An effort to apply the state’s minimum wage of $15 to tens of thousands of tipped service workers in Massachusetts just passed a key hurdle in making its way to next year’s ballot.
The Cambridge-based advocacy group One Fair Wage announced Monday that it had collected 108,000 signatures, more than the number of initial signatures necessary to keep the group’s 2024 bid alive.
One Fair Wage wants voters to choose whether to incrementally phase out the state’s “service rate” — which allows restaurants to pay employees $6.75 an hour if tips make up the difference between that and the standard $15 minimum wage — by 2029.
The measure would also allow tip sharing between front- and back-of-house workers once wages were level across the workforce. Currently, tips can go only to tipped employees like servers or bartenders, not kitchen staff such as dishwashers or chefs, who often have a higher base wage.
“There’s only one future to have a sustainable staff,” said Saru Jayaraman, president of One Fair Wage, “and it’s to raise wages.”
Advocates say doing away with the subminimum wage would lower poverty rates for service employees, reduce instances of sexual harassment facilitated by tipping culture, and draw additional workers to the service industry.
It would also make it more difficult for employers to commit wage theft, said Jayaraman, since the onus is currently on employers to calculate and pay workers properly when tips fall short of the minimum wage rate — a standard that the US Department of Labor has found can often go unenforced.
Even some restaurant owners support the change, arguing that many establishments have had to raise wages upward of $15 across the board already to attract staff amid the continuing labor shortage. Rachel Miller Munzer, who helps run Mamaleh’s Delicatessen, Vincent’s, and State Park, has implemented a “fair wage surcharge” — a mandatory fee on top of customer bills — at her three eateries in order to supplement the wages of all workers as a way around the tip pooling restrictions.
Removing the two-tiered system would “level the playing field” across the industry, said Miller Munzer.
“It would take out all the convoluted other things that restaurants have been doing to try to make up for the disparity,” she said. “We’re making up the rules to try to pay people better and have people have living wages and have people work in restaurant jobs as careers and sustainable jobs.”
Opponents, however, say that eliminating the tip credit would be untenable for the industry, which already operates on razor-thin margins and is still recovering from the pandemic and years of eye-popping inflation.
Stephen Clark, the CEO and president of the trade group Massachusetts Restaurant Association, said the measure would be “a disaster for the restaurant industry,” leading to total labor costs of upward of $500,000 a year for a restaurant with a staff of 15, he estimated.
“That’s a significant labor cost that has to be offset somewhere, either in reduced labor, increased menu costs, or more and more service charges,” he said. “Is a consumer going to pay $25 for a hamburger? ... They’re probably not.”
Andy Husbands, owner of The Smoke Shop BBQ, echoed these concerns, arguing that the current system already mandates every employee receives the minimum wage if tips fall short. He added that the average waiter at his restaurants makes more than double the minimum wage through tips and that he doesn’t think “we’ve ever had to make up the difference.”
“You show me a person or a restaurant that doesn’t do that, I will walk with those people to the Attorney General all day long,” he said.
If voters were to pass the measure, Massachusetts would join seven other states, most of them on the West Coast, that pay tipped workers the standard minimum wage, as well as Chicago and Washington, D.C., both of which recently eliminated the tipped rate. (The federal tipped minimum wage has stood at $2.13 since 1991.)
In addition to the potential ballot measure, there are also bills moving through both chambers of the state legislature that would eliminate the tipped wage.
David Cooper, the director of the Economic Analysis and Research Network at the Economic Policy Institute, a left-leaning think tank, said that in states where there is no subminimum wage, service employees receive a “significantly higher” hourly take-home pay than in states that follow the two-tiered system.
States without the tip credit also experience faster industry growth, he added, though he contended that the switch may lead to modest menu price increases or restaurant closures.
“It’s possible that some could close. It’s probably also likely that many new ones will open,” Cooper said, as workers have more disposable income to patronize other restaurants.
The current system is also an issue of gender and racial equity, Cooper said, since a large share of waitstaff and counter workers nationwide are female or people of color, according to data from the National Restaurant Association. One Fair Wage argues that the two-tiered system itself is a remnant of slavery, when tipping was used as a way to avoid paying newly freed Black people a full wage.
“The transition might be messy for some folks, but this is not the sky falling,” said Cooper. “This is a policy change that some jurisdictions have already dealt with, and they just need to share that knowledge.”
If election officials certify the initial batch of signatures, the initiative will come before the Legislature, which can choose to pass the law, suggest an alternative, or take no action, according to the Office of the Attorney General. One Fair Wage will have the option of gathering about 12,500 additional signatures to get the question on the ballot if lawmakers don’t pass a law with which organizers agree.