The Tipping Point – EPI Policy Center Report Backs “One Fair Wage”

To those who are worried that higher wages in the restaurant industry for employees who earn tips (tipped workers) will have a negative effect on the industry and “do more harm than good,” the Economic Policy Institute (EPI) replies: cool your wage-halting jets!

“The evidence overwhelmingly indicates that in one-fair-wage cities and states—where tipped workers are paid the regular minimum wage regardless of tips—tipped workers receive higher take-home pay, customers still tip, and restaurants big and small are operating successfully, just as they do in the District of Columbia,” writes David Cooper in his recent report “Why D.C. Should Implement Initiative 77” for the EPI.

In June, D.C. voters approved Initiative 77 which will raise the District’s tipped minimum wage of $3.89 over eight years until it equals the district’s regular minimum wage of $15. D.C. politicos have threatened to overturn the voters’ decision based on their contention that raising the tipped minimum wage will ultimately lead to layoffs, restaurant closings and  a loss of income to the workers because patrons will tip less.

But these claims don’t hold true, counters the EPI’s Cooper who cites data from one-fair-wage cities of Seattle and San Francisco, both of which have enacted a $15 minimum wage. Restaurants and their workers are doing just fine in those two cities, says Cooper, and Washington, D.C. should be just as successful.

The report notes that tipped workers (including servers and bartenders) in the one-fair-state cities earn more than their D.C. counterparts; that there is less inequality between tipped and nontipped workers in these cities than in D.C.; and that tipped workers are more likely than nontipped workers to be in poverty.

The issue remains a lightening rod within the industry. According to a story from WAMU 88.5,  workers from within the bar and restaurant industries campaigned heavily against Initiative 77 and politicos are threatening to overturn the vote.  Initiative opponents point to research from Harvard University and the Southern Economic Journal that lead to different conclusions.

Read more here and here.

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