Assemblyman Jones: Eliminating Wage Tip Credit Only Hurts North Country Economy

May 21, 2018

For the last 20 years, Jenilee Gillespie has enjoyed making people smile and providing them with good service and she takes pride in being a restaurant server. Jenilee is currently a server at Michigan’s Plus, a well-established restaurant in the city of Plattsburgh. Jenilee is a mother and head provider for her family; working as a server is not easy, but it has provided her with stable income and the flexibility she needs as a working mom. Whether the customers that come through the restaurant doors are “regulars” or just passing through for a quick bite, she works hard every day to provide a high quality customer service experience. Jenilee knows that if her customers are happy, they will come back again, and if they come back again, that means a stable income for her, her fellow servers, and the restaurant owner.

For nearly two decades, Jenilee has relied on tips to supplement her wages. Jenilee makes $7.50 an hour, but often with tips this salary is doubled or even tripled because of tipping. This not only provides her with money in her pocket each day, but it helps to stabilize and even augment her income to provide food, formula, and diapers for her children. Each of her fellow servers have different life situations, but what they all seem to agree on is that they definitely make more money as a server, than if they had taken a more restrictive, set-wage position.

But the security that Jenilee and her colleagues have known for the last several decades, is currently being threatened. The New York State Department of Labor is conducting hearings based on a proposal to eliminate the “Wage Tip Credit.” This longtime regulation has allowed restaurant owners to pay a lower legal wage as long as that wage combined with tips meets or exceeds the minimum wage rate.1 The department’s proposal would eliminate tipping and workers in the food service industry would all be moved to a new minimum wage rate of $15 an hour. While upon first glance this may seem positive, given the fact that many servers, including Jenilee, make much more than this per hour on a given day, this would have a detrimental impact on servers in the North Country, and around the state.

If tips are eliminated altogether, businesses like Michigan’s Plus would ultimately have to increase the prices on their menus and cut the allowable work hours of their staff which will result in higher costs for the consumer and critically impact the customer experience. In many cases, food service enterprises would likely have to consider layoffs just to stay afloat. We have seen this initiative carried out in other states throughout the country, and it didn’t work.

In 2016, the state of Maine eliminated the tipped wage system. Many workers and businesses that depended on tipping showed their opposition by protesting and lobbying their respective state legislators to overturn the law. After hearing the testimony of the detrimental impact it was having on the workers in the industry, in 2017 the tip credit was reinstated, returning to a system that had been successful for several decades.2 If you were to examine both the short and long-term effects, it is easy to tell why this measure would hurt the pockets of servers, owners, customers and the overall health of our economy here, in Northern New York.

The food service industry undoubtedly has an enormous impact on our economy. Before making a decision of this magnitude, the voices of those who are being affected must be heard. I have attended meetings across the state and spoken with many restaurant workers and owners and they have overwhelmingly rejected this proposal. As the Department of Labor conducts hearings, I urge you to share your story and tell them why this proposal does not work for the North Country, or for the state of New York. The deadline for submitting written testimonies is July 1st and can be done by emailing the Department of Labor at hearing@labor.ny.gov.

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1. https://www.labor.ny.gov/workerprotection/laborstandards/workprot/minwage.shtm

2. https://bangordailynews.com/2017/06/27/politics/lepage-signs-bill-into-law-to-restore-maine-tip-credit/