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The owners of at least three of D.C.’s gay bars have joined representatives of nearly all the city’s restaurants, bars, and nightclubs in speaking out against a measure on the Nov. 8 D.C. election ballot calling for ending the so-called tipped wage system.
The ballot measure, called Initiative 82, calls for ending an exemption to the city’s minimum wage law that allows employers of tipped workers to pay them less than the prevailing minimum wage but requires them to make up the difference if the workers don’t earn the equivalent of the full minimum wage through their tips combined with the lower “tipped” wage.
D.C. restaurant industry officials argue that ending the tipped wage system, which is in place in all but seven states in the U.S., would create an economic hardship for their mostly small, community-based businesses by dramatically increasing labor costs at a time when they have yet to fully recover from the hardships caused by the COVID-19 pandemic.
They say most tipped workers make significantly more than the city’s current $16.10 per hour minimum wage. The current lower “tipped” minimum wage in D.C. is $5.35 per hour.
“I have not met a single server who wants this,” said David Perruzza, who owns the Adams Morgan bars Pitchers and A League of Her Own, which share the same building.
“My staff makes $30 or more an hour,” he said, noting that all except his small kitchen staff are tipped workers. “I pay my non-tipped workers more than the minimum wage,” Perruzza told the Blade. “The people who support this don’t know anything about the service industry.”
Like other bar and restaurant owners, Perruzza said ending the tipped wage could result in the doubling of his payroll, which could force him to raise prices and possibly lay off employees, most of whom are LGBTQ.
John Guggenmos, co-owner of the Logan Circle area gay bars Number 9 and Trade, and Jo McDaniel, co-owner of the recently opened Capitol Hill gay bar As You Are, said they too believe the approval of Initiative 82 by voters on Nov. 8 would have a negative impact on their businesses.
Guggenmos said the initiative would also have a negative impact on consumers because prices would have to be increased, and a service charge of as much as 20 percent could be put in place to offset the higher labor costs. Opponents of the initiative argue that a service charge of as much as 20 percent added to the customer’s bill would prompt at least some to cut back on tipping.
Ryan O’Leary, a gay former service industry employee who serves as chair of the Committee to Build A Better Restaurant Industry, the organization leading the campaign in support of Initiative 82, disputes the claims by restaurant and bar industry representatives that ending the lower tipped wage will seriously harm their businesses.
O’Leary told the Washington Blade that both tipped workers and the restaurants and bars for which they work are doing “very well” in the states that do not have a tipped wage system, including in California, where tipped workers earn $15 per hour minimum wage plus tips.
He said tipped workers in D.C. and other states where the tipped wage is in place have reported that restaurant employers engage in subtle forms of retaliation against workers who request to be paid the difference if they don’t earn the equivalent of the full minimum wage through tips.
According to O’Leary, a growing number of D.C. restaurants and bars are already paying their tipped workers the full D.C. minimum wage or just short of the full minimum wage, in part, because of staff shortages brought about by the COVID pandemic.
“Those that did this are doing very well,” he said. “Some restaurants are fear mongering about tipped workers losing money or losing their jobs if Initiative 82 passes.”
O’Leary also points out that under Initiative 82, the full minimum wage for tipped workers will be phased in over a five-year period from 2023 to 2027. Supporters of the initiative say this will minimize if not eliminate any significant economic impact on restaurants and bars.
Among those who strongly dispute the arguments made by O’Leary and others backing Initiative 82 is Mark Lee, coordinator of the D.C. Nightlife Council, a local organization that advocates for businesses such as restaurants, bars, and nightclubs.
Lee said the decision by restaurant and bar owners to adopt a higher minimum wage is based on market conditions such as staff shortages and that’s a “good thing” that should be left to the marketplace. He said Initiative 82 would force businesses to raise tipped employees’ minimum wage in circumstances where it is not needed, and which will hurt both the businesses and the employees.
“Federal data indicates that D.C. tipped employees at bars and restaurants earn well above the local minimum wage, currently at $16.10 per hour, and earn more than tipped workers in the handful of states that either never had a tipped-credit or outlawed the tip-credit more than 40 years ago,” Lee told the Blade in a statement.
Lee points to data released by the U.S. Department of Labor’s Bureau of Labor Statistics showing that the average tipped worker’s wages in D.C. are close to $27 per hour. He says the data show that average earnings of D.C. tipped workers under the current system are more than $10 per hour above the earnings of tipped workers in states that don’t have a tipped wage system.
“There’s a reason that no state has gotten rid of the tip-credit in more than four decades, and that’s because elected leaders know that workers are opposed and that worker wages will decline,” Lee said.
“Initiative 82 backers falsely claim that so-called ‘wage theft’ and ‘retaliation’ is rampant and widespread at local bars and restaurants, while offering no actual evidence,” Lee said. “First of all, it’s extremely rare that a tipped worker’s base wage and tips do not exceed the minimum wage, as the D.C. Office of Wage-Hour Compliance can attest,” according to Lee.
“But more than that, no worker would stay at a venue if it did violate the law, as hospitality jobs are plentiful as the second-largest local employment sector,” he said.
O’Leary said claims by opponents of Initiative 82 that nearly all tipped workers earn more than the full D.C. minimum wage cannot be verified because the D.C. Office of Employment Services has failed to enforce a law requiring service industry businesses like restaurants and bars to submit to the office wage data for all their employees.
He points to a nearly identical measure calling for ending the tipped wage system that D.C. voters approved in 2018 by a 55 percent vote margin that strongly indicates voters will approve Initiative 82 on Nov. 8.
In a highly controversial development, the D.C. Council overturned the 2018 measure, called Initiative 77, on grounds that most tipped workers did not support it and it would be harmful to restaurants and bars.
But political observers this year note that the makeup of the D.C. Council changed since it overturned Initiative 77 in 2018 and the current Council is expected to allow Initiative 82 to become law if voters approve it this time around.
D.C. Mayor Muriel Bowser and D.C. Council Chair Phil Mendelson, who supported the decision to overturn Initiative 77 in 2018, have each said they will not support an attempt to overturn Initiative 82 if D.C. voters approve it next week.