The District of Columbia has been rattled by the latest damage caused by its tip credit elimination law, Initiative 82 – the closing of Brookland’s Finest restaurant. The tragic closure of that DC institution is not an isolated occurrence, as Washingtonian reported:
“There’s a lot of skeleton versions of restaurants out there right now and the names would probably surprise you,” says Matt Hetrick, a CPA whose tax-and-accounting firm, Harmony Group, works with nearly 150 area restaurants. Hetrick says his “watch list” of clients that are in dire financial straits—or who at least need extra attention to deal with fundamental issues—has quadrupled from this time last year. He says he’s now having daily conversations with restaurant operators about how to walk away from their businesses or stop the bleeding.”
A recent survey of operators in the District found that 44 percent may close locations in response to Initiative 82. A Washington Post headline that ran just a few days ago reporting on the slew of restaurants closing or struggling to stay in operation read: “It’s just not sustainable.”
Perhaps One Fair Wage, headquartered in Massachusetts hundreds of miles away and led by California-based Saru Jayaraman, hasn’t gotten the memo: D.C.’s tip credit elimination has been a disaster for restaurants and their employees.
DC has already racked up several high-profile restaurant closures in 2025, adding to the losses compiled since the start of Initiative 82 back in May 2023:
- January 2025: “A running list of establishments calling it quits this month”
- February 2025: Makan and Thirsty Crow close, “a “perfect storm” of causes for the closure — high rent, inflation, a slowing trickle of customers, rise in neighborhood crime”
- February 2025: Multiple additional closures were reported by Eater here
- March 2025: BREAKING and Holy Smokes, Hill Country Closing Next Friday in Penn Quarter!!
- April 2025: “After 11 years, Brookland’s Finest Bar & Kitchen has closed its doors”
- April 2025: “DC restaurant ‘Sticky Rice’ blames Initiative 82 as it prepares to close down”
We explain some of the One Fair Wage myths in its latest D.C. report, and the facts about losses experienced under Initiative 82.
MYTH #1: “The District of Columbia’s restaurant industry has held steady employment since January 2023.”
FACT: Roughly two thousand restaurant and bar jobs have been lost.
The best available federal data that covers most employees on the ground shows that D.C. restaurants and bars have lost over 1,700 jobs in the industry since Initiative 82 began in May 2023. 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.
Even the limited dataset that One Fair Wage cites shows that DC’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 Initiative 82 is striking and obvious.
MYTH #2: “…tipping in the District has also remained robust.”
FACT: D.C. workers themselves report their tips have dropped up to 50% of pre-Initiative 82 levels. The dataset cited by One Fair Wage shows that tipping declined sharply in DC in 2024, and it does not provide a pre-Initiative 82 baseline to compare it against. Moreover, average tipping percentages for no-tip credit states are the lowest in the nation, and multiple studies link higher tipped wages to lower tips.
A recent snapshot of local tipped workers’ experiences under Initiative 82 found 79% have earned less in tips this year than they did last year. Many attributed the lower tips to hours reductions, layoffs, reduced customer traffic, and higher menu prices scaring off customers.
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 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
- “My guests would report that after [visiting the restaurant] for over 5 or 10 years, they do not visit anymore [due to service fees from I-82]… it takes away the livelihood of servers and support staff.” – Joy, Server
This trend has been corroborated by economic studies. Studies by University of California-Irvine economists and the U.S. Census Bureau show as state tipped wages rise, tips – and therefore workers’ earnings – fall. Similarly, a Cornell study found as state tipped wages rise, tipping rates fall.
The Toast platform data that One Fair Wage uses to make its point is inconclusive at best. In 2024, it shows that average tips declined sharply by 14 percent during the normally-busy summer months–hardly a sign of success. Toast also does not provide a pre-Initiative 82 baseline to compare these results against.
And if One Fair Wage is going to rely on Toast as the credible source on tipping, it also has to explain why Toast consistently shows that One Fair Wage states have the lowest average tipping percentages.
MYTH #3: One Fair Wage compares D.C. to “Similar Success Stories in Illinois and Florida…”FACT: Chicago’s tip credit elimination experiment has cost the city thousands of jobs, and Florida’s tipped wage hike has recently been cited as a reason for restaurants’ struggle to stay in operation.
After pushing tip credit elimination in D.C. with Initiative 82, One Fair Wage picked up and took the policy to Chicago. Early federal 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.
Florida is on a different path than D.C. entirely. The state has a law that notably maintains a tip credit, even as its regular minimum wage goes up. This is a stark contrast from D.C.’s law, which is on the road to fully eliminating the city’s tip credit while the city minimum wage rate also goes up independently.
Even still, Florida’s slower tipped wage increases have begun to cause harm to the state’s restaurant industry. Recent reports cite the rising minimum wage as a reason for restaurant struggles.
During a legislative hearing in March, the Florida Restaurant and Lodging Association noted the rise in service fees in Florida restaurants was an attempt by local restaurants to adapt to rapidly rising wage mandates.
The Orlando Business Journal found tipping has declined 46% since the tipped wage increased in Central Florida.
Ultimately, local media reports have documented a rash of restaurant closures in the last year, citing the rising wage amid other economic difficulties as a reason for shutting down.
MYTH #4: “More than 20 States Are Raising Wages For Tipped Workers”
FACT: In 2024, every state that considered a One Fair Wage tip credit elimination bill or ballot measure rejected the idea.
The negative consequences experienced by D.C. and Chicago, as well as other states that eliminated their tip credits decades ago like California, reached far and wide across the country.
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.
See below the One Fair Wage policy push by state, and the outcome:
- Arizona: Ballot measure to eliminate the tip credit and raise the minimum wage to $18 did not receive enough voter signatures to even appear on the ballot
- Connecticut: Bill to eliminate the tip credit died at the end of the state’s legislative session
- Illinois: Bill to eliminate the tip credit died in committee with bipartisan opposition
- Maryland: Bill to eliminate the tip credit died in committee
- Prince George’s County, MD: Bill to eliminate the tip credit received a unanimous county council vote to table the proposal
- Montgomery County, MD: Bill to eliminate the tip credit died in council
- Massachusetts: Ballot measure to eliminate the tip credit was rejected by voters by a 2 to 1 margin
- Michigan: A bipartisan group of lawmakers – including the Governor – passed a fix to the 2024 Michigan Supreme Court ruling that would have enacted tip credit elimination statewide.
- Ohio: Ballot measure to eliminate the tip credit failed to qualify to appear on the ballot
- Rhode Island: Bill to eliminate the tip credit was tabled by the House labor committee