Legislation to eliminate the tip credit in New York won’t empower restaurant workers. Special interest groups like One Fair Wage don’t speak for workers, who would suffer the real life consequences of fewer jobs, lower tips, and shuttered workplaces.

Tipped restaurant employees earn differently, and far more, than other minimum wage employees.

Currently, New York law requires restaurants to pay a $10 base hourly wage upstate ($10.65 in downstate counties and New York City) to employees who regularly earn tips. After tips are factored in, tipped employees are legally obligated to make at least the regular minimum wage rate: $15 per hour upstate and $16 per hour in New York City and downstate counties. (The difference between these two rates is called a “tip credit.”)

For tipped workers, minimum wage is a floor and not a ceiling: They regularly earn double or triple the regular minimum wage rate through their tips, as high as $50 per hour. But that won’t remain the case if the tip credit is removed.

Changing this system will cut off servers’ and bartenders’ earning potential. Cornell University research finds as tipped wages increase, tip percentages left on customer checks fall. States that have fully eliminated the tip credit, including California and Washington, have the lowest tip percentages in the country.

One Fair Wage’s own endorsed “solution” to this problem is to add new fees to restaurant checks. But these fees are not the same as tips – and don’t go directly to tipped employees. Evidence also suggests that customers are growing increasingly confused about these automatic charges, leading to frustration and reduced tipping.

As restaurants struggle to adjust to historically high labor and operating costs, they are forced to reduce scheduled hours or cut staff. University of California-Irvine economists find for every dollar increase in the tipped wage, server and bartender employment falls by six percent.

New York’s past attempts to shrink the tip credit have already eliminated jobs and shuttered restaurants. This legislation would make a bad situation worse.

Take Washington, D.C., for example, where the same activists pushed tip credit elimination. Less than a year after the policy began, the most comprehensive federal data shows restaurant employment is down nearly three percent. Employees, including those that supported the policy initially, are saying their tips are down, and take-home pay has been cut in half. Restaurant closures are the highest they’ve been since the pandemic.

These consequences don’t sound like empowerment. New York tipped employees already fought this bad idea after Governor Cuomo pushed for it in 2018. The Legislature should listen to real workers and protect the tip credit.