The tip credit issue has long been a contentious topic within the restaurant industry in the United States. It refers to the practice of using employees’ tips to offset the minimum wage that employers are legally required to pay. While this system has its proponents and opponents, the issue remains of utmost importance for restaurant owners across the nation. Advocates for restaurant workers in Massachusetts said they have gathered enough signatures to secure a statewide ballot measure next year to raise the minimum wage for tipped service workers.
The One Fair Wage campaign reported last month that they have gathered 108,000 signatures, exceeding the 75,000 required. The group is a national organization working to boost pay for workers earning below minimum wage.
One Fair Wage wants voters to choose whether to incrementally phase out the state’s “service rate’’ which allows restaurants to pay employees $6.75 an hour if tips make up the difference between that and the standard $15 minimum wage by 2029. “There’s only one future to have a sustainable staff,’’ said Saru Jayaraman, president of One Fair Wage, “and it’s to raise wages.’’
Advocates say doing away with the subminimum wage would lower poverty rates for service employees, reduce instances of sexual harassment facilitated by tipping culture, and draw additional workers to the service industry. “It would also make it more difficult for employers to commit wage theft,” added Jayaraman, “since the onus is currently on employers to calculate and pay workers properly when tips fall short of the minimum wage rate, a standard that the US Department of Labor has found can often go unenforced.”
In Massachusetts, the minimum wage for most workers was raised to $15 per hour early this year, but restaurant workers make less than half that, at $6.75 an hour. Tips are meant to make up the rest of their income. “Tipped workers are doing so much for this economy, for our families, and they cannot take care of their own,” U.S. Rep. Ayanna Pressley said at a press event in support of the measure. “I want you to know that I give a damn about your livelihood, but I care that much more about your lives.”
Pressley and former U.S. Rep. Joseph Kennedy joined local restaurant owners and advocates at the downtown event. Participants highlighted three local restaurants Mei Mei Dumplings in South Boston, Comfort Kitchen in Dorchester and Mamaleh’s in Cambridge that say they already pay their employees a full minimum wage. “We work hard as any other industry, and yet we get the short end of the stick,” said Biplaw Rai, managing partner of Comfort Kitchen. “Why is our industry so behind in raising minimum wage?” Rai added that most restaurant workers cannot afford health insurance and other vital services for their families.
Opposition to the measure comes from the Massachusetts Restaurant Association (MRA), which argues that restaurant owners cannot sustain higher wages for their workers. “We continue to add the cost to the restaurant and then the buying power of the public continues to diminish,” noted MRA president Steven Clark. “So we’re kind of in this circle of increased costs and increased wages.”
The new ballot measure aims to ensure that restaurant workers start out with the state minimum wage and can receive tips on top of that. The Secretary of State’s Office must certify the signatures, a process that can take several weeks.
The tip credit issue remains of paramount importance for restaurant owners across the United States. It plays a crucial role in maintaining the economic viability of restaurants, preserving high customer service standards, and offering flexibility in staffing and hiring. Additionally, the tip credit system supports employee earnings and incentivizes exceptional performance. While the debate surrounding the tip credit system continues, finding a balance that addresses the concerns of both employers and employees is vital to ensuring the continued success of the industry in Massachusetts and across the nation.
