Will D.C. Repeal the Law That Has Cut Tipped Workers' Earnings by $1,800 a Year?
The law that was supposed to boost their wealth has left most of them poorer instead.
The Washington, D.C., city council convened on Wednesday to discuss the FY 2026 budget. One of the topics on the council's agenda was reviewing proposals to repeal Initiative 82, the District of Columbia Tip Credit Elimination Act of 2022, which has hurt the district's restaurant industry and workers since its enactment.
Initiative 82 passed with 132,925 votes in favor—nearly three-quarters of the electorate—in November 2022. Before the passage of the initiative, all workers in the district, including tipped workers, were entitled to a minimum wage of $15.20 per hour. Employers of tipped workers, however, were allowed to credit their employees' tips toward satisfying this requirement, and were required to provide their workers with a significantly lower mandatory base pay of $5.05 per hour. The initiative proposed to increase the mandatory base pay to tipped workers until it equaled the district's minimum wage, permanently phasing out the tip credit.
On May 1, 2023, the Tip Credit Elimination Act increased mandatory base pay to $6 per hour. That figure increased to $8 per hour in July 2023 and to $10 per hour in July 2024. The act prescribed a July 2025 increase to $12 per hour, but on June 3, the city council voted to pause this increase until October. Councilmember Kenyan R. McDuffie (I–At large) said he introduced the pause out of concern for how the act has impacted the restaurant industry, reports NBC 4 Washington. Councilmember Robert C. White Jr. (D–At Large) voted in support of the pause after speaking to 150 restaurant workers who told him that "[their] take-home pay has decreased," according to The Washington Post.
Jennifer Budoff, Washington's budget director, dismissed such concerns in a recent report, claiming that the city's restaurant industry "remains healthy" following the enactment of Initiative 82. Mayor Muriel Bowser, a Democrat, disagrees. Bowser's FY 2026 budget proposal, released to the public on May 27, calls on the city council to "repeal Initiative 82 & establish sales tax holidays for restaurants" as part of her call to cut red tape and reduce barriers to growth. Employment and earnings data support Bowser's concerns.
Rebekah Paxton, director of research at the Employment Policies Institute (EPI), tells Reason that the district has lost over 1,600 full-service restaurant and bar jobs, on net, between May 2023 (when the act took effect) and December 2024, the latest month for which the Bureau of Labor Statistics Quarterly Census of Employment and Wages (QCEW) data are available. The QCEW data put this number in perspective: Restaurants employing tipped workers in the Virginia and Maryland counties surrounding Washington experienced an employment decline of 0.84 percent from May 2023 to December 2024, while the district witnessed a decline of 4.74 percent during the same period, according to Paxton's testimony to the city council on Wednesday. The decline of employment in the city's restaurants that do not employ tipped workers was nearly one percentage point lower than that of its full-service restaurants, Paxton testified.
Not only has full-service restaurant and bar employment decreased, but so have earnings. Total worker earnings decreased by nearly $12 million dollars from $345.6 million in May 2023 to $333.8 million in September 2024, according to EPI's analysis of QCEW data. Paxton says "the median tipped worker in DC is losing about $1800 a year" in the two years following implementation of the act compared to the two years preceding, according to her analysis of U.S. Census Bureau Current Population Survey (CPS) data.
Despite the progressive intentions of the act's supporters, Paxton's testimony details that the reduction in income has been borne disproportionately by the bottom quartile of tipped workers, who have lost $3,400 in median yearly earnings from May 2023 to December 2024, per CPS data. The data show that the elimination of tipped wages in Washington, D.C. has been a disaster for the local restaurant industry. Hopefully, the city council is listening.
