When New York legislators passed an increase in the state’s minimum wage in 2013, they demurred on whether to increase the tipped minimum wage. A three-member Wage Board was appointed by Governor Andrew Cuomo earlier this year to consider this question, and the board is now touring the state to collect feedback on whether the base wage for employees who earn tip income should be increased.
Labor union-backed organizations such as the National Employment Law Project (NELP) have called for a tipped wage increase of up to 80 percent, and argue that it can be accomplished with little or no consequence for the restaurant industry and the people they employ. However, peer-reviewed research published in the Southern Economic Journal reaches a very different conclusion: Over the last two decades, Census Bureau data shows that increases in the tipped minimum wage have reduced employment in the full-service restaurant industry.
The authors of that study, economists from Miami and Trinity Universities, used their results as a framework to analyze NELP’s proposed 80 percent wage hike for tipped employees in New York. The write-up of their analysis is available here. In short, the economists find that between 7,400 and 19,700 restaurant industry jobs would be eliminated as a consequence of this wage mandate. They further specify that “the bulk of this job loss will be borne by the tipped workers in the industry – i.e., servers, bartenders, and attendants.”
You can learn more about how much much tipped employees earn, and why an increase in the tipped minimum wage means fewer jobs for tipped employees.