Tipped Minimum Wage

Democrats' COVID-19 Aid Package Would Quietly Eliminate the Tipped Minimum Wage as Restaurants Struggle To Stay Alive

Do small businesses need another punch in the gut?


The American restaurant industry continues to hemorrhage money as local governments around the U.S. restrict indoor dining options in order to keep COVID-19 cases at bay. With other parts of the economy still lagging and many Americans still unemployed, Congressional Democrats want to pass another large COVID-19 relief package.

Except this time, Democrats want to provide that relief by doubling the federal minimum wage from $7.25 an hour to $15 an hour. As part of that effort, Democrats also want to completely eliminate the tipped minimum wage—a lower hourly rate paid to certain workers in the hospitality industry. The federal tipped minimum wage is currently $2.13 an hour and many workers who receive it make up the difference (and then some) with tips from customers. The COVID-19 relief bill could raise that amount to $15 an hour.

As I wrote last month, the Democrats' latest spending effort would likely require many of the bill's intended recipients to seek relief from the relief. Though some employees may see a bump in pay, others would lose their jobs entirely. In a recent report, the Congressional Budget Office estimated that raising the minimum wage to $15 an hour would lift 900,000 people out of poverty while pushing 1.4 million people out of work.

That effect would arguably be even more pronounced in the restaurant industry, which would see labor costs increase up to 604 percent, as opposed to the mere 106 percent faced by businesses whose employees already make $7.25 an hour.* (If tipped-wage workers are not able to pull in the equivalent of the full federal minimum wage, employers are already required by law to make up the difference.)

In good times, the restaurant industry operates on profit margins of around 6 percent. But things aren't normal right now. As of December, restaurant closures were up 32 percent year over year as businesses grapple with COVID-19 restrictions that have hamstrung their operations, particularly for eateries in downtown areas that rely on tourists and office workers for business.

This debate isn't new. An example: In the summer of 2018, voters in Washington, D.C., passed Initiative 77, a measure that axed the tipped minimum wage. It drew a full-throated backlash from restaurant workers, who lobbied to have the measure overturned. (The D.C. Council obliged.)

New York City has not done away with its tipped wage entirely, but it has continued to increase it over time. After the city upped the tipped minimum to $10 an hour in 2019, hundreds of restaurants reported that they would have to cut employee hours, with just under half of respondents saying they would eliminate jobs entirely.

A bump in pay might sound nice—until you're let go. A study conducted by researchers at Harvard Business School using data from Yelp concluded that "a one-dollar increase in the minimum wage leads to a 14 percent increase in the likelihood of exit for a 3.5-star restaurant."

Some Democrats are skeptical of the proposal. "If the minimum wage provision is in the bill with the elimination of the tip credit, it would make it very hard for me to support it," Sen. Angus King (I–Maine), who typically votes with Democrats, told The Wall Street Journal. "A lot of restaurants are just hanging on by the thread."

Without King's support, and without the backing of other moderates like Sens. Kyrsten Sinema (D–Ariz.) and Joe Manchin (D–W.Va.), it's doubtful that Democrats will be able to muscle a massive minimum wage increase through budget reconciliation. But this debate could be coming to a city near you.

*CORRECTION: The original version of this article overstated the specific percent the minimum wage and tipped wage would increase as a result of this legislation.

NEXT: Progressives Say Good Riddance to Businesses Who Can't Afford a $15 Minimum Wage

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  1. But mean tweets.

    1. Do you want more TDS articles from Reason? Because this is how you get more TDS from Reason.

    2. Trump recap:

      worst jobs record since the Great Depression
      worst single year and four year GDP since the Great Depression
      escalates trade wars and fails in trade deals
      fails to build wall and make Mexico pay for it as promised
      fails in pandemic response
      record deficits – up to 5x higher than his predecessor left
      attempted overthrow of election
      complete disregard for US Constitution and democracy
      failed allies and NATO
      gave Iran runway to develop nuclear weapons

      Trump = Total failure

      1. gave Iran runway to develop nuclear weapons

        Black Jesus cleared the way, and paid them to do it.

        1. “Paid them?

          We unfroze their assets when they agreed to de-nuke and inspections.

          “Paid” is a lie.

          1. The courts ready ruled the held money could be used in court cases against Iran you fucking statist fuck. Quit apologizing for every Democrat.

          2. Serious question, Buttplug. You obviously believe that Trump invented Covid, and the global restrictions and their repercussions on the economy were solely due to Trump.
            How did Trump invent Covid and its effects on the global economy?

            1. “How did Trump invent Covid and its effects on the global economy?”

              Easy. He had the Chinese do it for him. 11ty dimensional chess.

          3. Sarah-buttplug2 comment – “We unfroze their assets when they agreed to de-nuke and inspections”

            Thats not what happened.

      2. Lol. The iran nuclear deal gave Iran billions of dollars and freedom to build bikes after 10 years. The covid bills were passed by veto proof majorities in congress.

        I do love how you have to rely so heavily on a global pandemic to try to make an argument.

        1. Build nukes* including building missiles for delivery in those 10 years.

        2. Hmm, a desert country building bikes. This is how Mad Max starts, isn’t it?

        3. Trump lost. Quit crying.

          1. Lol. God dam. The leftists are really dumb lately. Hi Jeff.

            1. I’m not a leftist or “Jeff.”

            2. Lol. God dam. You thought Trump.was going to win re-election. Lol.

            3. You called me “dumb.” I’m crushed. Lol.

        4. Trump gave farmers welfare. Lol.

      3. You forgot:

        Hamstrung by corrupt justice department
        Sabotaged by 5th column in the FBI
        Sans Culottes and their media Jacobins running with BS Russia nonsense

        1. Always the excuses.

      4. Trump recap for our retarded friend Buttplug:

        Goofus – “worst jobs record since the Great Depression”
        Gallant – Best jobs record in decades until the Covid pandemic. Did Trump invent Covid and are you retarded?

        Goofus – “worst single year and four year GDP since the Great Depression”
        Gallant – Best GDP in decades until the Covid pandemic. Did Trump invent Covid and are you retarded?

        Goofus – “escalates trade wars and fails in trade deals”
        Gallant – Swapped NAFTA for the infinitely superior USMCA. Are you retarded?

        Goofus – “fails to build wall and make Mexico pay for it as promised”
        Gallant – The wall is still being built. What kind of idiot expects a wall from the Atlantic to the Pacific to materialize overnight. Are you retarded?

        Goofus – “fails in pandemic response”
        Gallant – (He finally recognizes the pandemic happened) Do you not understand Federalism? Covid management is the domain of the governors, not the president. Are you retarded?

        Goofus – “record deficits – up to 5x higher than his predecessor left”
        Gallant – Oops, what happened to the pandemic? Maybe explain how veto proof budget bills are Trump’s and not Pelosi’s fault. Do you even know how government works? Are you retarded?

        Goofus – “attempted overthrow of election”
        Gallant – The election was a fraudulent sham, and so are your Reichstag fire claims of insurrection and overthrow attempts. Are you a fascist?

        Goofus – “complete disregard for US Constitution and democracy”
        Gallant – By the people who filled DC with troops based on a lie?

        Goofus – “failed allies and NATO”
        Gallant – Fuck NATO, you fucking warpig… also, what ally did he fail? Dishonest warmongering retard.

        Goofus – “gave Iran runway to develop nuclear weapons”
        Gallant – Who is Obama?

        First Step Act
        Attempted rapproachment with the DPRK
        Peace deal with the Taliban
        Peace agreement between the Serbs and Kosovars
        Peace deals between Arabs and Israelis
        No New Wars

        Trump = Best president ever. He did more for Trade and world peace than any president since WW2.

        1. “What kind of idiot expects a wall from the Atlantic to the Pacific to materialize overnight.”

          Only from the Gulf of Mexico to the Pacific. The southern land border. There is not and never was a plan to build the wall across beaches of the US gulf coast states.

          1. Tell us again how the Gulf of Mexico isn’t part of the Atlantic. Only White Knight sockpuppets could be this retarded.

            1. Colloquially, nobody refers to the Gulf as part of the Atlantic. You’d get strange looks in any of those states if you referred to the Gulf of Mexico as the Atlantic Ocean.

        2. There is virtually no difference between USMCA and NAFTA. I didn’t bother to read after that.

          1. Lol. Jeff is actually this dumb.

            1. Trump added $7.8 trillion to the national debt in four years after promising to eliminate the entire national debt. What a lying sack of crap!

              When’s Mexico paying for the wall?

              1. Remind us again of how Trump, rather than Pelosi crafted the Covid bills?

                1. He signed them.

                  1. You mean he signed the veto proof bill he was obligated to sign?


                    You’re really not very good at fifty-centing, Buttplug.

                    1. He should have vetoed it and let them override. He signed it, so he owns the debt. Next?

                2. He also signed a tax cut with no plan to cut spending.

                  1. So?
                    This is a libertarian website, Buttplug. Not Huffpo.

                    And who controls spending, the president or congress?

                    1. You cut spending first. THEN you cut taxes. That’s common sense. Republicans don’t seem to grasp that.

                      Libertarians do not support more debt.

                    2. If Trump was a leader, he’d have said, “No tax cut until you agree to my spending cuts first. I was elected to end the deficit spending.” He’d have had leverage over Republicans in Congress that way.

          2. So, not a failure then?

            1. A lot of work for no gain is a fail. Yes.

            2. Losing to Sleepy Joe in a landslide is failure too.

              1. Landslide, lol.

                1. Trump said his win over Hillary was a landslide, so Biden’s win was definitely a landslide.

                  1. Why do you let Trump run your life?

              2. “Losing” lol.

                1. Poor snowflake has to lie about election fraud to deal with Orange Man’s humiliating defeat. Lol.

                  1. Poor Buttplug, it must be hard on you, shilling for actual fascists who don’t seem to give a fuck about who knows how dirty they are.

                    1. I’m not “Buttplug,” Tulpa.

                2. Really pathetic.

                  1. A sockpuppet defense of your post? It sure is.

                    1. No. It’s pathetic to still be claiming the election was rigged.

        3. Lol @ crybaby snowflakes still trying to defend Trump after we threw him out on his behind. Whom are you trying to convince? Lol. “Best presidents” get re-elected.

          I thought most people on the right would have thrown Trump under the bus and moved on by now. Boy was I wrong! The sooner you move on, the sooner you can win elections again.

          1. One of these countries didn’t have a fraudulent election. Can you guess which one?

            United States of America
            North Korea

            1. United States of America.

              Why does a Canuck like you even care about our election? Lol.

              1. Most powerful nation on earth just had a coup, and is now in the grip of totalitarian oligarchs who a trying to eliminate all opposition.

                It’s scary as fuck and a threat to the entire world.

                1. Bwahahahahaha!

                  The attempted coup was on Jan. 6.

              2. “Why does a Canuck like you even care about our election? Lol.”

                Why does a TDS-addled piece of shit like you ask?

                1. Still mad Trump lost and is heading for prison? Lol.

          2. “Lol @ crybaby snowflakes still trying to defend Trump after we threw him out on his behind….”

            Gee, a brand new TDS-assled piece of shit.

            1. Aww, you’re mad. Lol.

            2. Trump lost. Trump lost. Trump lost. Trump lost. Trump lost. Trump lost.

      5. This would be correct if it say Obama at the top.

      6. Not to mention, 500,000 dead because he didn’t want to take responsibility for handling pandemic, relied solely on a vaccination strategy which experts warned wouldn’t be in place much before Jan 2021, told people it wasn’t serious, and mocked those who took it seriously. Having smaller government may be a goal, but having no government cannot be. Further, smaller government is a nice idea right up to the point that catastrophe happens because you spent decades living on subsistence level budgets and suddenly, SURPRISE!, you don’t have the resources (or controls) to handle the crisis, like COVID, like the Texas power and water outages. Instead you relied on Laizes Faire (sic)/market will-out, which doesn’t actually work to restrain people with bad intent who are simply looking to make a quick buck. tRump was more a symptom than a cause. The cause was people wanting something for nothing and thinking they could get it. So, to those of you who want to bury your head in your assinine accusation that people who don’t like what happened are deluded, understand we recognize (unlike you, who DEEPLY suffered from ODS), that it is the POLICIES of the far right that are the issue, not one man.. What’s funny, though, is you so readily adopted to politics of cult (tRump) over policy, for tRump was hardly tied to fiscal responsibility. He WAS, though, someone who never wanted to do the real, hard job of being President, like, dealing with COVID, and probably something on the order of 400,000 Americans, paid with their lives for his lack of responsibility, lack of planning, and lack of empathy. THAT is a right-wing trait, so it’s not Trump which is at fault (alone), it is the politics of do nothing for others, there is no common cause or common fate.

        1. You make some good points. I would just point out that mostly old people, with other health issues, have died from COVID. We’ll save money and resources as a result.

      7. I’m not a Trump fan, but until the pandemic began, unemployment was at the lowest rate in decades. Wages for the lowest paid workers were increasing – same for blacks – at the high rates in decades. The stock market reached new highs before and after the election. For every new federal regulation during his administration, more than 2 were removed. Corporate tax rates – which were higher than the average among developed nations – were cut. Some Arab countries established diplomatic relations with Israel – something the Trump administration helped (if only a little) make happen.

        Trump failed in many ways – but a few good things happened during his term.

        We’ll be listing lots of Biden failures – and we won’t have to wait four years.

        1. Blonde, you say you aren’t a Trump fan but tout his supposed economic accomplishments. Let’s quantify these things, the stock market ALWAYS rises over time, it was up MORE under Obama (in the first 4 years after the financial crisis) than under Trump. Unemployment had been falling for years, Trump just was a recipient of an already functioning economy. That pay for blacks (and many others) was increasing was a reflection of a delayed set of wage pressures. He “achieved” that by passing a massive tax cut for the rich, which boosted profits but short-changed our ability to fund our government. All of THAT came to a screeching halt when tRump failed to manage/control the pandemic. Our outcome, per many folks but including Anthony Fauci when measured against a whole host of countries, was among the worst in the world. The short version is this, tRump chose to eat a slow death, rather than act boldly, and that slow death has now come home to roost, both in terms of lives lost, but also crushing debt, and a paralyzed economy, paralyzed far longer than our peers. A 30% cut in GDP for 2 years is FAR worse than a 50% cut for 20 weeks. tRump didn’t have the guts to act boldly and set things aside for 20 weeks to avoid the 2 year death. He didn’t want to take accountability and he OWNS that, that’s ALSO part (in fact the main part) of his economic “legacy.” Much of the rest he either inherited or should have been better considering the massive debt-spending he undertook. Your house always looks prosperous when you spend money you don’t have to put in $100,000 in landscaping – that’s what Trump did. Eyewash, and when the first crisis came, Trump utterly failed to handle it.

      8. “Trump recap:”

        turd assumes posting lies often enough will, by some magic, convert those lies into facts.
        Ken got turd’s number:
        “…We often think Tony, Shrike, and ChemJeff are being dishonest–especially when they don’t seem to learn anything from having their arguments shredded and smeared in their faces everyday for years. But the fact that they don’t seem to learn anything–knowledge wise or in terms of critical thinking–may be consistent with the hypothesis that they’re just not that bright. And we shouldn’t necessarily assume that Binion, Boehm, or Britschgi are fundamentally different from them.
        Maybe the reason they try to make us feel is because they’re incapable of making us think. It is beyond their capabilities…”

    3. Still crying about the election? Get over it.

      1. Still whining about Trump, asshole? Get over it.

        1. Not whining. LAUGHING.

  2. “The American restaurant industry continues to hemorrhage money”

    That’s too bad. But we Koch / Reason libertarians have the solution: unlimited, unrestricted immigration. There must be millions of Central and South Americans willing to work in restaurants for like 19 cents per hour. They can do it off the books if these misguided minimum wage increases become law.


    1. So where does an OpenBordersLiberaltarian/gourmand such as yourself go when you dine out

  3. So is there some other reason besides sheer cruelty for them to torment restaurant owners? I’m sure this sort of wage requirement isn’t going to affect the sorts of restaurants these people frequent, the waitstaff at those sorts of places make over $100 an hour, but it’s going to affect the sorts of places us deplorables can afford.

    1. That about sums it up.

      People really need to wake up from this whole “unintended consequences” fantasy. A third of small businesses have gone under in ONE YEAR! And all we’re hearing from The Party is more policies that will clearly hurt small businesses. How about that Amazon stock though!

      Occam’s Razor tells me this is all intentional.

      1. Of course it’s intentional. Biden’s campaign slogan, Build Back Better, is a globalist economic idea in line with the Great Reset that the World Economic Forum is pushing.

        1. I still think you give them too much credit. There isn’t some great conspiracy. Its good intentions gone awry.

          1. 10 years ago you were saying no need to worry about woke people in college. Always the useful idiot defending liberals against their open desires for authoritarian rule.

            1. Sarcasmic really is a useful idiot. He reminds me of Tom Parsons in 1984.

            2. How’s it like living in a blue state with two Democrat senators, bitch?

          2. I don’t think it’s an either/or situation. These are people, like Klaus Schwab and Bill Gates, who genuinely believe that implementing a top-down, globalist, neo-feudal technocracy is the only thing that will save this planet.

            They aren’t even being shy about it. Pull up WEF forum talks, or Great Reset literature, and they lay out in explicit detail what their plans are.

            They’re basically like John Hammond in Jurassic Park–oligarchs with a crap-ton of money who “spare no expense” to implement whatever fantasy they have, without any regard for how it might affect the very people they think they’re helping.

            1. Is Pelosi a velociraptor? A really old one?

              1. Remember that frilled one that spat poison? The Dilophosaurus?

          3. You think?!

            Fuck coulda fooled me over the past few years. All I’ve seen is reflexive gasslighting and pants shitting from you.

      2. You’d think at some point there would be a line…

      3. It’s not fantasy, it is enforced narrative. Democrat motives are always presumed good and pure while Republican motives are always suspect at best.

        It’s in the Reason Stylebook.

      4. Virtually every Big Thing that big, left-dominated government has done in the past 20 years has been a great booster for Big Corporations, despite the shrill whining they used to do about them (McDonald’s protests, WalMart protests, etc.). Obamacare, Sarbanes-Oxley, minimum wage laws, family leave act, and so on: Big Corps can subsume the obscene costs they demand, most small businesses cannot.

        Home Depot is thriving because of COVID-19. And locally, in increasingly liberal Colorado, small appliances business were not allowed to open at its outset.

        And yes, meanwhile, the left-dominant media and media-big-tech cabal are doing fantastic.

        It’s not accidental.

    2. I guess the goal is to get us to pay $25 for a meal from McDonald’s by the time this is all said and done. Because, as you said, all the affordable sit-down restaurants for the proles will be shut down.

      1. That is what happened, along with high unemployment rates for high schoolers, in Australia when they did the same. Bye entry level jobs.

    3. They want to put the Olive Garden out of business so insurrectionists can’t dine out anymore.

    4. You can’t unionize tipped workers.

  4. If they can’t afford to pay $15/hour plus tips, they don’t deserve to stay in business, they don’t have a viable business model.

    Saaaayy…. I wonder how many Congressional staffs have unpaid or low-paid interns …..

    1. And oh yes, how about all those campaign staffers, how much do they get paid? The doorbell ringers, the envelope stuffers, the telephone callers ….

      1. The useful idiots volunteer. The useful corrupt cronies volunteer, while a family member’s business gets a nice contract.

      2. If they get into the govt employee union it’s at least 45$/hr

      3. “Do as I demand as a self-righteous, wealthy and protected moralizing politician, not as I do.” — BS (Bernie Sanders)

        I also remember AOC whinging about her paltry $180,000 salary (plus infinite perks)–how could she be expected to live the Washington DC social life on that pittance?

        I don’t recall her pushing for $90/hour wage minimums, though.

  5. One of the things I enjoyed the most about being a waiter was that I was paid by the customers, not the restaurant. I make them happy and they give me money. It’s great! Take that away and soon restaurants will have customer service like Walmart or the DMV. This is soooooooo stupid.

    1. I’ve watched many a shitty server complain that they can’t make any money and go find another job, while I made bank off the same customers.

      Tips weed out shitter servers. Show me a place with marginal service and I’ll show you someplace that doesn’t allow tips or that forces the servers to pool them.

      I over-tip for good service, like 30% or more, especially breakfast since the tickets are small.

      Lousy service gets ten percent.

      1. You fucking liar. You tip 7%

        1. Hi Tulpa.

          1. I’m not a sock you 7% tipping mallate

        2. HO2

        3. Tiger Woods used to give the Denny’s waitresses a tip.

        4. I’d tip zero if you were my waiter.

          1. Lefties don’t tend to tip well as a rule

            1. I’m not a leftie. I’m right handed.

      2. In all seriousness I over tip if the server shows some cleavage

        1. Gender neutral?

      3. “I over-tip for good service, like 30% or more, especially breakfast since the tickets are small.”


        If you’re well enough off to eat out, you’re well enough off to “overtip”, esp. breakfast. I get a kick out of handing the waiter a twenty for a $15 breakfast and seeing the look when I they start to get the change and I just say “all set”. It’s a little thing to me, but every little bit helps them.

        Noblesse oblige

        1. Yes, you have to be well-off; in the past couple years restaurant prices have gotten outrageous. We used to eat out a couple times a week for maybe $40 per visit. Now we’re lucky if I can get 2 burgers and a beer each (plus tip / tax) for less than $60. This in a not-so-major city.

          COVID brought more price increases, and not-so-subtle in many cases. Now I limit myself to one take-away visit a week, and aren’t buying any carryout drinks. I give a 20% tip usually, only because I return to the same restaurants–it’s not like I’m getting waited on.

          Don’t be surprised if the minimum expected tip becomes 25% once restaurants re-open.

      4. I love going to the government-run DMV where you don’t have to tip at all, and they get to (and do) treat you like shit because they can.

        I literally had to make 4 visits to re-title a car (the existing title was with the original owner of a 1966 vehicle); the 3 return trips were their fault. Not a whisper of an apology, and no they couldn’t wave a cent of the $20 fee for wasting a couple hours of my time.

    2. You were happy about reduced alcohol costs at the restaurant, be honest for once.

  6. It’s terrible what they’re doing to restaurants but I fought for this issue for months and rarely saw a restaurant or business owner complain about lockdowns. Yes sometimes you see them interviewed on TV news but they rarely appeared on social media. They should have been out in force fighting the karens considering they weren’t working. But they kept quiet. I think part of it was that they actually supported the restrictions and for those who didn’t, they were scared of backlash on their business. Or just cowardice. But the point is, they have only themselves to blame for much of the damage. (Bickering with your allies in your echo chamber here doesn’t count.)

    1. Brewpub owner here. The second one of us pushes back, it’s surprise inspections from the county health department, the state health commission… Hell, we were inspected by the state agriculture department.

      They control our liquor license, our future building or event permits, etc. We are over a barrel. Resistance, as they say, is futile.

      We’ve survived in spite of it all. We consider ourselves lucky.

      1. Like I said, cowardice. You could easily fight anonymously but you refuse. Where were you when I was fighting for restaurants? You have only yourself to blame.

        1. Not true.

  7. Choice. Even more than Republicans, Democrats don’t want you to have it.

  8. A full time minimum wage worker makes $2,000 over the poverty level now. Who is this new wage going to lift out of poverty who can’t do it now?

    1. The impoverished but somewhat motivated to do better serfs

    2. For those who had math in a public school – – – –

      In 2020, in the United States, the poverty threshold for a single person under 65 was an annual income of US$12,760

      assume 2 weeks vacation and no overtime;
      2000 hrs x 7.25 = $14,500.

      1. But how do I support a house spouse and 3 kids on minimum wage?

        TELL ME THAT!

        1. If you had any sense of responsibility, you would have got a job that would support a family FIRST. The minimum wage is for teenagers’s starting jobs. Only the severely handicapped or severely lazy, irresponsible, or criminal make a career out of minimum wage jobs.

  9. Hello underground economy! It is the only viable option for many.

  10. How’s the Great Reset Forward working out for you?

  11. Gotta keep the unions happy, no matter how it fucks with other people.

  12. While I can understand an argument against minimum wages generally, I don’t see any logic for carving out an industry specific exception to a minimum wage law.

    I also don’t really buy the idea that restaurants can’t survive without the tip credit carve out given that there are 7 states that already don’t allow a tip credit (and another 4 that set the minimum cash wage above the federal minimum wage for non tipped workers). They aren’t all blue states either, they run the gamut of red blue and swing.

    1. And what are the costs of living/eating in those states comparatively?

      They tried this in Seattle a few years ago, reason reported on it extensively. It resulted in less hours, thus less pay, for waiters. I believe it was about 400$ month loss iirc. And in many cases, like at ivars their famous seafood restaurant, the business began explicitly telling customers not to tip their staff because they were now making at least 15$, which resulted in higher food costs. And they didn’t want the cost of a meal going up even more with tip based on food prices that were based on inflated wages.

      1. Both high and low cost of living states are represented, though I think that’s a better argument for whether or not to set a national minimum wage and less of an argument for whether within a state there should be different minimum wages for different industries.

        States that don’t allow a tip credit:
        Alaska, California, Minnesota, Montana, Nevada, Oregon, Washington.

        In addition, the following states allow a tip credit, but the minimum cash wage allowable even with the tip credit is higher than the federal minimum:
        Arizona, Colorado, Hawaii, New York.

        Here’s the list: https://www.dol.gov/agencies/whd/state/minimum-wage/tipped

  13. Funny that there is never a survey of servers about his nonsense.
    Ask a competent server if they want only $15.00/hr fully taxed, or whatever they make now, and see if it matches up with their overlords statements.

    1. All of the left seems set on making incompetent people feel no shame or discomfort for their incompetence.

      Like planning, organization, and time management are signs of white supremacy.

      And math is racist.

      1. Yes. The left does not like tipping because it rewards good service. Their ultimate goal is to have all jobs be like the government schools and the post office:

        Get your job through credentials received from left-dominated institutions.

        Get your promotions by going back to college and getting more credentials and leftist indoctrination.

        Get pay raises only for seniority and added credentials.

        Get NOTHING for superior performance.

        Cannot get fired for inferior performance.

        Your job is guaranteed no matter how badly your employer fails, because it is either tax-supported or a monopoly by law.

    2. Tips are taxable income as well, it’s just harder to catch tax cheats.

      Also, this wouldn’t outlaw tipping, and it’s impact on tip incomes isn’t easy to predict. There are competing forces that would increase tips (if a restaurant raises prices to cover wages, customers would be paying 15-20% of that higher cost for larger tips over all) and decrease tips (higher costs driving down customer demand) We’d need a lot more data about where we were on the demand curve to meaningfully predict the effect on tip income.

  14. Headline: ALL of the Democrat Party plans are FAR worse for individual liberty than anything the Republicans have ever conceived of . . . FILM AT 11.

    Or 2011 . . .
    Or 1911 . . .

  15. We pay our servers and staff well above the $2.13 minimum… Usually $6 to $8 per hour plus tips.

    With credit card tips, our average performers take in $25 per hour, on average, and that doesn’t include the cash tips we don’t see. Our top performers can clear far more. In our Midwestern city, it’s a solid pay.

    Everyone is happy as it is: the customers, the owners, and the staff. It’s not broken. Please stop “helping.”

    1. See, there is the problem. Some people are making more money than other people doing the same job. It’s not fair. Just because someone can put a smile on their face and get your order right , they should make the same money as the grumpy server that screws everything up and won’t refill your drink.

  16. I have no support for this measure. However, culturally I can get on board with eliminating tipping. I can’t stand the practice anymore and it seems like everyone now feels they deserve to be tipped.

    Can we as a society agree to just raise prices a little on everything and eliminate tipping altogether?

    1. No.

      1. Ah, so you like not knowing what things actually cost and having to tip every single person who provides you with a service?

        1. The price is on the menu, and we don’t have to tip shitty servers allowing greater autonomy and market efficiency.

          1. You mean the business can’t regulate itself and requires you as the customer to properly pay an employee rather than the employer doing that?

    2. So lazy fucks have 0 motivation to do their job? Nope, do your job or move on to something else, this is a proper economic feedback loop we should not interrupt.

      1. If a lazy fuck isn’t motivated by (A) a paycheck and (B) keeping their job, then I don’t think receiving a small portion of their paycheck on a nightly basis is going to fix things.

        Or are you suggesting that bosses don’t fire “lazy fuck” employees if they sometimes get tips?

        1. It’s not a small portion of their paycheck. Usually it is most of their paycheck. In normal times (COVID messed this up temporarily) if a server isn’t getting more than $15/hour in tips, either she’s a lousy waitress, or she works for a lousy restaurant.

      2. So capitalism doesn’t work unless the customer is the one who directly pays the employee as opposed to the business?

    3. I wish there was some magic wand to wave that would eliminate tipping, but sadly I don’t think it’s in the cards. I don’t find the service provided in traditionally tipped industries better than in non-tipped industries, nor between tipping cultures (like the US) and countries where tipping isn’t customary.

  17. Notice that these people never asked the actual workers what they want. Many of them make MORE than $15/hr with tips.

    Now they won’t.

    Great job.

    1. Nah, they would turn around and ask for better enforcement on tip reporting cause Uncle Sam needs his fair share from these people, too.

  18. Is this debate entirely by people who don’t understand how the tip wage works?

    Restaurants have to document that the wage plus tips is at least the minimum wage.

    So it’s NOT TRUE that the minimum wage for servers is $2.13/hr. That’s the minimum hourly wage paid directly by the restaurant. The server is still entitled to an overall wage that meets the minimum wage.

    It does lead to some weird scenarios where for any given shift a server could actually LOSE money depending upon their expectations for tipping out the dishwashers, etc. However their average wages must still be over the minimum.

    People pushing for a change in the “tipped wage” are either ignorant or lying.

    1. I would lean towards not understanding. IT’s a really weird system with kind of byzantine rules.

      The simplest way of understanding it is like this.
      If you recieve more than some minimum amount of tips per month, which varies by state, your employer may reduce your wages by that tip amount or some percentage thereof (again depending on state) from your hourly wage up to a cap (which again varies by state)
      Employees must report tips to their employer, who in turn reports it to the IRS.

      Of course, the system lends itself to abuses including tip theft, tax evasion, etc. but it’s so entrenched in our culture that it’s not likely to change.

  19. “…local governments around the U.S. restrict indoor dining options in order to keep COVID-19 cases at bay.”

    Assumes facts not in evidence.

    1. The facts are in evidence, but since they support freedom and not “cloth face coverings”, they are ignored.

  20. Almost every single study shows this would harm the very people it is supposed to help. Even the workers making tips are against this idiotic mush. Yet here we are living in a fantasy.

  21. I blame a century of government schooling having replaced education in the USA for creating a generation of citizens so unable to grasp the simple notions of cause and effect, of incentive and reward and the motivation for human action, seeking a more desirable outcome than the current situation.

    It’s a travesty that Socialism and collectivist economics have not been outlawed in the USA after the obvious and widespread devastation around the world such economic folly has caused. Instead, champions of those ideas are now driving the USA off the economic cliff as fast as they possibly can.

  22. There is really no way to do this. COVID-19 is so powerful that there is no way to control it now. The entire economic downturn is inevitable. There are many people whose lives cannot be guaranteed. The Democratic Party should make a difference.
    Orologi Rolex

  23. Reading today’s headlines at Reason, it’s almost like Reason has suddenly discovered that democrats are a worse thing than getting rid of bad orange man.

Please to post comments

Comments are closed.