I am a server at a full-service restaurant in St. Paul. I am in favor of a tip credit, which guarantees workers at least the minimum wage at all times.
If St. Paul raises the minimum wage, why would I want myself and other full-service tipped workers to be excused from this increase?
Today, between the current minimum wage and my tips, I make well over $15 per hour. Most of my colleagues and many others who work in full-service restaurants will agree.
Without a tip credit, there are three factors that would reduce my earnings:
1) Patrons will be less likely to tip the same percentage, or tip at all, knowing tipped workers are being paid $15 per hour. Unfortunately, some see my profession as a low-skill job and will not tip, because occupations they consider of a higher skill set are paid only slightly more than $15 per hour. There are several articles online regarding this issue. Read the comments; many individuals have said: “If servers get paid $15 per hour, I see no need to tip.”
2) Tipping may be converted to service charges. To offset their huge increase in labor costs, many restaurants may strongly consider implementing a service charge, in lieu of a tip, on every bill. A service charge is not a tip. Tips are the property of the worker; a service charge is the property of the owner. I’m extremely concerned because this would give employers the control over the majority of a worker’s income. Service charges would potentially convert control of hundreds of thousands of dollars from the workers to the employers.
On Aug. 31, the Citizens League released a 446-page report on the St. Paul Minimum Wage Study Committee’s process. The committee heard from two restaurateurs, one for and the other against a tip credit. Each presented potential business model changes that might offset the increase in labor costs.
The restaurateur in favor of a tip credit presented a service charge scenario that reduced tipped workers’ earnings from $31 to $23 per hour (a nearly 26 percent reduction).
The restaurateur against a tip credit presented a written statement including a service charge scenario that reduced tipped workers’ earnings from $32.65 to $26 per hour (more than 20 percent).
3) Restaurants may move to no tip/hospitality-included models. This is another measure available to offset increased labor costs, by incorporating the increases into menu prices. Generally, this increases prices by about 25-30 percent. To compensate, the restaurant institutes a “no tip policy” and eliminates the tip line on the credit card receipt. Tipped workers are converted to hourly employees. Most tipped workers make much more in tips than their employers can pay with just a flat hourly rate.
I would love to get paid $15 per hour plus tips. However, the economics of the full-service restaurant business model do not make this possible. Establishments in San Francisco and Seattle are moving to the models described above.
Without a tip credit, tipped workers in St. Paul will see a huge reduction in their incomes. No matter your views regarding a tip credit or the minimum wage, almost everyone can agree it is unjust for workers to lose 20-25 percent of their incomes.
Matt Gray is a career server at a St. Paul restaurant and served on the St. Paul Minimum Wage Study Committee.