A waiter hustles at the iconic Ben's Chili Bowl in Washington, D.C. Kamenko Pajic/Reuters

The District’s voters will decide Initiative 77, which would raise the minimum wage on tipped employees. Why don’t workers support it?

Updated: June 20, 2018 Voters approved Initiative 77 on Tuesday. If the city council or Congress don’t void the initiative, it will pass into law a gradual increase to the minimum wage for tipped workers. Stay tuned for additional coverage.

In less than a week, voters in Washington, D.C., will settle a national debate over tipping. The District’s upcoming primary election includes a ballot measure called Initiative 77, a policy to gradually raise the minimum wage that tipped workers receive. Two national restaurant groups are turning D.C. into a proxy war over a wide-reaching and politically fraught norm: the tip.

In one corner: One Fair Wage, the campaign to raise the base pay that waiters, bartenders, and other tipped workers earn in the District. The pro-77 side is almost entirely the work of Restaurant Opportunities Centers United (ROC), a national nonprofit advocacy organization. If 77 passes, employers will pay a single minimum wage throughout the city. No more tiers. Currently, tipped-wage workers can make a lot more (or a lot less) than the regular minimum wage.

In the anti-77 corner: Save Our Tips, the campaign to preserve the status quo. A no vote means that tipped workers will continue to earn a sub-minimum base wage. Most local restaurant industry workers—owners and employees alike—have aligned themselves with the opponents of Initiative 77. But Save Our Tips is far from a grassroots push: Campaign finance records show that it’s principally a production of the National Restaurant Association, which bills itself as “the largest foodservice trade association in the world.”

So in some ways, Initiative 77 is a classic throw-down between labor and management, with a confusing twist: Across the city, bosses and workers are both fighting against the wage increase. Economists take a slightly different tack. Different parties have been squabbling over (and studying) the minimum wage since Congress passed the Fair Labor Standards Act in 1938. But there’s a lot less information on the tipped wage as a phenomenon of its own.

While the empirical research on the tip-credit provision is threadbare, special-interest groups are nevertheless barreling ahead with this economic experiment. The nation should pay attention to what D.C. voters decide on June 19: After all, it’s national groups waging these restaurant wars, and they won’t stop here.

As a city with an electric restaurant scene and staggering racial disparities, D.C. is minding this vote closely. Arguments for and against Initiative 77 can be had all over town. Some of those points are more persuasive than others. Here’s a rundown of some of the questions, myths, inaccuracies, and scare tactics shaping this debate—and also a few bedrock truths.

“Initiative 77” is actually a plot from Star Trek: Deep Space Nine.
False! (You’re thinking of Section 31.) In fact, Initiative 77 is a ballot proposition to gradually raise base wages for tipped workers in D.C. over the course of eight years. Currently, these workers earn $3.33 per hour, plus tips. And currently, tipped workers are guaranteed the minimum wage ($12.50). That means that if tips don’t add up to at least $9.17 an hour, the employer pays the difference.

If Initiative 77 passes, the tipped minimum wage—that $3.33 basement rate—will increase, over eight gradual bumps, until it reaches whatever the minimum wage is in 2026. At that time, front-of-the-house staff at bars and restaurants—those are the servers, bartenders, hosts, sommeliers, and the like—will earn at least $15 an hour (which is what D.C.’s standard minimum wage will be in 2020).

Right now, employers and customers share the responsibility for paying tipped workers a minimum wage. If 77 passes, that duty would fall on employers alone.

If Initiative 77 passes, I don’t have to tip anymore!
No. Or there’s no reason to think so, based on the handful of states that have already banned the sub-minimum tipped wage.

“There has been absolutely no change in tipping practice, to the best of my knowledge, in any of the states that have no tipped minimum wages,” says David Cooper, senior economic analyst for the Economic Policy Institute, a think tank that favors 77. “Think about it: When folks cross the border from Arizona to California to go out to eat, do you think that they are aware of the difference in the state’s tipped wage policy and change their tipping behavior? I doubt it.”

No one has ever consulted this map before leaving a tip.
Light gray: States that use the federal tipped wage.
Medium gray: States that pay above the federal tipped wage.
Dark gray: States that do not have a tipped wage.
Hash marks: States whose standard minimum wage is higher than the federal minimum wage.
(Industrial Relations)

Since the District isn’t a state, it’s hard to compare it with places that prohibit the tipped wage, especially since some states (such as California) never used it in the first place. There’s only one real point of comparison: Flagstaff, Arizona. The state uses the federal tipped wage, but the city will start phasing it out in 2022, gradually increasing it to the city’s (higher) standard minimum wage in 2026.

I heard that tipped workers in D.C. already make a lot more than the minimum wage—$20, $30, or $40 an hour.
True and false. Front-of-the-house staff at most bars and restaurants in D.C. do make more than the minimum wage. Some make a lot more.

But tipped-wage employees also include people who don’t work in fancy restaurants, or in any restaurants. Valets, for example. Housecleaners and landscapers, too. Nail salon workers, an often invisible class of highly exploited immigrants, are also tipped-wage workers. Tipped workers are disproportionately women, people of color, and people living in poverty.

“I realize that when someone thinks of a tipped worker, they think of the waiter they had at Le Diplomate on Thursday night. But there’s a lot of other tipped workers in D.C.,” says Justin Zelikovitz, managing partner of D.C. Wage Law, a firm that specializes in wage-hour compliance. He says he’s argued four car-wash cases in the last year: While car-wash owners are obligated to pay their (mostly African-American and Latino) employees the difference between their cash wage and the minimum wage, plenty get away with paying far less.

“I don’t know if this is good policy or bad policy, but when you create an exception to the baseline rules, you create an opportunity for people to abuse those rules,” Zelikovitz says.

What if Initiative 77 raises costs so much that cocktails will go for $17.97 by 2026?
God, I hope so. Let me lock in my order now!

In an instant-classic media stunt, one D.C. speakeasy hosted a dystopian pop-up bar that imagined what prices would be like in a dark, gritty post-77 era. A gin rickey called “Came to the Wrong Town,” a drink that would normally set back drinkers $12, instead cost nearly $18—a demonstration of the severe consequences of a yes vote on 77. In reality, though, that price hike would be little more than the cost of an inflation increase over the last eight years. As a piece of agitprop, the 2026 pop-up bar flopped—especially since its operators gave one drink a problematic name.

If Initiative 77 passes, my favorite D.C. restaurants will all close or move to Maryland or Virginia.
No, of course they won’t. As a District resident, I will continue to require food and beverage well into the 2020s, and there’s not a policy directive imaginable that can steer me across the river to Clarendon, Virginia, every time I’m hankering for a half-smoke. The National Restaurant Association estimates that D.C. restaurants hauled in $3.8 billion in 2017, most of that spending mine. That money won’t evaporate, especially as the wage hike is structured to happen gradually.

But restaurants may need to make some changes. Ruth Gresser, the owner of Pizzeria Paradiso—a family-friendly tavern with four locations across D.C., Maryland, and Virginia—says that she estimates that she will need to do about $500,000 better in sales to cover her costs in a post-77 2026. In addition to increasing prices, she guesses that Pizzeria Paradiso will abandon tipping altogether, in favor of a flat service charge.

Another District eatery, Sally’s Middle Name, tested out the service charge model when it opened in 2015. Instead of a line for adding gratuity, every check came with an automatic 18 percent fee, which the restaurant split evenly among the front and back of the house. It didn’t last: Sally’s Middle Name ditched the service charge in favor of traditional tipping after a little more than a year. Customers liked it; workers didn’t.

Gresser says that she pays all 140 employees of her four Pizzeria Paradiso locations D.C. wage rate, even though it’s higher than the base rate in Maryland and Virginia, states with lower minimum wages. She worries that if 77 passes, top workers may seek employment in the suburbs. “Unless this happens across the country, the servers who are used to making above minimum wage, including their tips, are going to look for other locations to potentially move to, because they can still make $25, $40, $50 an hour.”

It’s not a given, though, that D.C. restaurant workers are bound to earn less. (After all, this law promises to pay them more!) Already pricey restaurant items—like the $17 burger at Scott Pruitt’s favorite haunt—may rise in cost. But then so will tips on these larger checks, to say nothing of the increase in base wages. More workers making higher wages means more money for them to spend at local industry bars and restaurants. The cycle could be virtuous.       

Do servers or bartenders in D.C. want this initiative to pass?
Not really! The vote-no side includes dozens and dozens of D.C. restaurants, from beloved indies to prominent local chains. Celebrity humanitarian chef José Andrés is a vocal opponent. ROC provided a list of local servers and waiters willing to go on record about why they support a measure that would raise their wages; it was only six names long.

So, case closed, right? If the workers themselves don’t want it, why should the rest of us?    

”This is what keeps me up at night,” says Laura Hayes, food editor at Washington City Paper and the author of the most exhaustive story on Initiative 77 to date. (Disclosure: I’m a contributing writer for Washington City Paper.) “I’m worried that the people that we’re hearing from are the loudest, the people who are [opposed to Initiative 77], because they’re good at social media, they speak English, they work at popular restaurants, and they have lots of friends.”

Hayes took a number of steps to try to find tipped workers who do support 77. She says she infiltrated niche Facebook groups organized on the matter. Hayes teamed up with El Tiempo Latino, D.C.’s Spanish-language daily, to interview Latino workers. But they sided with the opposition, too.

She believes that workers who support 77 are out there, though, and that they may be fearful of retaliation from their employers or otherwise disinclined to wear their support on their sleeve. “It is my sincere hope that restaurant operators wouldn’t put pressure on their employees to take a stand against 77,” she adds. “But in light of recent campaign finance reports that show major dollars being exchanged on both sides, it’s clear that this is a very high-stakes battle.”   

Is this a back-door attempt to unionize restaurant workers?
”No, but we strongly believe that all workers should have the right to organize for living wages, regardless of where they work,” says Diana Ramirez, director of the D.C. chapter of ROC. The organization’s 1,300 members pay a $5 monthly membership fee, she says, but it’s not a strict requirement, so this is hardly union dues.

Restaurant owners are not so sure. Some of them, like Dan Simons, the co-owner of Farmers Restaurant Group—a metro-area farm-to-table chain—claim that the organization wants to boost restaurant workers’ pay in order to establish a base that can support union fees. This insinuation is echoed widely among restaurant workers.

Would a union for restaurant workers be so bad? Back in December, the Trump administration floated a rule that would enable restaurants to pool tips and share them with the back of the house. Critics (including ROC) pounced on the proposal, since it would not require restaurants to share tips: Under the new rule, employers could decide how or whether to divide them up. (Congress nipped the Department of Labor’s so-called “tip-stealing rule” in the bud with a provision in the omnibus in March.)

Wait, isn’t President Donald Trump trying to kill Initiative 77?
No, although one headline might have led readers to think otherwise. The Intercept posted a story on Monday that said that the Save Our Tips anti-77 campaign was “managed in part by” the Lincoln Strategy Group, consultants with ties to the Trump administration. The very next day, though, new campaign finance records showed that Save Our Tips, who paid $11,000 to Lincoln Strategy Group, paid far more to Democratic-leaning strategists. WAMU’s Martin Austermuhle has reported on the actually shadowy groups that are jumping into the fray.

Do D.C. restaurant owners have any better ideas?
I asked Simons, the Founding Farmers co-owner, how he would address the complaints about low wages in the industry. Not by backing 77, he says: Most of his workers don’t want it to pass, and it doesn’t help the back of house staff, like dishwashers and line cooks. For waiters and bartenders specifically, Simons has an idea that might raise some eyebrows: Change the regulations on overtime.

Here’s how he explains it:

A lot of these employees see their lives through a weekly income. They’re trying to get to a weekly income number. That’s how they can plan their lives and pay their bills. A lot of employees at this socioeconomic level end up having to work two jobs to make ends meet, to get to their weekly number. Rather than having two different jobs at 30 or 40 hours a week, they might have a much easier time if they could work for one company for 60 hours or 55 hours. But the way that overtime laws are structured? Companies don’t want to pay overtime. The employees are now forced to have two jobs.

It’s far more difficult for an employee to have two jobs—it’s two commutes, it’s two work cultures, it’s two sets of data to learn. It’s serving two bosses that can have competing needs. I need you to come in, can you help now, I can’t honor your schedule. When you need to take a sick day, you have two people to trust you that you’re actually sick. The reason I’m talking about this issue when I’m talking about tips—these issues to me are all connected. Maybe that overtime law which is 40 hours in the U.S.?  Maybe that should be 50.

Cutting overtime pay is the kind of management suggestion that most workers would roll their eyes over. Workers at Founding Farmers restaurants specifically sued the restaurant and its owners, including Simons, for allegedly failing to pay overtime wages to employees who worked at multiple Founding Farmers locations, among other labor violations. Still, despite the everyday friction of capitalism, when it comes to 77, workers and bosses in D.C. see eye to eye about bosses not paying workers more money.

Restaurant owners are big bullies who just want to pay workers less.
That’s not true. Or that’s not always true.

Simons says that his employees make above minimum wage, for example. He runs through the math: Front-of-house employees at Farmers restaurants work 2,000 total hours* in any given week. To implement an $11-an-hour pay raise would cost $1.1 million—more profit than he sees in a year, he says. That’s fuzzy back-of-the-envelope math, and the increase would happen gradually. In any case, Simons says he’s against 77 because his workers are. Only one is a vocal supporter (as far as he knows).

Some restaurants lining up against the initiative have had run-ins with labor law. In 2010, workers brought a class action suit against Clyde’s Restaurant Group alleging that the company—which owns 15 restaurants around D.C., among them the Old Ebbitt Grill—failed to pay employees their tipped minimum wages. (The parties settled.) Clyde’s has contributed $15,000 to fight Initiative 77; David Moran, area director of operations at Clyde’s, chairs the Save Our Tips campaign.

Gresser, Pizzeria Paradiso’s maestro, says it’s wrong to characterize local owners as bullies.

“We’ve been a company that’s had very significant employee benefits very, very early in our existence,” Gresser says. “We’ve had healthcare for our employees since the mid-90s. We have 401(k) plans. We had sick and vacation time for full-time employees way before it was mandated by the government. There’s an aspect that I find personally offensive, the vilification of the restaurant owner.”

District diners might tend to agree. The city’s restaurant scene is hot, and is not pocked by bland national chains and soulless franchises. Residents who can afford the nightlife love it. Restaurateurs are often involved in the community. But the Economic Policy Institute warns that locals’ affection for their neighborhood bars, eateries, and staff should not blind them to the ubiquity of the arguments against 77.

“Any time there’s a campaign to try to raise labor standards, be it minimum wage, paid minimum wage, or paid sick days, there’s a claim that all these businesses are going to shutter or move across the river to Virginia or over to Maryland. It’s never come to fruition,” Cooper says. “But that’s actually true of every city as well. I’ve testified on probably a half dozen city minimum wage campaigns throughout the country over the last several years, and I hear the same exact thing every city I go to. Our city is not like any others, we can’t possibly absorb a minimum wage increase or a tipped minimum wage increase.”

Can Initiative 77 stop sexual harassment?
No. There’s an argument that tipping leads workers to suffer abuse from customers, since customers are paying their wages. But since Initiative 77 would not put a stop to tipping, it wouldn’t change nasty customer–server dynamics.

City Paper’s Hayes says that sexual harassment is absolutely a problem in D.C. and that it should be taken seriously. While unwanted advances are awful, the form of sexual harassment that’s far harder to endure (or address) comes from management.

“This is not a small town somewhere with two IHOPs and two Denny’s and maybe a Hooters, where [servers] are expected to look date-ready before they go see customers,” Hayes says. “I think that in D.C., the professional class of people who are working in restaurants—they’re highly educated, they have to wear uniforms, they take pride in what they do, they consider it a profession, not just a career stop or a way to make ends meet. They really enjoy it, and that’s from casual restaurants up to fine dining. Whenever they hear this connection between tipping and sexual harassment, they feel that their professionalism is being knocked down a notch.”

Should this issue even be on the ballot?
Absolutely not. Initiative 77’s supporters tried before to sponsor legislation to raise the tipped wage but failed to draw much support. Now, national organizations for and against are asking D.C. voters to wade into an extremely complicated question in a snoozy off-year primary election. The issue at hand matters, and it should be decided by elected representatives who can convene hearings, interrogate locals and experts, and fix any unintended consequences that arise (or be held accountable for their vote).

“This is D.C.,” says CP’s Hayes. “Everyone is working 80-hour work weeks. They don’t have time to consume article after article on this. It’s tough to rely on an uneducated voter base to make such an important call that could affect 35,000 workers. Not everyone is literate on how margins work in restaurants.”

Cooper acknowledges the many passionate arguments about why eliminating the tipped wage can’t work for D.C. He’s heard it all before. Owners and staff will adjust if 77 passes, Cooper says.  

“Every city thinks it’s unique in this way, and yet, somehow, once these increases are passed, every city still finds a way to thrive.”

*CORRECTION: An earlier version of this story incorrectly stated that Farmers restaurants employ 2,000 front-of-house workers in any given week. Its employees work 2,000 hours per week.

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