New Report Exposes Fatal Flaws In Gov. Cuomo’s Tip Credit Proposal
Publication Date: February 2018
WASHINGTON D.C. – Today, the Employment Policies Institute (EPI) released a new report exposing the fatal flaws in a proposal by Gov. Andrew Cuomo to eliminate New York’s tip credit. The Governor’s Labor Commissioner will hold hearings on the proposal starting Monday, March 12th.
Read the full report here.
The report first documents the harm caused by the last substantial increase in the state’s tipped minimum wage–an overnight 50-percent hike on December 31st, 2015. Labor Department data show that New York lost over 270 full-service restaurants that year, after steady growth in prior years. In New York City, full-service employment growth averaging 6.7 percent was reduced to barely one percent. The report complements this data with stories of now-closed restaurants that were harmed by the tipped wage hike.
Governor Cuomo’s proposal to eliminate the tip credit leans heavily on research from the labor advocacy organization Restaurant Opportunities Center (ROC), which claims that states without a tip credit see restaurant sexual harassment cut in half. In fact, data from the Equal Employment Opportunity Commission, covering a similar time frame as ROC’s report, show the opposite: Less than two percent of sexual harassment claims in New York came the restaurant industry, as opposed to nearly four percent in California–a state praised by ROC due to its lack of tip credit.
EPI documents extensive flaws in ROC’s report, and demonstrates that ROC’s core claim about harassment being “half” in states without a tip credit relies on survey responses from non-tipped employees, and on behavior from servers’ managers and co-workers–which has nothing to do with tipping.
EPI also provides some key facts about restaurant servers in New York, including the following:
- Restaurant servers report earning more than $17 an hour statewide, and $20 an hour in New York City;
- Restaurant servers in New York are 56% female, rather than the 70% figure used by proponents;
- Restaurant servers in New York have a poverty rate that’s roughly two-percentage points lower than other non-managerial restaurant occupations;
EPI’s managing director, Michael Saltsman, released the following statement:
Governor Cuomo’s tip credit proposal is a problem in search of a solution. New York restaurants and servers have already suffered because of past tipped wage increases, and the Governor wants to compound the damage. Rather than listening to labor groups such as ROC and its discredited studies, the Governor and his Labor Commissioner should listen to the servers who are loudly yelling “NO” in response to this proposal.
The Employment Policies Institute is a nonprofit research organization dedicated to studying public policy issues surrounding employment growth. In particular, EPI focuses on issues that affect entry-level employment. EPI receives support from restaurants, foundations, and individuals.