June 9, 2016 at 9:11 pm EDT | by Mark Lee
How David toppled Goliath in D.C.
tipped, gay news, Washington Blade

Hospitality tipped employees understand that eliminating the tip wage system would cause prices to skyrocket.

As a prominent athlete once said, “Everybody pulls for David, nobody roots for Goliath.”

That describes what happened to the big-money attempt by labor unions and union-financed groups to radically revise the wage system for tipped employees at D.C. bars and restaurants that failed miserably at winning with local legislators in the nation’s capital this week.

This latest Big Labor escapade even managed to overshadow the resulting relatively joyless muted announcement by Mayor Muriel Bowser and the D.C. Council in approving an increase in the local minimum wage to $15 over the next four years, joining California and New York in eventually phasing in the highest rates in the country. Controversy surrounding a usually denied but not-so-secret desire by labor groups to eventually do away with tipping and essentially convert all hospitality employees to hourly wage remuneration had eclipsed the broader wage hike.

All it took to dissemble this opaque scheming and the outlandish assertions regarding the purportedly miserable occupational slavery while toiling in abject poverty were the actual tipped workers interjecting themselves into the discussion.

In my role as director of a local hospitality business association, I often heard the frequent frustration from those earning tips at local establishments that no one was asking them what they thought while a radical restructuring of their jobs, incomes and livelihoods was being debated. When they became directly and organically engaged in expressing their concern to Council members, the entire political dynamic was altered.

In the end, no voice proved as powerful as that of local bartenders and servers in halting this now unsuccessful union effort.

After all, it seemed inevitable that the attempt to require restaurants and bars in the District to convert from the tip wage system long the standard in the vast majority of the country to an alternate system of paying tipped employees the full minimum wage, rather than guaranteeing it, would succeed. Residents unfamiliar with the tip credit wage system proved easily susceptible to intentional misinformation and false representations regarding how it works that became the deceptive tool of labor organizers.

Many don’t realize that tipped employees are guaranteed the full minimum wage in any rare instance that the base wage and tips earned do not equal or exceed the minimum. Any rise in the minimum wage is also a raise in the guaranteed minimum wage for tipped staff.

Hospitality tipped employees understand that eliminating the tip wage system, or even tripling the base wage as the mayor proposed, would cause prices to skyrocket, tips to plummet, jobs to be eliminated, shifts to be reduced and shift hours to be shortened. Many venues would have no choice but to switch to a service charge system that would reduce incomes.

Hundreds of tipped workers, typically earning good incomes well above minimum wage, began writing Council members and meeting with them. The scores of tipped staff who testified at a marathon public hearing proffered a single simple message for local politicians, “Don’t ‘fix’ my job, it isn’t broken. Don’t destroy my livelihood and professional career.”

Confronted with shrinking workforce memberships, labor groups have abandoned conventional organizing efforts in favor of creating “virtual unions” and negotiating with government officials as if employers representing private sector workers. It’s a political effort that SEIU has invested $80 million in targeted cities across the country over only three years, hoping to eventually garner hundreds of millions in dues payments.

In the District, those facing this type of workplace manipulation managed to stop them. As part of a tail-between-their-legs deal that also saw the mayor’s proposed increase in the tip base wage significantly reduced, the unions agreed to abandon a planned ballot initiative.

Although D.C. hospitality is uniquely distinctive in being nearly universally comprised of independent small business enterprises unlike other locales, it’s a lesson for other jurisdictions: Don’t make the same mistake a handful of other cities have recently made.

Most important, don’t ignore the actual workers.

Mark Lee is a long-time entrepreneur and community business advocate. Follow on Twitter: @MarkLeeDC. Reach him at OurBusinessMatters@gmail.com.

2 Comments
  • Hmmm. How many of these employees that testified were strong armed and threatened by employers like Lee that they would lose their jobs if they didn’t come down against the minimum wage hike?

    Is shaming customers to pay a certain amount of tip to cover the wage the employer should be paying suppose to encourage people to return to that restaurant or bar? It’s really about the employer’s profit margins. Prices keep going up regardless while pay checks aren’t keeping up. Look at the airline industry. You business owners want to make a profit but consumers want to save money!

    There are ways around paying a tip, like opting for take out instead of sitting down for a meal. People could also opt to eat out less that won’t keep people’s jobs either.

    Further, many places are automating services so people are losing their jobs in the service industry anyway. Panera for one is using terminals to place orders and using less cashiers for example.

    It may result in less jobs in the service industry but then those people hopefully would be encouraged to get a better job in another industry. Like McDonalds, no one really expects people to make a career out of such jobs. They are transitional jobs, a stepping stone while you go to school, while you seek something better.

  • The price paid would NOT skyrocket as the author falsely claims. What has happened is the customers have been subsidizing restaurants not raising their wages. People used to tip 8%, then 10%, then 12%, then 15%, then 20%, and now very often 25%, all with the argument 9f “they live off those tips”. So the price of a meal out has already skyrocketed, the author just doesn’t want his business to be responsible for paying it.

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