Over the past year, media coverage of the red-hot labor market gave employers considerable print space to rehash stale narratives of how “no one wants to work anymore.” Less prominent were the sober facts: wage gains have barely kept pace with inflation, the cost of living crisis is dire, and race and gender wage gaps persist — especially among tipped workers.
Despite these challenges, some of the lowest-paid workers in the country — delivery drivers in New York City and restaurant workers in Washington, DC — have won significant victories. The New York drivers won the country’s first minimum wage for their occupation and DC servers won a ballot initiative to get rid of the local subminimum wage for tipped workers.
But industry lobby groups in both cities have used malicious tactics to drag out the implementation of these victories. In New York, they managed to impose a last-minute stay order before drivers’ first pay increase took effect. In Washington, the restaurant industry drove a bullish attempt to overturn the tipped wage ballot victory through legislation.
So far, dogged worker movements have managed to hang on to these wins. But employers aren’t giving up their steadfast commitment to keep the bar low. Now they’re unabashedly pushing for even further gains via tax exemptions and wage liability limitations.
The powerful opponents of low-wage worker wage increases
The National Restaurant Association has long been the driving force behind a two-tier wage system that has kept employers’ responsibility for tipped worker wages frozen at $2.13 per hour at the federal level, subjecting workers to every kind of harassment to secure customer tips for the rest of their pay. Now gig companies, like Uber and Doordash, have enthusiastically adopted this two-tier wage system, even as they aggressively deny employee status for delivery drivers.
Up against the money, power, and influence of the National Restaurant Association and gig companies, worker-led movements have recently delivered enormous wins.
One Fair Wage, a national campaign fighting to end the subminimum wage in the service industry, won a resounding victory in DC through a November 2022 ballot initiative. Seventy-four percent of voters favored phasing out the subminimum wage for tipped workers, giving over 15,000 workers a raise from $5.35 to $16.10 per hour by 2027.
Delivery drivers, an adjacent profession that has moved from the purview of restaurants to apps but is still deeply connected with the restaurant ecosystem, also won big in New York City. Los Deliveristas Unidos, a worker collective representing over 60,000 delivery drivers, pushed for and won a six-bill package in September 2021 that included access to restaurant bathrooms, tip transparency, and minimum wage. This legislation also led to a study that was the basis for the introduction of a minimum wage for drivers.
The restaurant industry is fighting back against a DC ballot victory to phase out the tipped minimum wage
Instead of responding to the new DC wage law by adopting more equitable business models, the restaurant industry is pushing for more gains for employers.
At the time of the first pay increase for DC tipped workers (a princely 65 cents an hour), the Restaurant Association Metropolitan Washington encouraged their member restaurants to start charging a service charge of 20 percent, the customary tip amount, to cover servers’ base wages. The lobby group also supported a bill, the Workers and Restaurants Are Priorities (WRAP) Act, that would exempt such service charges from taxes, a move that would substantially lower the city’s sales tax revenue.
The cobbling together of wages from multiple sources (employers, customer tips, and service charges) is the antithesis of one fair wage. It disadvantages the worker and confuses customers. The Office of the Attorney General has had to issue multiple clarifying advisories on restaurant fees to help consumers navigate through all this complexity.
The restaurant lobby group has tried to claim that this legislation is “pro-worker” since it would fast-track the wage raises for tipped employees. But unlike the sensible multi-year schedule that DC residents voted for, this accelerated plan would create an actual financial emergency for many businesses and potentially provoke action under the next City Council’s term to scuttle the phaseout of the subminimum tipped wage altogether.
Hearings on this bill saw robust turnout from servers and worker advocates, and so far the proposal has not moved forward.