Arlington, VA – Today, the Employment Policies Institute released a new analysis showing Washington, DC has lost over $11.8 million in full-service restaurant workers’ earnings since the implementation of Initiative 82, which phased out the tip credit for restaurant workers.
The new report comes on the heels of DC Mayor Muriel Bowser’s call for a repeal of Initiative 82 in her FY2026 budget, and provides even more supporting evidence that the law has caused a devastating waterfall of economic consequences for the District.
The lost earnings are a dual consequence of some tipped workers earning fewer tips, and other tipped workers losing hours or their jobs entirely as a consequence of the higher costs.
“This new data quantifies what workers have been saying for years – Initiative 82 has taken away their income, either through loss of tips or the loss of a job,” said Rebekah Paxton, research director at the Employment Policies Institute. “This adds to the overwhelming evidence that I82 has been bad for workers, bad for restaurants, and bad for DC. It’s time to stop the bleeding and fix a policy that has backfired on the workers it claimed to help.”
In addition to at least $11.8 million in lost earnings, EPI’s latest analysis also found that:
- Since the implementation of Initiative 82, workers reported earning up to 14% less per week than they were before the law took effect, representing a loss of nearly -$3,400 annually for each worker at their primary job.
- The law also worsened the income gap. In fact, after Initiative 82 went into effect in May 2023, the weekly earnings difference between higher-earning tipped workers (75th percentile of earnings) and lower-earning tipped workers (25th percentile) was a staggering 65%. That’s up significantly compared to a 45% difference between the income groups prior to the law’s implementation.
Background:
- Initiative 82 was passed by voters on the ballot in November 2022, despite vocal opposition from tipped workers and restaurant owners. The law was set to raise the base wage for tipped restaurant workers annually until the tip credit was fully eliminated in 2027, with the next wage hike set to hit on July 1, raising the wage to $12 an hour. The repeal will now restore the city’s $5.35 tipped wage workers received prior to the passage of I-82.
- Earlier this month, DC Mayor Muriel Bowser called for the repeal of Initiative 82 as part of her FY2026 budget proposal. The proposal requires approval from the DC City Council.
- The evidence documenting the consequences is overwhelming: the best available government data shows a 5 percent employment loss for the industry, including thousands of jobs lost while restaurant closures are at the highest rate in any year since the pandemic. Survey data also shows that the job loss figure could even climb up to 4,000.
- In January tipped workers testified in a six-hour hearing before the DC City Council condemning the law, with many saying their hours and earnings had been slashed, and tipping percentages have plummeted.
- 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.
- The regional slowdown is unique to the District: The District’s full-service restaurant employment growth rate dropped nearly 19 percentage points under Initiative 82 from the previous year, more than doubling the losses for the larger Washington metro area’s full-service restaurant employment.
- Proponents of the One Fair Wage law have attempted to gloss over these consequences – calling Initiative 82 a “success” – but their own data sets show 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.