Following a recent misleading report about the state of Washington, D.C. under its tip credit elimination law, One Fair Wage has released another report — this time offering misleading claims about tipping in New York claiming workers are “drowning.” The proposed life raft? Eliminating New York’s tip credit. EPI reviewed these claims against the economist analysis, government data, and employee survey responses that suggest tip credit elimination in New York would hurt restaurants and their employees, not help.
#1. One Fair Wage claims tipping has declined, and the proposed solution is eliminating New York’s tip credit. This doesn’t hold up: New Yorkers have higher average tipping percentages than “One Fair Wage” non-tip credit states like California and Washington.
In the Toast report cited by One Fair Wage, they claim tipping is down nationally. Yet when you look at individual states, the same Toast data tell a different story, one that is bad for One Fair Wage’s cause.
In fact, “One Fair Wage” states that have eliminated tip credits – such as California and Washington – have the lowest tipping percentages in the country, well below the national average of 19.8%. The states that consistently have the highest tipping percentages nationally are those that maintain a robust tip credit, including Delaware, Indiana, and West Virginia.
A look at historical Toast data actually shows One Fair Wage states’ tipping are percentages low and they have increasingly been on the decline.
That would explain a “declining” national average.
New York on the other hand, has maintained higher average tip percentages than these non-tip credit states since 2022, and has stayed stable while non-tip credit states have seen plummeting tip percentages.
In fact, in areas that have or are in the process of eliminating tip credits, tipping declines.
- In Washington, D.C., workers testified before the local city council that they are earning lower tipping percentages and taking home as much as half of what they used to in tips.
- A recent snapshot survey of local workers by the Restaurant Association of Metropolitan Washington found 79% percent are taking home less than they used to a year ago.
- In Chicago, an Axios Chicago survey of readers found 72% are less likely to tip on service charges.
A Cornell University study found that studying state-level tipped wage increases across the country, as the tipped wage for restaurant workers increases, tip percentages left at full-service restaurants fall.
#2. To further promote its anti-tip credit agenda, One Fair Wage claims “all workers at restaurants see higher wages in fair wage states compared to subminimum wage states.” This is false: economic analyses show as the tipped wage goes up, earnings for workers fall. D.C. workers themselves report their tips have dropped up to 50%.
In order to make its claim, One Fair Wage cites payroll platform Toast data that selectively looks at September 2023 to 2024, and says tipping in Washington, D.C. and Chicago has not declined. This is misleading for several reasons:
- This chart shows declines in tips per hour for Chicago since the spring of 2024 (as local news reported local Chicago restaurants were bracing for the impact of a tipped wage hike beginning July 1, 2024). In the months prior to that decline, tips per hour were actually growing in Chicago.
- In D.C., this period fails to show a baseline for tips per hour earned before the city’s tip credit elimination law began in May 2023 – and still shows a steep decline in tips per hour in 2024.
- Moreover, employees themselves in D.C. have been reporting their tips have been negatively impacted by the local tip credit elimination law – testifying that their tips have been slashed as much as 50%, and they can work in surrounding states with tip credits for almost double the pay for the same-length shift.
Employees who actually work in affected D.C. restaurants confirm this trend of declining tips. At a D.C. City Council hearing this past January, local tipped restaurant workers testified that their tips had been slashed and earnings are lower than before the local tip credit elimination law, Initiative 82, went into effect. Here are some of the testimonials servers and bartenders gave:
- “Since Initiative 82 has begun to be implemented…I’m now making up to 50% less….for the first time in my adult career at 41 years old…I don’t know what my future looks like.” – Laura, Bartender
- “I can go to Maryland and make at least $200, oven $300 or more, for five hours of work, or work double those hours and only make $150 in DC.” – Rachel, Server
- “Here we are now suffering the consequences … .my working hours were cut by 5-10 hours per week and service charges decreased mv average tip percentage from 23-25% to 18-20%.” “I barely have any support staff now…I have to do everything myself to be on the floor, with the support of only one person in the whole dining room..” – Yana, Server
- “Since Initiative 82, what was happening is staff was cut. All of the sudden I don’t have my food runners and bussers I don’t have my polishers. I’m now having a larger section with less help. And there’s this 20% service fee…which did definitely hurt my percentage in tips.” – Lili, Server
- “A lot of people see the service fee, which is not a gratuity, and decide not to tip.” – Dennis, Server
- “Service fees being added has been mistakenly think its tips, its reduced our earnings. – Veena, Server
Economists have studied decades of evidence on this subject, and have found that slashing tip credits and raising the base wage for tipped restaurant workers actually has a negative impact on their tips and income.
- A U.S. Census Bureau researcher studying W-2 payroll data found that mandated tipped wage hikes increase the hourly rate paid by employers, but decrease tip earnings by a proportional percentage.
- University of California-Irvine economists studying U.S. Census Bureau data find that every $1 increase in the tipped wage for restaurant workers translates to a 5.6% decline in total earnings.
#3. One Fair Wage claims in Chicago and Washington, D.C. “the number of workers in establishments has remained consistent.” This is false: In places where tip credit elimination has been tried, the best-available federal data shows thousands of jobs have been lost.
Washington, D.C. began implementing its tip credit elimination law – pushed by One Fair Wage – in May 2023. Since then, the best-available U.S. Bureau of Labor Statistics quarterly data providing a “near universe” of employment levels shows the District has lost 1,700 full-service restaurant and bar jobs. That is more than 5% employment loss for the industry, a distinct trend from the rest of the District of Columbia’s industries, which gained jobs over the same period.
This employment loss may have an even larger footprint when looking at hiring trends: A survey by the Restaurant Association of Metropolitan Washington (RAMW) found 70% of its members had either laid off staff, reduced staff hours, or stopped hiring.
After pushing tip credit elimination in D.C. with Initiative 82, One Fair Wage picked up and took the policy to Chicago. Early Bureau of Labor Statistics quarterly data shows in just three months under the policy, the city has lost roughly 5,000 jobs in full-service restaurants (a 3% industry employment drop). This decline outpaced the rate of decline statewide and for Chicago’s other industries.
Even the limited dataset that One Fair Wage cites shows that D.C.’s full-service restaurant employment has flatlined, with the steep drop in annual growth rate corresponding directly to the start of Initiative 82. When the exact same chart from One Fair Wage’s report is recast to compare the change in employment year-over-year, the damage of tip credit elimination in D.C. is striking and obvious.
Similarly in Chicago, the year-over-year employment growth rate in the data featured by One Fair Wage shows the Chicago metropolitan area is down full-service restaurant jobs by approximately -1.1%.
#4. One Fair Wage cites “the Chicago experience” as a win for tip credit elimination – but fails to mention the negative impacts already occurring there. The report also completely fails to mention D.C.’s experience with its tip credit elimination law, which has been a disaster for employees and restaurants alike.
Chicago began eliminating its tip credit on July 1, 2024.
- Service fees: Already, local residents have tracked over 150 local restaurants that have added automatic service fees as an attempt to adjust to rapidly rising mandated tipped wages.
- Restaurants reducing tipped staff: In April 2024, ahead of the scheduled tip credit elimination law going into effect in July, Axios Chicago reported restaurants were trying “server free” models.
- Restaurants laying off staff: Federal jobs data as reported above shows the Chicago metropolitan area has lost roughly 5,000 full-service restaurant jobs just months after the city’s tip credit elimination law took effect.
- Restaurants closing: Several media reports including by Axios Chicago, Eater Chicago, and Eat This Not That have reported a slew of restaurant closures following the implementation of tip credit elimination. Another foodie blog reports dozens of restaurants had closed their doors in the last six months.
While the Chicago law has been in place for less than a year, One Fair Wage also fails to mention the longer-term crisis playing out in their so-called “building block for the rest of the nation” – Washington, D.C.
- Service fees: Over 300 local restaurants have added automatic services fees to adjust to rapidly rising mandated tipped wages.
- Restaurants closing: A recent survey by the Restaurant Association of Metropolitan Washington found two in five local D.C. restaurants may be forced to close this year due to rising costs attributed to the city’s tip credit elimination law. Last year, D.C. saw the highest rate of restaurant closures since the pandemic, and has already seen several high-profile, community-beloved restaurants close in 2025, as covered by Washingtonian and the Washington Post.
- Restaurants downsizing and laying off staff: Federal jobs data as presented above shows D.C. has lost up to 1,700 jobs in its full-service restaurants and bars, and surveys indicate restaurants have slowed hiring and reduced staff hours in addition to layoffs.
#5. The data is clear about the anti-tip credit track record: tip credit elimination is a policy that kills jobs, slashes earnings, and forces restaurants to close. But the best evidence is in those who oppose it: 88 percent of surveyed New York employees said they do not support changes to the current tip credit system.
In fact, proposals to eliminate the tip credit in other states – including Massachusetts, Michigan, Maine, Maryland, Rhode Island, and Connecticut – have all been rejected following the vocal opposition from tipped servers and bartenders. In fact every state that considered a One Fair Wage tip credit elimination bill or ballot measure in 2024 rejected the idea.Most notably, in deep-blue Massachusetts, voters resoundingly rejected a ballot measure to eliminate the state’s tip credit following a worker push against the idea. One Fair Wage even dishonestly cites Michigan as a success story, despite the fact that the group just suffered a record defeat in the state. A bipartisan majority in the state legislature, as well as the state’s Democratic Governor, stood with the state’s tipped workers and saved the tip credit from One Fair Wage’s anti-tipping scheme.