By Maya Shavit – Intern, Boston Business Journal
Seana Gaherin, owner of Dunn-Gaherin's Food and Spirits in Newton, has been able to eke out small profit margins for years thanks to strategic planning. But now, Gaherin says her Irish pub will be doomed if a ballot question eliminating the state's lower minimum wage for tipped workers passes.
“This would be such a radical change that it is going to put me out of business,” said Gaherin, who has operated the pub with her husband for 34 years.
If passed, ballot Question 5 will change two key aspects of the industry for Massachusetts restaurants. It will gradually raise the minimum base wage for tipped employees from $6.75 to $15 an hour, and it will also require wait staff and bartenders to participate in a tip pool managed by the owner that would be shared by front and back of house workers.
Tipped restaurant workers are currently guaranteed to make a minimum wage of $15, even though the employers are only mandated to pay a minimum wage of $6.75. On slow weeks when tips don't add up to $15 an hour, employers must make up the difference, but industry insiders say that rarely happens.
The ballot initiative, which has been brought by a national coalition called One Fair Wage, would change the onus of the $15 minimum wage to come entirely from the owners, with any tips coming on top of that.
“It requires that the house pay the difference, rather than the patron from the tips,” said Meghan Blair, a Mass Restaurants United Board member with over 20 years of experience in restaurant financing.
Restaurant groups oppose initiative
The state's two main restaurant industry groups — the Massachusetts Restaurant Association and Mass Restaurants United, a more recent group focused on independent restaurants which started during the pandemic — together represent both small and large owners. They are both working together to defeat the tipped wage ballot question.
“This is going to completely change the way servers and bartenders are compensated,” said Steve Clark, president and CEO of the MRA.
Blair estimates a business owner will have to pay an additional overhead cost of at least $18,000 per full-time employee to switch from tipped minimum wage. For a small restaurant with approximately 50 seats and 20 employees, that's more than $360,000 a year.
“I don’t know many small operators that could just afford to swallow that,” said Blair
Restaurant owners say consumers aren't ready to pay more to eat out.
“Is America ready to start paying $40 for a burger?” said Gaherin. She said a price increase that extreme would likely cause her to lose customers.
Ballot question backers
The initiative is put forward by a national organization, headquartered in California and New York, called One Fair Wage. The nonprofit has satellite coordinators across the country, including in Massachusetts, according to state organizer Grace McGovern, a former tipped worker who is one of two on-the-ground OFW employees based in the state.
While opponents argue that the initiative may reduce tipping and lower restaurant worker wages overall, Triona Murray, a waitress and bartender at a worker-owned restaurant, believes it "would benefit restaurant workers."
"They would make more money and make less of an unpredictable environment," said Murray.
Critics argue that tips will go down or go away completely if the measure passes, but McGovern and proponents of the legislation pushed back on that.
"I think tips could maybe go down a little bit overall, but the increase in wage would absolutely make up for it. I think tipping in general definitely will not go away," said McGovern.
Saru Jayaraman, president of OFW, said that "the policy is not to outlaw tips."
“The policy is to ensure that workers get a living wage from their employer which is a basic fundamental problem that was created after emancipation,” Jayaraman said.
OFW has already passed similar initiatives in places California, Michigan and Washington, D.C., and McGovern says it has been a success in those states. According to OFW's analysis, three factors that clarify this for their team are lower rates of poverty in the restaurant industry, less wealth disparity and a greater diversity of restaurant ownership.
But opponents contend that there has not been a positive impact.
“The similar proposal that was passed in D.C. is only one year into its effective date, and already 10% of servers have lost their jobs. Restaurants are closing, and it's a disaster,” said Clark, referencing the U.S. Bureau of Labor Statistics' analysis on employment change.
Some tipped wage workers oppose the measure
Some restaurant workers contacted by the Boston Business Journal believe that the initiative would be devastating, as customers may stop tipping altogether.
“Why are they trying to change something that’s not broken?” said Bartender Angelina LaBrecque who thinks this initiative will confuse voters. “I don’t think a lot of people know what’s going on. We didn’t ask for this.”
In most restaurants, co-called "front of house" workers — waiters — are tipped, while typically "back of house" workers (cooks and dishwashers, among others) are not.
According to Clark, most servers and waiters currently make far more than minimum wage.
“Our tipped waitstaff, on the worst day of the year, the busser — someone who probably makes the least money — is probably walking out of here with $35 an hour,” said Stephen Bowler, founding-partner, sommelier and operations director of upscale seafood restaurant The Nautilus.
Longtime bar manager and bartender Tara Wellington, 43, says the initiative may force her to sell her home and move in with her parents if her tips are shared with the rest of the workers.
“Good people that take care of their employees the best ways they can will get negatively impacted by this,” said Wellington. “It brings a tear to my eye to think that last night, I was looking to see what other kinds of jobs I could do that might be fulfilling for me if this was to pass and that is the last thing I want to do because I love what I do.”
Many front-of-house workers believe tips will eventually stop altogether, and what will be left will not go directly to the bartenders or wait staff if the tip pool is rerouted to managers.
Alfredo Amado works as a steward, or dishwasher, and has worked in back-of-house jobs for almost two decades since he came to America from Cape Verde. He thinks a tip pool that would redistribute what front-of-house servers make would be unfair.
“They are the ones that have to deal with the guests and they work hard for their tips,” said Amado.
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