Initiative 77 & The Crisis of The Tipped Minimum Wage

The current minimum wage for most hourly workers in the District of Columbia is $13.25, which is set to increase to $15 come 2020. Tipped workers, however, receive a fraction of that amount per hour. As of July 1, 2018, tipped workers (which can include servers, valets, and bartenders) receive $3.89 per hour, with an anticipated increase to $5.00 by 2020. The justification for this low hourly wage is the understanding that, in the case that an employee is unable to meet DC’s minimum wage with their tips, the employer will cover the difference. Therefore, a tipped worker who is unable to make $13.25 per hour in tips will have their wage supplemented by their employer under the Fair Shot Minimum Wage Amendment Act of 2016. However, restaurants in the DC area have been under fire for charges of wage theft, putting into question workers’ lived experience of this law.

Research done by the United States Department of Labor reveals that, nationally, the US food service industry has had higher rates of wage violation than any other low wage industry since 2008. In fiscal year 2018 alone, over 41,000 food service workers reported nearly $43 million in thefted wages. Research done in 2011 by the Washington, DC chapter of the Restaurant Opportunities Center (also known as ROC), a non-profit based in Manhattan whose stated mission is to “improve wages and working conditions for the nation’s restaurant workforce.”, gives us a local perspective on wage violations in the restaurant industry. Following a year’s worth of research, ROC’s DC chapter released a 76 page report on DC’s restaurant industry. Table 7 (which can be found on page 25) of the report reveals that 33.5% of restaurant workers in DC report having experienced overtime wage violations and 11.4% report having experienced minimum wage violations. As further detailed in ROC’s report:

11.4% of the workers spoken with reported earning less than $8.25 per hour, which violated DC’s 2011 minimum wage laws Only 18.5% of tipped workers were able to correctly recall the correct minimum wage and only 9.7% knew the amount of the tipped minimum wage, even though it is the employer’s responsibility to post bilingual signs in the workplace detailing this information

A briefer report published by the Economic Policy Institute further reveals that:

Tipped workers in DC are largely people of color (70% of the tipped workforce while only 55% of the general workforce) The median annual wage for servers and bartenders in DC is $22,763. 13.7% of tipped workers live below the poverty line

Of course, given the unsavory conditions tipped workers were experiencing in the restaurant industry, movement to make change was inevitable. In the spring of 2018, a campaign promoting Initiative 77 began. Initiative 77 was a ballot initiative (meaning that an adequate number of registered voters signed a petition to get a statute or amendment voted on publicly) that would rework DC’s minimum wage laws for tipped workers. Under Initiative 77, the tipped minimum wage would increase each year so that, by 2026, tipped workers would be making $15 an hour, the same as other workers in DC receiving an hourly wage. It seems that, in the frenzied coverage of the Initiative, many people assumed that tipped workers would begin receiving the minimum wage immediately, not understanding that employers would have 8 years to pay their employees the eventual $15 minimum wage.

The Washington, DC chapter of ROC became the primary driving force in support of Initiative 77 in DC. Faced with opposition from, both, restaurant owners and tipped workers themselves, Initiative 77 became one of the most discussed and controversial political topics in DC during the 2018 local election season. The proposal of Initiative 77 left the city cleaved into two camps; those in support of the initiative and those against it. A cursory glance through a DC area resident’s Facebook or Twitter feed from that period of time would very likely contain at least one charged debate over the initiative. Alongside the business owners and tipped workers opposing Initiative 77, Mayor Muriel Bowser and various members of the DC Council publicly opposed the Initiative as well. It must be stated, however, that many of the politicians in opposition to Initiative 77 have, at various points, received money from restaurants for their campaigns. After being passed by voters by a more than 10% margin, Initiative 77 was repealed by eight members of the DC Council on Oct. 2nd, 2018.

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