(Photo: Lou Stejskal/Flickr)
As New York City businesses and their employees continue to adapt to shifting consumer habits, online competition, and increasing costs of doing business, New York State is dangerously close to further damaging the chances of business and employee success by eliminating the tipped wage credit.
This tip credit allows restaurant owners to pay tipped workers $8.65 per hour so long as tips ensure that the employee is earning at least the minimum wage at the end of the day.
The city’s family-owned restaurants and cafes aren’t shortchanging their employees to make a quick buck – they’re trying to make ends meet and take care of their servers at the same time. Surveys show that, on average, tipped workers end up earning as much as $25 an hour, with tips.
In this city, it’s notoriously difficult for locally owned and operated restaurants to survive.
As one restaurant owner from Harlem told me, “My customers expect me to compete with the best food and the best service as the best restaurants in town, but they want Harlem prices. It’s very hard and eliminating the tip credit will push me over the edge.” This is the sentiment throughout the city’s less affluent areas and outer-boroughs, where restaurant owners of color have been fighting to keep the tipped wage credit in place.
We celebrate birthdays, anniversaries, and graduations at family-owned neighborhood restaurants; they’re essential to the economic and cultural vitality of communities of color in every borough. They employ locals, from a handful to a few dozen each, and sometimes those employees have been with them for decades. These jobs are important to these workers and their families, and when tips are included, they are paid well over the minimum wage.
Most restaurant owners care deeply about their servers and want to pay them as best they can while still staying in business. If New York State eliminates the tip credit, labor costs will soar, jumping approximately 50 percent overnight. That massive increase will force tough choices, starting with cutting employees and reducing hours. But fewer employees means slower service, and no restaurant can survive a reputation for poor service. It’s a downward spiral that will close many restaurants permanently, and communities of color can least afford it.
We support good-faith, smart solutions to increase wages sustainably and fairly and promote small businesses throughout the city. That’s why we need to preserve the credit for tipped workers. These workers don’t want to lose their tips and can’t afford a pay cut. And they certainly don’t want to lose their jobs. This is a critical issue for communities of color, and our state leaders must get right – or risk causing more harm than they intend.
Jessica Walker is CEO and President of The Manhattan Chamber of Commerce. On Twitter @ManhattanCofC.