Like most Washington, D.C., residents who headed to the polls Tuesday, Dean Madsen voted yes on Initiative 77, a ballot measure that would phase out the city’s tipped minimum wage of $3.33 per hour. Even if workers earn plenty more in gratuities, Madsen felt the city’s restaurants should have to pay more in direct wages than they’ve had to.
“It just seems paltry,” the 37-year-old said while leaving his polling place in the Brookland neighborhood. “Not everyone tips the same way, and not every restaurant distributes tips the same way ... Why not set the bar higher?”
That was apparently the prevailing line of thought on election day in most of D.C, particularly lower-income neighborhoods without a thriving bar-and-restaurant scene. The measure passed 55 to 45 percent, giving a boost to the “one fair wage” campaign that seeks to end the two-tier minimum wage system used in most states.
The initiative would gradually do away with the city’s “tip credit.” Legal in most states, tip credits allow employers to pay tipped workers a sub-minimum wage so long as the workers earn enough gratuities to get them up to at least the regular minimum wage. In D.C., that means restaurants can pay servers and bartenders a base wage of just $3.33 per hour since the bulk of their earnings will come through tips.
If Initiative 77 goes into effect as passed, the tipped minimum wage would gradually rise to the regular minimum wage of $15 by 2025, at which point the tip credit would be gone. That would significantly increase the base wages that businesses would be required to pay servers, parking attendants and other tipped employees. There are seven states, including Washington and California, that already require employers to pay all workers a full minimum wage before gratuities.
D.C.’s restaurants ― and many of their employees ― campaigned relentlessly to defeat it, and the bitter fight is far from over. A majority of members on the city council joined the industry in opposing the measure. They have the power to alter it or toss it out altogether. The city’s powerful restaurant lobby immediately said they would pressure the council to overturn it. Backers of the initiative held a rally outside the council building Wednesday morning urging members not to defy the will of voters.
Some of the most vocal opponents to the measure in the city were themselves bartenders and servers. They warned that restaurants couldn’t sustain the higher labor costs without significantly hiking prices, which they said would eat into customers’ tipping habits and ultimately drive down their take-home pay. Many bartenders in the city’s liveliest nightlife corridors wore “No on 77” pins and gladly told diners and bargoers why they were against it, even if it was supposed to help them.
Judging from the voting results, their message did resonate ― in more well-to-do neighborhoods. The initiative was voted down in most of the higher-income precincts west of Rock Creek, as well as in gentrified areas of Shaw, Logan Circle and Capitol Hill, all of which have thriving restaurant scenes. But the initiative passed in all but a single precinct east of the Anacostia River, where the vast majority of residents are black.
Diana Ramirez, the director of Restaurant Opportunities Center D.C. ― the local chapter of the New York-based worker center behind the initiative ― said she wasn’t surprised by the racial implications in the voting results.
“That’s exactly why we did this,” Ramirez said. “The system works for some people and it doesn’t for others…. People of color are affected [more] by this.”
It wouldn’t be a good look for the council to completely spike an initiative popular with the city’s lower-income residents. They could look at other ways to water it down though, such as by putting a higher tipped minimum wage in place, or by making the phaseout of the tip credit even more gradual. If they decide to alter it, they will probably point to the low voter turnout ― just 17.6 percent of registered voters cast ballots Tuesday ― as well as the language of the proposal on the ballot, which was friendly to its backers.
Ed Lazere, who ran unsuccessfully against Council Chairman Phil Mendelson, said he expects the council to tinker with the initiative rather than let it become law as is. A supporter of the initiative, Lazere acknowledged it could force restaurants to dramatically change the way they do things, and legislation done through the council would give them a seat at the table that they didn’t have with a ballot initiative.
“No doubt there will be a conversation, which I think is a good thing,” said Lazere, who’s on leave as director of the DC Fiscal Policy Institute.
Local restaurateur Andy Shallal, who owns the Busboys and Poets eateries in town, said he anticipates that over time ending the tip credit could lead restaurants to raise menu prices between 20 and 30 percent. He spoke at an election watch party being hosted by the “Yes on 77” crowd at his restaurant in Brookland on Tuesday night. Even though it was a victory party, Shallal told the crowd that a lot of restaurants would feel the pain of the higher labor costs.
“Lots of restaurants will be hurt by this ― I just want to be honest with you,” he said at one point.
Shallal said he hoped the council would tweak the proposal and make it more business-friendly, floating the idea of giving restaurants tax breaks or a longer runway for implementing the initiative. But whatever happens, Shallal said the ballot measure’s success started an important conversation, and he hoped tipping would become less ingrained in the culture.
“We are an industry that’s easily spooked, and I think sometimes for good reason. There’s a lot of pressure to keep prices down,” Shallal told HuffPost. “But the restaurant industry is one of the last industries that believes in tipping as a way to make a living. That has to become obsolete.”