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Wage board to decide minimum wage for tipped workers in 2015

William Hartz
Advocates for tipped workers are asking the state to increase the minimum wage for servers, delivery drivers and others.

A state panel is examining whether workers whose income is supplemented by tips should receive an increase in the minimum wage. The wage board, appointed by Gov. Andrew Cuomo, has held hearings and will make its decision early next year.

Waiters, pizza delivery drivers, and other tipped workers earn a significantly lower wage than the rest of the workforce. While the state’s regular minimum wage is $8 an hour, and will increase to $8.75 on December 31, tipped workers are paid just $5 an hour. That’s because it’s assumed they will make at least $3 an hour in tips. In fact, those tips are counted in calculations employers make about their earnings.

Advocates for raising the minimum wage for tipped workers say that logic actually subverts the whole etiquette of tips in our society.

Robb Smith, with Interfaith Impact, joined in a small demonstration outside Cuomo’s office. Smith says he’s outraged that the state’s policy of counting $3 in tips towards the worker’s minimum wage has, in his words, “twisted and perverted what should be a charity into a hidden tax.”

“I thought it was a kindness,” Smith said of the practice of tipping. “And it turns out that it is not.”

Smith, along with others, testified at the final hearing of the wage board. Emily McNeill, with the New York Labor Religion Coalition, says at a time when state lawmakers, who earn a base pay of $79,500 a year, are considering pay raises for themselves, the state’s lowest paid workers should also get a break.

“Before legislators receive any raise, New York’s lowest paid workers desperately need a raise,” said McNeill, who says tipped workers are twice as likely to live in poverty.

McNeill says all kinds of factors, including a snow storm, can lead to a slow night at a restaurant and significantly diminish a worker’s earnings.

Melissa Fleischut is with the New York State Restaurant Association, which represents independent restaurant owners. She says restaurant owners and many employees are happy with the way things are. She says if owners have to pay a higher minimum wage, there could be reduced hours for employees and even layoffs.

“There’s no way to absorb that kind of an increase. Menu prices cannot be increased that way,” Fleischut said. “Your customer base does not have to go out to eat. They can stay home.”

She says many restaurant employees make far more than the minimum wage on the majority of days that they work. She says the average tipped worker is earning $11 an hour, and at her members' restaurants the rate is more commonly $15 or $20 an hour.

Fleischut says the restaurant industry continues to struggle since the 2008 recession.

“The average holiday party for a company is down,” she said.

Advocates say other states have increased the minimum wage for tipped workers, and it has not affected business or employment.

Cuomo faced pressure from the left in his party to further increase the state’s minimum wage for non-tipped workers. A gradual set of increases will raise the state’s minimum wage to $9 an hour by the end of 2015. The governor has said he’s for a bigger increase, but the measure has stalled in the state Senate.

Under the rules of the wage board, Cuomo does not need permission from the legislature to increase wages for tipped workers.

Karen DeWitt is Capitol Bureau Chief for New York State Public Radio, a network of 10 public radio stations in New York State. She has covered state government and politics for the network since 1990.