"New York City's hospitality industry is built on a promise: if you work hard, you can make it here. From the dishwasher climbing the ladder to the server earning $40 an hour on a Friday night, our restaurants are engines of opportunity. But that engine is about to be dismantled by a well-intentioned but economically disastrous slogan. As the City Council and Albany lawmakers consider eliminating the tip credit often under the banner of One Fair Wage we are told this policy is a moral imperative to end a subminimum wage."
"The reality, proven by the collapsing restaurant markets in Chicago and Washington D.C., is that eliminating the tip credit doesn't raise worker pay. It destroys workers' jobs. Let's start with the most pervasive myth: that tipped workers in New York earn less than the minimum wage. They do not. Under current state law, if a worker's tips plus the cash wage do not equal the standard minimum wage, the employer must make up the difference. The subminimum wage does not exist."
"We do not have to guess what happens next. We just have to look at Chicago. In the twelve months since Chicago began phasing out its tip credit, the city's restaurant industry has decoupled from the broader economy. While jobs in other sectors held steady, Chicago's bar and restaurant employment has plummeted by approximately 8%. That is double the decline seen in the rest of the state. Why? Because the math broke, triggering cost spikes, fewer work shifts, and less hiring."
New York's hospitality sector relies on tip-based compensation that allows high earning potential for tipped workers. Proposals to eliminate the tip credit would force a shift from commission-style pay to a flat-wage model. Evidence from Chicago shows an approximately 8% decline in bar and restaurant employment after phasing out the tip credit, with similar economic harm observed in Washington D.C., including closures and reduced take-home pay for some tipped workers. New York law already requires employers to top up tips to the minimum wage when necessary, so eliminating the tip credit would mainly alter compensation structure and increase employer costs.
Read at www.amny.com
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