Initiative 77: A Solution in Search of a Problem

Tensions escalated in D.C. restaurants between owners and employees this summer over  Initiative 77, a proposal to raise the minimum wage for tipped workers, after the initiative passed in D.C.’s primary election last June.

This proposal raised contentious issues about wage fairness and the economics of the restaurant industry, but the initiative would likely do more harm than good—undermining the restaurant industry in the District and hurting employees over time.

Initiative 77 would phase out the lower minimum wage for tipped professions, including bartenders, nail stylists, barbers, bellhops, delivery drivers and restaurant wait staff, currently paid $3.89 per hour. The tipped minimum wage would match the non-tipped minimum salary of $15 per hour by 2026. Implementation of the initiative would bring D.C.’s tipped professionals to the same minimum wage standard set by a number of states, including California, Oregon, Washington, Alaska, Nevada, Montana, and Minnesota.

One advocacy group, Restaurant Opportunities Centers (ROC), a national organization that works to improve wages and working conditions for restaurant workers, campaigned to get the initiative on the ballot this summer.The group One Fair Wage argued that the tipped wage makes incomes too unreliable and that workers should not be dependent on the generosity of strangers. Although ROC is not against the act of tipping, the group says the two-tiered wage system is inherently discriminatory toward women because tipping exposes women to sexual harassment from customers and their coworkers. According to ROC, professions in areas that have a tipped minimum wage are twice as likely to experience sexual harassment than those professions that do not.

Callie, a waitress at Comet Ping-Pong in D.C. who asked that her last name not be used, has gone back and forth on whether she supports Initiative 77.  Because gentrification constantly raises the cost of living in in D.C., she views Initiative 77 as a way to help “restaurants that are not high-end, as they would benefit more.” On the contrary, Callie added, “Most of the servers I know and interact with on a daily basis work in wealthier areas, and did not support the measure.”

Although it could be argued that Initiative 77 provides salary equality, evidence indicates that the proposal would be detrimental to the restaurant industry. Owners of more than 100 local restaurants and bars, including Comet Ping-Pong, signed a letter asking D.C. residents to vote “no” on Initiative 77. Their campaign joined other anti-Initiative 77 campaigns including the Save Our Tips effort from the Restaurant Association Metropolitan Washington (RAMW). According to RAMW, the primary backer of the campaign against Initiative 77, D.C.’s servers and bartenders tend to earn between $25 and $40 an hour when their tips are included. In Washington, when tipped workers don’t earn at least $12.50 per hour after tips, employers are legally obligated to make up the difference. That’s why opponents of Initiative 77 have called the referendum a “solution in search of a problem.”

Anti-Initiative 77 organizations also cite studies demonstrating that removing the lowered minimum wage for tipped employees would decrease profits for restaurants and cause them to increase prices. These studies also show that restaurants are more likely to lay off staff because they can’t afford to pay the full minimum wage. For these reasons, many tipped workers were rightly opposed to Initiative 77, because they would be more likely to lose their jobs if it went into effect.

ROC argues that implementing Initiative 77 would help workers at chain restaurants like Denny’s, IHOP and Applebee’s. The problem, though, is that only four out of nearly 2,000 eating and drinking establishments in D.C. are national chain restaurants and bars. In D.C., 96 percent of full-service restaurants and bars are independently owned.

In 2015, legislators from New York increased the minimum wage for all tipped workers by 50 percent. To adapt to the rise in labor costs, the state’s restaurants and bars were forced to raise prices, cut staff, or close their doors. The following year, the Census Bureau data confirmed that more than 500 New York restaurants closed in the wake of the policy after years of considerable restaurant growth. One similar study in Seattle found that, while the salary of low-wage tipped employees increased, employers reduced hours, resulting in an average loss of $125 per month. The report also estimated the new law resulted in 5,000 fewer jobs.

José Andrés, an internationally-recognized chef who owns ten restaurants in D.C., is an outspoken critic of Initiative 77. His company, ThinkFoodGroup, published a statement in May of this year urging voters to vote no on Initiative 77, stating that “Initiative 77 is attempting to solve the wrong problem.”

ThinkFoodGroup also argued that “increasing the tipped minimum wage will only make the current wage disparity more extreme and place downward pressure on small business margins.”

In October, the D.C. City Council approved, with an 8 to 5 vote, a 90-day emergency legislation repealing Initiative 77, supporting restaurants that were worried about the financial effects of Initiative 77. Mayor Muriel Bowser plans to sign the repeal, which would keep D.C.’s tipped minimum wage constant at $3.89 per hour. It also preserves concepts from Initiative 77, including provisions to address wage theft and sexual harassment in the restaurant industry.

Regarding Initiative 77’s repeal,the D.C. City Council made the correct decision as restaurants lean on tipped minimum wage to avoid paying their employees such high salaries out of the owners’ pockets. Initiative 77 hinders the growth of Initiative 77 in this rapidly growing city.

By: Will Olsen’21