Ending the tip credit brings pay cuts, not raises

Published March 11, 2021 5:00am ET



Here’s a tip that restaurant workers don’t want. The Raise the Wage Act, which will likely return as a standalone bill before Congress, would eliminate the employer credit for tip income and raise the minimum wage for tipped workers to $15 an hour (a 600% increase). But for many restaurant servers and bartenders, this would actually mean taking a pay cut if they aren’t included in the hundreds of thousands of lost jobs. No wonder workers are rejecting Washington’s misguided “help.” It’s a classic case of a law with unintended consequences.

Restaurant servers and bartenders generally support traditional tipping over alternatives because they find it more profitable and flexible. A survey of more than 1,000 restaurant workers found that 97% prefer the traditional tipping method of earning.

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