Arlington, VA – This week’s jobs release shows a bleak outlook for service industry workers just one year after implementation of Initiative 82, a ballot measure that would incrementally phase out the tip credit for restaurant workers by 2027.
The data shows DC shed nearly 1,000 limited-service jobs on net year-over-year in May, due in part to businesses adapting to soaring labor costs as a result of Initiative 82. Since March 2023, businesses have been saddled with two wage hikes, and are bracing for a third coming on July 1, 2024 that would account for an 87% total increase since I82’s implementation.
Rebekah Paxton, EPI’s research director, made the following statement on the data:
“Just one year into Initiative 82, restaurants are staring down a third wage hike. Workers have seen their tips slashed, hours cut, or employers out of business. Meanwhile, other restaurants are raising prices or using service charges. The effects are only expected to get worse as the businesses grapple with additional increases in labor costs. DC’s restaurant workers are feeling the pain and the continued fallout will be devastating for the city’s economy.”
More detailed findings are found here and included below.
- District of Columbia full-service restaurant employment had a net loss of 925 jobs since the beginning of Initiative 82 in May 2023. This is while the District of Columbia’s total nonfarm employment has been rising – DC experienced a near-1% increase over the same period since May 2023;
- This represents a 3.1% percent net employment loss for the full-service restaurant industry since May 2023, when Initiative 82 was first implemented;
- In the same period the year before, D.C. full-service restaurants added nearly 4,000 jobs from May 2022 to May 2023, more than a 15% industry employment increase.
- When I82 took effect it caused DC to see the steepest year-over-year losses in full-service restaurants since 2002 (excluding the pandemic).
Background:
- Initiative 82 was passed by voters in November of 2022
- The first wage increase took place on May 1, 2023, with a second increase hitting just two months later on July 1, 2023
- The next wage hike is coming on July 1, 2024
- After the ballot measure passed, many restaurants in the District began tacking on service fees to customers’ tabs to offset the spike in labor costs, frustrating both workers and patrons