As a campaign promise, now-Mayor of New York City Zohran Mamdani pitched a $30 wage for the city. Now, it seems some state lawmakers are taking it even further – across the state.
This week, New York state senators unveiled a new proposal to raise the minimum wage to $30 an hour statewide. This would include getting rid of the tip credit, raising the base wage for tipped servers and bartenders by more than 80% in some parts of the state.
Substantial data and research shows this is a terrible idea for New York, including evidence on how historically wage hikes have stagnated the state’s restaurant industry.
New York’s Recent Minimum Wage Hikes Have Already Done Harm
In a recent analysis, EPI found that as rising operating costs, rent, and wages have skyrocketed for New Yorkers and businesses, restaurants are struggling.
As New York has raised minimum wage mandates statewide since the pandemic, Bureau of Labor Statistics quarterly data shows industry employment ground to a halt. The latest data shows New York restaurants lost as much as 10,000 restaurant jobs last summer compared to the year before.
New York Tipped Workers Don’t Want One Fair Wage
Lawmakers have proposed similar wage hikes before in the Empire State – which have failed to advance because tipped workers have spoken up about how they would negatively impact them.
A survey of tipped servers and bartenders commissioned by the New York State Restaurant Association and the New York City Hospitality Alliance found that the vast majority oppose getting rid of the state’s tip credit. Nine in 10 tipped workers said they support keeping the state’s existing base wage plus tips system over a flat-wage alternative.
Most say they believe they will earn less being paid under a higher flat hourly wage, because customers won’t tip as much on top of higher prices and potential service charges instituted by restaurants to accommodate higher wage bills. Roughly two-thirds also believed their restaurant would be forced to downsize staff or reduce scheduled hours if the tip credit system were to go away.
Bad Wage Ideas Have Real World Consequences
New York isn’t the first state to consider sky-high wage mandates out of touch with economic precedent.
Despite already having a high regular wage requirement, California is the latest example of how pushing the limit even higher can still cause massive harm for workers. An annually rising minimum wage up to $16.90 this year, with no tip credit, has already made California “one of the toughest places to run a restaurant.” As of April 2024, the Golden State upped the ante yet again with a $20 minimum wage for fast food workers. The result was tens of thousands of job losses across the industry, shuttered restaurants, and double-digit price increases faced by residents in just a single year of implementation.
Washington, D.C. also just walked back a harmful proposal to eliminate the District’s tip credit, which would have raised the base wage for tipped workers by over 200% in the next few years. In roughly a year, D.C. lost thousands of restaurant jobs, and many of those who kept their jobs said they were earning less in tips and overall than before the law went into place. EPI analysis of federal quarterly data showed that overall D.C. full-service restaurant and bar workers lost over $11 million in earnings under the tip credit elimination law.
New York’s latest wage hike proposal is completely unprecedented, but the estimates of the fallout of such a policy are not. This policy would deliver a massive one-two punch to New York’s restaurants and workers who are already struggling to make it in the industry.