December 30, 2021

CommonWealth: Is it time for the tipped minimum wage to go?

By Eric Spencer in CommonWealth Magazine

IN MOVING TESTIMONY at a legislative hearing in October, Western Massachusetts native Marie Billiel recounted the sexual harassment she experienced as a restaurant server. Billiel, who has worked in the restaurant industry for 16 years, started working at the Route 9 Diner in Hadley when she was 18. She regularly received comments about her body from customers and unwanted advances from staff. The cooks “participated in the most extreme harassment I’ve ever experienced,” she told the committee. One cook grabbed her by the wrist saying he wanted her to kiss him. She was shut in a walk-in cooler with the head chef, who told her he wanted to bite her.

Billiel told the Joint Committee on Labor and Workforce Development that she felt she couldn’t push back. If she rebuffed the advances, other staff would try to sabotage her, often by filling her orders incorrectly, poorly, and slowly. This would lead to fewer tips for Billiel. Earning $2.63 an hour, the minimum wage for tipped employees at the time, Billiel survived on tips. “I was still relatively new to the industry, and I hesitantly accepted this as part of the job,” says Billiel. “Frankly, my livelihood also depended on it.”

Although the state minimum wage for tipped service employees is now $5.55 per hour, set to rise to $6.15 on Jan. 1, Billiel and others argue that any tip dependency creates an unhealthy power dynamic, one that disempowers workers like her. Across the state, advocates want to eliminate the two-tiered wage system in Massachusetts and move all workers to the standard state minimum wage of $13.50 per hour, set to increase to $14.25 on Jan. 1.

State Sen. Patricia Jehlen has proposed a bill, S.1213, An Act Requiring One Fair Wage, which would gradually bring all workers up to the standard minimum wage. Tips would be earned on top of the standard wage. This would make Massachusetts the eighth state to eliminate the tipped minimum wage.

Proponents believe the reform would not only raise wages for many low-income restaurant workers, but would also advance racial and gender equity and reduce workplace sexual harassment. Opponents, including the influential restaurant industry lobby, insist that the current wage model works well for Massachusetts and its restaurant workers. The COVID-19 pandemic’s impact on the industry has raised the intensity of the debate.

Worker Advocates Push for Reform

Worker advocates say raising the minimum wage in Massachusetts would improve economic and working conditions for tipped employees. They note that the subminimum wage has roots in the nation’s history of slave labor. After emancipation in 1863, the restaurant industry lobbied for formerly enslaved people to be hired for no pay in exchange for tips. “[Tipped wages] are a vestige of slavery that we are still trying to correct and still trying to address,” Boston City Councilor Lydia Edwards, who is running for state Senate, said during the committee hearing.

Indeed, tipped workers are disproportionately people of color. Nationally, 48 percent of workers in key tipped industries are people of color, compared to 37 percent in the workforce as a whole, according to the Center for American Progress. A 2020 study by One Fair Wage found that people of color made up 47 percent of tipped positions in casual dining restaurants but only 32 percent of tipped positions in fine dining restaurants, where higher tips are possible.

“Tipping isn’t correlated with good service the majority of the time. It has to do a lot with customer biases based on race, gender, ethnicity,” says Yamila Ruiz, communications director at the Cambridge-based One Fair Wage, a group focused on empowering workers through civic engagement.

Advocates of reform say dependence on tips creates a “power imbalance where the customer is essentially deeming a worker’s worth through a wage,” said Ruiz. That imbalance results in a high rate of sexual harassment in an industry in which 70 percent of tipped workers are women.

One Fair Wage found that restaurant workers in Massachusetts are twice as likely to experience sexual harassment as restaurant workers in states that pay all workers a full minimum wage. In Boston, one in three tipped workers reported sexual harassment at work, a rate higher than in other major cities, including New York and Los Angeles, according to a report by the Restaurant Opportunities Center United.

“Sexual harassment is endemic in the restaurant industry to this day, owing to the power dynamics created by making workers reliant on tips to achieve even subsistence wages,” said Ashka Naik, research director of the Boston-based nonprofit Corporate Accountability.

Changing the pay structure could also reduce wage theft. Employers are required to make up the difference when wages plus tips do not meet the standard state minimum wage, but few employees know that. A nationwide Department of Labor compliance sweep conducted under the Obama administration revealed that 84 percent of restaurants were not meeting that obligation.

The Center for American Progress found that poverty rates for workers in tipped industries were far higher in states with a tipped minimum wage than in states with a standard minimum wage. Tipped workers in Massachusetts are three times more likely to live in poverty and twice as likely to rely on Medicaid as the rest of the workforce, according to a One Fair Wage study.

“People are serving food and going home and living on food stamps,” Jehlen said.

The Massachusetts Restaurant Association Pushes Back

The Massachusetts Restaurant Association, which represents 1,800 restaurants, opposes eliminating the tipped wage, arguing that the current model is best for Massachusetts workers and restaurants.

In written testimony to the Joint Committee on Labor and Workforce Development, MRA president and CEO Bob Luz said the tipped wage compensation model “has allowed the highest percentage of employees to earn the highest average wage.” Luz said the tipped wage model is popular among employees. He alleges that the push for reform is by activists in a coordinated multi-state effort, not servers.

Steve Clark, director of government affairs at the Massachusetts Restaurant Association, says the current model “allows waitstaff to earn essentially unlimited earnings.” Clark says he knows tipped employees in Massachusetts who have worked in restaurants for 15 or 20 years and “they’ve been able to raise families, they’ve been able to pay for education, they’ve been able to retire because of their tipped income.” Servers, he says, “don’t consider themselves minimum wage earners, because they earn far above minimum wage.”

Clark cites a survey by the industry publication Upserve, which found that 97 percent of tipped employees prefer the current model over straight hourly compensation. (The poll asks workers the question under the premise that tips would be removed from their hourly compensation. This is not the model promoted by advocates in Massachusetts or used in many restaurants in states with standard minimum wages.)

Clark believes the drive to eliminate the tipped wage is driven by national activists, not workers. “There are speakers that come in from out of state and attend rallies, and they file the same exact bill in 43 different states,” he said.

Clark said the measure could have unintended consequences – like leading restaurants to reevaluate how many employees they can schedule on a given night. At a time when prices for ingredients and supplies are increasing in an industry hard-hit by the pandemic, restaurants are operating on slim profit margins. An increase in the minimum wage would likely lead to menu price increases, Clark said.

Advocates counter that the Massachusetts Restaurant Association is misrepresenting the situation. Its narrative about restaurant workers thriving under the current model, Ruiz says, is based on the experience of the small number of workers who work in fine dining restaurants in urban centers. These positions are largely occupied by mid-career white men and are not representative of tipped workers statewide, who are largely women, people of color, and immigrants.

Ruiz said the MRA’s real interest is not small independent restaurants, but large corporate restaurants “who are ultimately committed to maximizing their profit by any means necessary.”

The Pandemic Effect

Advocates say COVID-19 has exacerbated the negative effects of the two-tier wage system. Among tipped workers who retained their jobs, 80 percent reported declining tips and 40 percent reported an increase in the frequency of unwanted sexual comments from customers, according to One Fair Wage.

Jehlen speculates that customers may not realize how important tips are to workers’ income. “I don’t think most people know there is a subminimum wage,” she said.

Many workers are now also tasked with enforcing COVID-19 safety measures, like mask mandates and capacity limits at their restaurants, and are afraid this could lead to decreased tips from customers. In a survey by One Fair Wage and the University of California, Berkeley Food Labor Research Center, two-thirds of workers reported a decline in tips after enforcing health and safety measures.

Additionally, some who were laid off in the pandemic found it difficult to collect adequate unemployment benefits because tips are not calculated as part of wages for purposes of unemployment eligibility.

Even as the reform is being debated by lawmakers, many restaurant employees remain unaware of the proposed policy change. A sampling of servers at eight sit-down restaurants in Somerville’s Davis Square in late November revealed that although most workers liked the idea of the reform, none had heard about the policy proposal.

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