens. Occasionally, a server might play the role of the host, seating guests when a line has formed, or filling salt and pepper shakers when dining service has ended—but such activities cannot take up more than 20 % of their time without employers paying them the full minimum wage, regardless of tips.

The Department of Labor (DOL), under the Trump administration, has proposed to do away with the 80/20 rule. Workers would be left with a toothless protection in which employers would be allowed to take a tip credit “for any amount of time that an employee performs related, nontipped duties contemporaneously with his or her tipped duties, or for a reasonable time immediately before or after performing the tipped duties” (see page 53957 of the proposed rule).

With no meaningful limit on the amount of time tipped workers may perform nontipped work, employers could capture more of workers’ tips. It is not hard to imagine how employers of tipped workers might exploit this change in the regulation.

Consider a restaurant that employs a cleaning service to clean the restaurant each night: vacuuming carpets, dusting, etc. Why continue to pay for such a service, for which the cleaning staff would need to be paid at least the federal minimum wage of $7.25 per hour, when you could simply require servers to spend an extra hour or two performing such work and only pay them the tipped minimum wage of $2.13 per hour? Or, a restaurant that currently employs three dishwashers at a time might decide they can manage the dish load with only one dedicated dishwasher if they hire a couple extra servers and require all servers to wash dishes periodically over the course of their shifts. Employers could pay servers less than the minimum wage for hours of dishwashing so long as they perform some tipped work right before or after washing dishes.

The department recognizes that workers will lose out under this change, stating that “tipped workers might lose tipped income by spending more of their time performing duties where they are not earning tips, while still receiving cash wages of less than minimum wage” (see page 53972 of the proposed rule). Tellingly, DOL did not provide an estimate of the amount that workers will lose—even though it is legally required, as a part of the rulemaking process, to assess all quantifiable costs and benefits “to the fullest extent that these can be usefully estimated” (see Cost-Benefit and Other Analysis Requirements in the Rulemaking Process).

The department claims they “lack data to quantify this potential reduction in tips.” However, EPI easily produced a reasonable estimate using a methodology that is very much in the spirit of estimates the Department of Labor regularly produces; DOL obviously could have produced an estimate. But DOL couldn’t both produce a good faith estimate and maintain the fiction that getting rid of the 80/20 rule is about something other than employers being able to capture more of workers’ tips, so they opted to ignore this legally required step in the rulemaking process.

Below we describe the methodology for our estimate. The simplicity and reasonableness of this approach underscores that by not producing an estimate, the administration appears to simply be trying to hide its anti-worker agenda by claiming to not be able to quantify results.

Methodology for estimating tips captured by employers

The remainder of this piece describes the methodology for estimating the total pay transferred from workers to employers as a result of this rule described above. To evaluate how this rule change would affect pay, we use data from the Current Population Survey (CPS), restricted to states with a tip credit (i.e., that allow employers to pay a subminimum wage to tipped workers), to estimate how much employers might shift work from traditionally nontipped to tipped staff. Doing so would allow them to spread out the total pool of tips received over more people for whom employers can pay less than the minimum wage, thereby reducing employers’ wage responsibility. We then estimate the change in total earnings that would occur for food service workers if that shift in employment took place.

The CPS is a household survey that asks workers about their base wages (exclusive of tips) and about their tips earned, if any. One problem with the CPS data, however, is that earnings from tips are combined with both overtime pay and earnings from commissions. Researchers refer to the CPS variable that provides the aggregate weekly value of these three sources of earnings (overtime, tips, and commissions) as “OTTC.” In order to isolate tips using this variable, we first restrict the sample to hourly workers in tipped occupations, to help ensure that we are not picking up workers who are likely to earn commissions.

For hourly workers in these tipped occupations who work less than or equal to 40 hours in a week, we assume that the entire amount of OTTC earnings is tips. For hourly workers in tipped occupations who work more than 40 hours, we must subtract overtime earnings. We calculate overtime earnings for these workers as 1.5 times their straight-time hourly wage times the number of hours they work beyond 40. For these workers, we assume their tipped earnings are equal to OTTC minus these overtime earnings.

Some workers in tipped occupations do not report their tips in the OTTC variable; however, the CPS also asks workers to report their total weekly earnings inclusive of tips, and their base wage exclusive of tips. For those workers in tipped occupations with no reported value in the OTTC variable, but whose total weekly earnings is greater than the sum of their base wage times the hours they worked, we assume the difference is tips.

In other words, for hourly workers in tipped occupations we calculate tips in two ways:

1. For those who report a value for OTTC:

Weekly tips = OTTC for those who work ? 40 hours per week, and

Weekly tips = OTTC ? [(base wage) × 1.5 × (hours worked ? 40)] for those who work > 40 hours per week.

2. For those who do not report a value for OTTC:

Weekly tips = Total weekly earnings inclusive of tips – (base wage x hours worker).

In cases where tips can be calculated both ways, we take the larger of the two values.

Standard economic logic dictates that employers will spread out aggregate tips over as many workers they can—thereby reducing their wage obligations and effectively “capturing” tips. They will shift work from nontipped to tipped workers until the resulting average wage (combined base wage plus tips) of their tipped workers is at or just above the hourly wage these same workers could get in a nontipped job. For employers of tipped workers to get and keep the workers they need, tipped workers must earn as much as their “outside option,” since, all else being equal (i.e., assuming no important difference in nonwage compensation and working conditions), if these workers could earn more in another job, they would quit and go to that job. But for employers to keep these workers, they do not need to earn any more than they could earn in another job (again, assuming all else is equal), since as long as they are earning what they could earn in another job, it would not be worth it to these workers to quit.

To calculate the “outside option wage,” we use regression analysis to determine the wage each worker would likely earn in a nontipped job. We regress hourly wage (including tips) on controls for age, education, gender, race, ethnicity, citizenship, marital status, and state, and use the results of that regression to predict what each tipped worker would earn in a nontipped job. We set a lower bound on predicted hourly wages at the state minimum wage. We refer to the predicted value as the outside option wage—it’s the wage a similar worker in a nontipped job earns. We assume if a worker currently earns less than or equal to their outside option wage, their earnings cannot be reduced because if their earnings are reduced, they will leave their job and take their outside option.

However, if a worker currently earns more than their outside option wage, their earnings can be reduced by the amount the worker earns above the outside option wage, since as long as their earnings are not reduced below their outside option wage, they will have no reason to leave. We also assume that if their base wage is greater than the state minimum wage—i.e. if their employer is not taking the tip credit—their earnings will not be reduced, since the 80/20 rule applies only to tipped workers who are paid a subminimum base wage. We calculate new average tips earned as the aggregate tips of all tipped workers minus the aggregate amount, just described, by which their earnings can be reduced, divided by the total number of tipped workers.

Using this estimate of new average tips earned, we can estimate how much employers might shift the composition of employment by reducing the number of nontipped workers and adding more tipped ones. We assume that the total amount of tips earned remains the same— it is just spread out over more tipped workers (who are now doing more nontipped work). In particular, we assume that the new number of tipped workers is the number that, when multiplied by the new average tips earned, is equal to the total aggregate tips before the change.

We operationalize this by multiplying the sample weights of tipped workers by total aggregate tips divided by the difference between total aggregate tips and the aggregate amount by which earnings can be reduced. We then assume that the number of tipped workers added is offset one-for-one by a reduction in the number of nontipped workers who have food service occupations. We operationalize this by multiplying the sample weights of nontipped workers by one minus the ratio of the increase in tipped workers to the original number of nontipped workers. We find that employment in nontipped food service occupations will decline by 5.3% and employment in tipped occupations will increase by 12.1%, resulting in 243,000 jobs shifting from being nontipped to being tipped as a result of this rule. The work that had been done by those nontipped workers will now be done by tipped workers, with tipped workers spending less time doing work for which they receive tips.

The loss in pay is calculated as the difference between current aggregate food service tips and new aggregate food service tips using the new employment weights just described for tipped and nontipped workers and the new average wages for tipped workers. We assume average wages for nontipped workers do not change. We estimate that there will be a transfer of $705 million from workers to employers if this rule is finalized.

Finally, it should be noted that our estimate of the transfer from workers to employers is likely a vast underestimate for three reasons. First, tips are widely known to be substantially underestimated in CPS data, thus it is highly likely that we are underestimating the amount of tips employers would capture as a result of this rule change. For example, we find that 47.6% of workers in tipped occupations do not report receiving tips. Similarly, using revenue data from the full-service restaurant industry and updating the methodology from Table 1 here to 2018, we find that tips in full-service restaurants are $30.5 billion, which is roughly twice the amount of tips reported in food service in the CPS. This means the amount employers will really capture is likely roughly twice as large as our estimate.

Second, we only estimated losses in food service. However, about 26.0 % of tips earned in the economy are not earned in restaurants or food service occupations. Combining these two factors together means what employers will really capture may be 2.5 times as large as our estimate. Third, our estimates assume that getting rid of the 80/20 rule will only have an effect if the employer is already taking a tip credit. This ignores the fact that some employers may be incentivized to start using the tip credit if the 80/20 rule is abolished, knowing that without the rule they will be able to capture more tips. Accounting for this factor would increase our estimate further.

The piece was also published at the Economic Policy Institute’s Working Economics Blog.

This article was originally published at In These Times on December 3, 2019. Reprinted with permission.

About the Author: Heidi Shierholz is Senior Economist and Director of Policy at the Economic Policy Institute. From 2014 to 2017, she served the Obama administration as chief economist at the Department of
Labor.
About the Author: David Cooper is a Senior Economic Analyst at the Economic Policy Institute.

DC Council overrules constituents, votes to reinstall tipped wage system

Tuesday, October 2nd, 2018

The District of Columbia’s city council took the first step Tuesday to overturn Initiative 77, a measure passed by a 55 percent to 45 percent majority by the Washington voters. If its efforts succeed, as expected, the council will undo the minimum wage protections for tipped workers.

A 2016 living wage law, enacted by the city council, established a series of gradual steps up to a $15 minimum wage for workers — but included a lower $5-an-hour minimum for service workers, so long as their tips brought that total to no less than $15 per hour. Restaurant-workers-rights groups launched a voter initiative to phase out that exemption and, on June 19, 2018, more than 55 percent of those voting on primary day backed the effort. The restaurant industry — and the city council members they have bankrolled — immediately launched an effort to overturn the voters’ will by city council legislation.

On Tuesday afternoon, the city council rejected a proposed compromise and endorsed a full repeal, on an 8 to 5 vote. Mayor Muriel Bowser (D) has said she will sign the legislation, authored by Council Chair Phil Mendelson (D). Six council Democrats and one independent voted yes on the initial vote; four Democrats and one independent voted no.  District voters have not elected a Republican to the council since 2004.

The council reaffirmed this on an 8 to 5 vote later in the afternoon.  Final final passage is expected later in the October.

Bowser’s official website highlights the District of Columbia’s demand for statehood — it currently has limited “home rule” but the U.S. Congress can overrule any local action. “DC residents seek full democracy for DC since 1982 and today,” it proclaims. “Mayor Muriel Bowser continues the fight to secure full democracy for DC because it is the most appropriate mechanism to grant U.S. citizens, who reside in the District of Columbia, the full rights and privileges of American citizenship.”

But for Bowser and the majority of council members, that full democracy can be overridden when the restaurant industry does not like what the majority decides.

This article was originally published at ThinkProgress on October 2, 2018. Reprinted with permission. 

About the Author: Josh Israel has been senior investigative reporter for ThinkProgress since 2012. Previously, he was a reporter and oversaw money-in-politics reporting at the Center for Public Integrity, was chief researcher for Nick Kotz’s acclaimed 2005 book Judgment Days: Lyndon Baines Johnson, Martin Luther King Jr., and the Laws that Changed America, and was president of the Virginia Partisans Gay & Lesbian Democratic Club.

D.C. Council moves to overrule voters, reinstall tipped wage system

Friday, July 13th, 2018

This week, the majority of the D.C. Council supported a repeal of Initiative 77. Initiative 77 is the ballot measure voters approved in June that eliminates the tipped minimum wage and would gradually phase out the tipped workers’ minimum wage, so that by 2026, all workers are paid the same minimum wage.

Fifty-six percent of District voters approved of it. States such as California, Alaska, Washington, and Oregon, have gotten rid of the subminimum wage, and Economic Policy Institute’s analysis shows that poverty rates for servers and bartenders are lower in the states that have.

The campaign against Initiative 77 was well-funded and backed by the Restaurant Association of Metropolitan Washington (RAMW), which created a committee, “Save Our Tip System Initiative 77” to spread anti-Initiative 77 messages. According to The Intercept, the committee is managed partly by Lincoln Strategy Group, which did canvassing work for the Trump campaign. The National Restaurant Association, which has been lobbying against the tipped minimum wage for decades, gave the campaign $25,000.

The council members who have supported a repeal include Jack Evans (D), Anita Bonds (D), Trayon White (D), Kenyan McDuffie (D), Brandon Todd (D), Vincent Gray (D), and D.C. Council Chairman Phil Mendelson (D). Brianne Nadeau (D) tweeted that although she did not support the ballot measure, voters did, which is why she didn’t back the repeal.

Council member Todd tweeted that “This bill is just the beginning of a legislative process where nuanced deliberation & constructive dialogue can take place.” When asked by Washington Post reporter Fenit Nirappil how a bill flatly repealing it would lead to nuanced deliberations, Todd responded that “it initiates public hearings. Who knows how the bill will change as testimony and more information become available.”

The Council won’t take up the bill until after summer recess. Council members chose not to announce the bill to repeal during a committee meeting and instead filed it with the Council’s Office of the Secretary.

Diana Ramirez of the Restaurant Opportunities Center DC told WAMU, “These are the same constituents who just voted them into office and re-elected them. I think they deserve to tell us why they introduced this.”

Although Ramirez has voiced a willingness to work with council members on some kind of compromise legislation, according to the Washington Post, Council member Mendelson said, “There are not a lot of compromise ideas that come to mind.”

The council has only overridden ballot initiatives four times since the 1980s, according to the Washington Post.

There have been many recent incidents of local lawmakers trying to override ballot measures. In Nebraska, Republican lawmakers filed a lawsuit to prevent voters from putting Medicaid expansion on the ballot this November. In other states, such as Maine and South Dakota, lawmakers have blocked or repealed ballot measures.

Josh Altic, project director for the Ballot Measures Project for the website Ballotpedia, told Stateline, a nonpartisan news service, “We have definitely seen some notable cases of legislative tampering this year, especially with regard to the boldness with which legislatures are willing to change or repeal initiatives.”

This article was originally published at ThinkProgress on July 11, 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.

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.

Busting some myths about tipped workers and the minimum wage

Wednesday, June 6th, 2018

There’s a referendum in Washington, D.C., to end the tipped minimum wage and make sure tipped workers get the full minimum wage. Restaurant groups are fighting hard and spreading misinformation, so the Economic Policy Institute sets the record straight. A lower wage for tipped workers disproportionately affects women and people of color—it “perpetuates racial and gender inequities, and results in worse economic outcomes for tipped workers,” especially given research showing that white people get higher tips.

Tipped workers in states where they get a subminimum wage experience higher poverty levels than in equal treatment states—a difference of 18.5 percent poverty vs. 11.1 percent poverty. And while restaurant owners are threatening that if the tipped minimum wage goes up, tips will go down or go away:

The data show that tipped workers’ median hourly pay (counting both base wages and tips) is significantly higher in equal treatment states. Waiters, waitresses, and bartenders in these states earn 17 percent more per hour (including both tips and base pay) than their counterparts in states where tipped workers receive the federal tipped minimum wage of $2.13 per hour. There is no evidence that net hourly earnings go down, such as from customers tipping less, when tipped workers are paid the regular minimum wage.

Finally, giving tipped workers the full minimum wage is not going to devastate the restaurant industry:

The restaurant industry thrives in equal treatment states. In one of the most comprehensive studies on the minimum wage, researchers aggregated the results of over four decades of studies on the employment effects of the minimum wage. They concluded that there is “little or no significant impact of minimum wage increases on employment.” Affected businesses are typically able to absorb additional labor costs through increases in productivity, reductions in turnover costs, compressing internal wage ladders, and modest price increases. Furthermore, research specific to the tipped minimum wage also found no significant effect on employment.

This blog was originally published at Daily Kos on June 2, 2018. Reprinted with permission.

About the Author: Laura Clawson is labor editor at DailyKos.

So you think tipping ensures good service? No, but it does enable sexual harassment

Thursday, March 15th, 2018

People who work in restaurants will tell you: tips say more about customers than about the service they get. All those people who say that tips are a way to reward good service and punish bad service? Sorry, but that’s not how it works in practice every day in restaurants across the country. Instead, tips are all too often used as weapons to force women to accept sexual harassment. A few of those women detailed their worst experiences for the New York Times:

There was the young server at a burger joint in Georgia, Emmallie Heard, whose customer held her tip money in his hand and said, “So you gonna give me your number?” She wrote it down, but changed one of the digits.

There was the waitress in Portland, Ore., Whitney Edmunds, who swallowed her anger when a man patted his lap and beckoned her to sit, saying, “I’m a great tipper.”

And at a steakhouse in Gonzales, La., Jaime Brittain stammered and walked away when a group of men offered a $30 tip if she’d answer a question about her pubic hair. She returned and provided a “snappy answer” that earned her the tip, but acknowledges having mixed feelings about the episode.

If you don’t believe restaurant workers when they say that tips aren’t about good service, the research agrees with them—and shows that tipping promotes racial inequality:

… good service does not motivate tipping decisions as much as people think, said Michael Lynn, a professor of consumer behavior and marketing at Cornell, who has spent years studying why we tip.

“The evidence just isn’t there that the desire to reward good service is driving most tipping decisions,” he said.

Instead, Professor Lynn said, customers are more likely to tip waitresses who are large-breasted, slender and blond, according to research he published in 2009. White servers are tipped more than people of color, according to his research.

And when tipped workers are paid a subminimum wage of $2.13 an hour—which has been the federal level for more than two decades—it only increases their dependence on tips.

This blog was originally published at DailyKos on March 12, 2018. Reprinted with permission. 

About the Author: Laura Clawson is labor editor at DailyKos.

Legislation from DeLauro and Clark Would Strengthen Protections for Tipped Workers

Tuesday, March 13th, 2018

As we reported in January, President Donald Trump’s Department of Labor is proposing a rule change that would mean restaurant servers and bartenders could lose a large portion of their earnings. The rule would overturn one put in place by the Barack Obama administration, which prevents workers in tipped industries from having their tips taken by their employers. Under the new rule, business owners could pay their waitstaff and bartenders as little as $7.25 per hour and keep all tips above that amount without having to tell customers what happened.

An independent analysis estimates this rule would steal $5.8 billion from the pockets of workers each year. A whopping $4.6 billion of that would come out of the pockets of working women. This is bigger than simply the well-deserved tips of restaurant workers. This is another example of extreme legislators, greedy CEOs and corporate lobbyists uniting in opposition to working people. They want to further rig the economic playing field against workers, people of color and women.

Last week, Reps. Rosa DeLauro (D-Conn.) and Katherine Clark (D-Mass.) offered up legislation that will strengthen protections for tipped workers and secure tips as the property of the workers who earn them. Department of Labor Secretary Alexander Acosta indicated that he will support Congress’ legislative efforts to stop companies from claiming ownership over tips instead of the workers who earn them.

Hundreds of thousands of you already have spoken out, sending comments of opposition to the rule straight to the Labor Department. It’s time for us to take the next step together. We can hold Trump’s Department of Labor accountable and make sure that Congress hears our opposition to this ridiculous and unfair change. Take action, and tell Acosta to support amendments to the Fair Labor Standards Act that will secure tips as the property of workers and oppose Trump’s rule legalizing wage theft.

Tips Are More Important Than You Think

Monday, January 22nd, 2018

The Donald Trump Labor Department is proposing a rule change that would mean that restaurant servers and bartenders could lose a large portion of their earnings. The rule would overturn one put in place by the Barack Obama administration initiated, which prevents workers in tipped industries from having their tips taken by their employers. Under the new rule, business owners could pay their wait staff and bartenders as little as $7.25 per hour and keep all tips above that amount without having to tell customers what happened.

new study from the Restaurant Opportunities Centers United and the National Employment Law Project shows that waiters and bartenders earn more in tips than they do from their base hourly wage. The median share of hourly earnings they make from tips makes up nearly 59% of waitstaff earnings and 54% of bartenders’ earnings. Allowing employers to take much or all of that tipped income would be a major blow to many working in the restaurant and bar industry.

Workers in these fields are already poorly compensated. A recent study by the Economic Policy Institute and the University of California, Berkeley, found that “median hourly earnings for waiters and bartenders are a meager $10.11 per hour, including tips. That is just $2.86 above the current federal wage floor and far below what workers throughout the country need to make ends meet.”

While proponents of the change suggest that businesses might use the tips to give workers more hours or to subsidize non-tipped employees, but with no requirement for such use of the tipped wages, employers could use them in any way they see fit. EPI analysis found that the new rule would transfer $5.8 billion from workers to employers.

Read the full report.

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