Today, State Senators, along with anti-tip credit organization One Fair Wage, will gather at noon at the State Capitol to introduce a “Living Wage for All” package. The package includes a $30 statewide minimum wage and eliminates the tip credit for restaurant workers.
But, the proposal will harm the workers it aims to help.
Here’s why: Eliminating the statewide tip credit would cause restaurants to increase hourly wages by at least 180% in just a handful of years. For non-tipped workers, the hike represents an 87% increase. Restaurants are already struggling under rising wages and inflation. These drastic proposals will only cause more restaurants to cut workers’ hours, layoff staff, or shutter completely. That’s why the vast majority of surveyed local tipped workers oppose the flat-wage system One Fair Wage is pushing.
EPI’s research director, Rebekah Paxton, will be available to discuss the proposed wage increase, and why New York lawmakers should be wary of drastic wage hikes, leaning on data from previous statewide wage hikes, as well as cities and states where tip credit elimination experiments have played out.
A quote from Rebekah on the issue is included below:
“New York’s history of wage hikes and surging inflation have already put many of the state’s restaurants in jeopardy. Couple that with data showing the tip credit elimination experiments in DC and other states have resulted in thousands of lost jobs and increased prices for consumers– it’s clear to see why this policy would be the breaking point for many restaurants and their employees.”
Background:
- New York restaurants have been struggling under higher minimum wages, increased operating costs, and inflated rent prices.
- In fact, just this past summer, New York restaurants lost roughly 10,000 jobs this past summer compared to the prior year, correlating with high wages among other rising costs.
- Overall, total New York employment (including industries less exposed to wage hikes) grew in employment during the same period.
- The continued wage hikes since COVID have stagnated growth in the industry, declining from an average of 5% annual growth over a decade ago, to negative growth in 2024.
- Eighty-eight percent of surveyed tipped workers say they prefer to keep New York’s tip credit system as-is. Eighty-six percent believe they would earn less if the tip credit were eliminated.
- One Fair Wage’s sister organization, Restaurant Opportunities Center (ROC) attempted to make the flat-wage model a reality in its Colors restaurant in NYC, but ultimately shut down, with workers later accusing them of wage theft.
- Washington, DC’ City Council recently halted a similar drastic tip credit elimination law after seeing workers had lost over $11 million in earnings and thousands of jobs.