OPINION:
Unless you’ve worked in a full service restaurant you may not appreciate how lucrative waiting tables can be. My first job out of law school was a corporate attorney for Bethlehem Steel. It was a highly coveted position with lots of benefits. Yet, in my last year of law school, my part-time waiter position at the King’s Arms in Williamsburg, Virginia, paid more than my first year attorney salary. It was the amount of tip income that made a huge difference.
Today, while the tipped compensation system in table service restaurants from Denny’s and IHOP to Outback and Applebee’s continues to provide far more than the minimum wage, some unenlightened members of Congress and some state legislatures have been hard at work to ruin the system, claiming it is some form of oppression.
The Raise the Wage Act would increase labor costs for tipped workers by an incredible 600 percent. In a labor intensive business, that kind of increase is impossible to digest. The impact of such legislation has already been felt in several cities and states where this idea has been implemented. While some wages get a bump up, jobs disappear leaving many with zero paychecks.
Restaurants with typically thin profit margins and little pricing power over their customers have resorted to layoffs, fewer hours and more self-service in order to stay above water in a highly competitive industry. Servers have protested against these compassionate fixes. They apparently understand better than many politicians that when they are making 15 percent to 20 percent on the same sales where their employer is earning a typical 5 percent profit, the system is working for them.
During a recent hearing for the Raise the Wage Act, a Seattle server of almost 20 years testified against the increased wage. She expressed the view of thousands of servers who understand the concept of unintended consequences. Now, given her employer’s response to a local wage law that dramatically hiked wages, she testified that she makes less tip income while having to work more shifts. She is now struggling to make ends meet.
Workers across the country have demonstrated, testified and complained to legislators that if it ain’t broke, don’t fix it. New York boasts a Facebook group of almost 20,000 members who are dedicated to preserving the current tipping system. In Washington, D.C., an overwhelming backlash from tipped workers convinced the D.C. Council to reverse a vote to raise the base wages of tipped employees. A similar organic server effort found success in convincing Maine legislators.
So who is in favor of this policy when an overwhelming 97 percent of tipped workers prefer a lower base wage and the opportunity to earn substantial tip commissions? The primary agitator is the Restaurant Opportunities Center (ROC), a creatively misnamed organization that acts as a front group for organized labor interests. ROC might be loud and well-funded, but it doesn’t have significant backing among the very tipped workers it claims to represent.
ROC takes the Alice in Wonderland position that IRS taxed tip income is not to be considered income earned on the job. Hence, the logic for ignoring these commissions on sales. The millions ROC has spent to attack the restaurant industry and its employees comes courtesy of the Ford Foundation, the Kellogg Foundation and George Soros’ Foundation to Promote an Open Society, among others. This is in addition to support from Jane Fonda and a few tone-deaf Hollywood celebrities looking for their latest uninformed cause.
The demise of tipped employment and the jobs that go with it is one more threat to entry-level employment opportunities that provide sufficient income potential. All members of Congress should listen to the people who will actually be impacted by their policies, instead of allowing organizations and individuals to promote “what’s best” for employees who clearly know better.
• Richard Berman is the president of Berman and Co., a public relations firm in Washington, D.C.
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