Washington D.C.’s restaurant industry may finally be seeing a small reprieve after years of disruption caused by Initiative 82.
The Restaurant Association of Metropolitan Washington recently reported that restaurant closures have declined by 43% following the D.C. City Council’s decision to pause the remaining increases required under Initiative 82. While the improvement is encouraging, the city’s restaurant industry isn’t out of the woods just yet.
Initiative 82, approved by voters in 2022, was planned to eliminate the city’s tip credit by 2027. Restaurant owners warned the policy would increase labor costs, force menu price increases, reduce staffing, and ultimately make it more difficult for restaurants to survive.
Those concerns quickly materialized.
The city saw the number of restaurants closing year after year grow larger. This time last year, Around the same time last year, RAMW reported restaurant closures were up 39% over the previous year. Workers suffered too. Full-service restaurants and bars lost approximately 5% of their jobs. Workers who remained employed also saw their earnings decline, with Census Bureau data showing average weekly pay, including tips, fell by 5% in the two years following Initiative 82.
As the impacts became increasingly difficult to ignore, the D.C. City Council voted to halt Initiative 82 in July 2025, preserving the tip credit instead of allowing it to be fully eliminated.
The recent slowdown of restaurant closures following the City Council’s action isn’t shocking.
Research consistently finds that higher mandated wages make it increasingly difficult for restaurants to absorb rising labor costs. As Initiative 82 was reducing the size of the tip credit toward full elimination, the effective base wage paid by restaurants was getting higher and higher.
In a recent EPI survey of economists, most say steep wage hikes of any kind make it harder to stay in business. 69% said minimum wages above $15 make it more difficult for businesses to stay open. That share rose to 94% for minimum wages approaching $20 per hour and 98% for wages exceeding $20. More than three-quarters also say eliminating the tip credit will lead to fewer full-service restaurant jobs.
Those concerns are especially relevant as advocates push Initiative 87, which would raise D.C.’s minimum wage to $25 per hour by 2029.
The recent slowdown in restaurant closures is welcome news, but it should not be mistaken for a full recovery. D.C.’s restaurant industry continues to operate under significant cost pressures, and policymakers should carefully consider the lessons of Initiative 82 before imposing even higher labor mandates. With another major minimum wage increase already in effect and a $25 minimum wage proposal on the horizon, the District’s restaurants, and the workers who depend on them, remain in a precarious position.