Employment Policies Institute Warns Against Tip Credit Elimination Proposals in Montgomery and Prince George’s Counties
Publication Date: October 2023
Arlington, Va – This month, two counties in Maryland will consider measures to eliminate the tip credit for bar and restaurant workers. On Thursday, Prince George’s County Council (Oct. 12) will hold a public hearing on a proposed measure to eliminate the tip credit. Next week (Tues. Oct. 17), Montgomery County will do the same.
The Employment Policies Institute (EPI) urges both Councils to listen to the voices of tipped workers who would see a drastic reduction in tips and a threat to their livelihoods should these measures pass. Across the country—and even next door in the District of Columbia—tip credit elimination is demonstrated to reduce jobs and hours, limit tip income, and force restaurants to shut down.
In advance of the upcoming hearings, EPI research director Rebekah Paxton released the following statement.
“Maryland tipped employees have already told lawmakers they don’t want to change the tip credit system. In jurisdictions that have tried tip credit elimination, it’s already changing the restaurant industry for the worse: eliminating jobs, forcing restaurants closed, and giving rise to service charges at the expense of employees’ hard-earned tips. The Prince George’s County Council should listen to tipped workers who stand to lose the most.”
Research indicates that eliminating tip credits causes earnings and job losses for restaurant employees, and forces businesses to shut down. Research finds:
- Every $1 increase in the tipped minimum wage causes 6.1% job loss for tipped restaurant employees;
- Eliminating Montgomery County and Prince George’s tip credit could cost thousands of employees their jobs;
- For families of tipped employees, tip credit elimination could cost them up to $8,000 a year in household earnings;
- As tipped minimum wages are increased, tipping percentages decline. Jurisdictions that have already eliminated the tip credit have some of the lowest tipping percentages in the country.
- This week, EPI launched ServiceChargeFacts.com to provide clear and concise information about the relationship between service charges and tip credit elimination.
- Read EPI’s tip credit primer to learn more about how the tip credit works and why employees across the country are fighting to preserve it,
- Check out EPI’s April survey of DC restaurant owners about the consequences of tip credit elimination (Initiative 82) in the city, with 86% of respondents expecting the measure to have a negative impact on their operations.