Article contributed by the NYS Restaurant Association
As expected hundreds showed up at the Long Island hearing, many from the restaurant community, servers, bartenders and operators that do NOT want a change to the current tip wage system and said “Leave the tip wage alone, Governor Cuomo”.
On Friday, April 20 the first of seven statewide hearings initiated by Governor Cuomo’s directive to the Department of Labor took place to hear testimony on the possible elimination of the tip credit. Hundreds turned out to SUNY Farmingdale to share their stories. The tip wage community of servers, bartenders and professional foodservice staff took to the microphone, some waiting for hours for their chance, to explain why this exploration is more of a solution in search of a problem than a move to improve wages. In fact one of the overarching messages was that this is not being asked for by the tipped restaurant workers, the very people this change is designed to help.
A server from one Long Island restaurant said that if the tip credit were eliminated her employer might have to close for a few months due to the seasonality of their business which would force her to get another job out of the industry.
Tipped employees from restaurants of all different sizes, styles and cuisine stood before the Department of Labor Commissioner Roberta Reardon and her staff sharing the negative affects this would place on their earnings, the restaurant industries owners and the consumers who will have to endure more price increases at a time where every penny is being pinched. The crowd’s comments suggested the effect of this type of change could reduce tips, confuse consumers, markedly increase prices and force service levels to drop due to reduced staff.
Restaurant owners also had their chance at sharing the impact to their businesses. The industry is already forced to survive on slim margins and after being forced to endure three minimum wage increases over a three year period many wouldn’t be able to handle a tip credit elimination.
Anthony Rovet, a Divisional Vice President for Miller’s Ale House shared this: “We employ over 600 New York residents and to stay competitive in hiring talent, our average non-tipped employee earns an average wage of $15 per hour, $4 above the current New York minimum wage. Our tipped employees, earn an average wage of $18 per hour when combining the required hourly wage and their tips, $7 above the current New York minimum wage.
Eliminating the tip credit in New York will hurt the very people Governor Cuomo is attempting to help:
- We will have to raise our prices.
- We will lose business.
- We will cut hours and jobs.
- Guests will perceive that tipping is unnecessary
- Guests will stop tipping or tip considerably less and ultimately reduce server income.
Melissa Fleischut, the President & CEO of the New York Restaurant Association shared in her testimony that “during the past eight years tipped restaurant employees have received increases in wages from their employers of anywhere from 115% in New York City to 61% in upstate with more to come” and that these increases do not account for any income made from tips. She also spoke to a recent example of a state eliminating the tip credit and how that ended poorly for all parties involved. In 2015 Maine voted to eliminate the tip credit through a statewide ballot initiative. Almost immediately after it was signed into law, servers and other tipped employees began to see a stark decrease in their take home pay due to rapidly declining tips. Restaurant employees began to rally en masse at the state capitol arguing for the reinstatement of the credit and got just that a mere 6 months later.
The New York State Restaurant Association has held dozens of meetings all over the state during the last four months to gain insights and listen to feedback about how this would affect the industry.
During those meetings members have explained if the tip wage were eliminated they would have to consider cutting staff, raising prices, consider technology options like tablets, and almost certainly add work responsibilities to the current staff. Some even said they might have to contemplate ‘service included’ models which would likely result in less total earnings for tipped employees. Service included models can be risky since many customers dislike them and the concept has failed more times that it’s been successful. Many operators are reeling from the recent minimum wage increases and fear they may have to close if the tip credit were eliminated.
Momentum is key and we urge the industry to continue to voice their opposition to this dangerous policy. The remaining hearing is scheduled to take place on 6/27 in the New York City.