The effort to boost New Jersey’s minimum wage to $15 an hour — supported by Gov. Phil Murphy and legislative leaders — has been slowed by concerns about its impact on young workers, small and seasonal businesses and the agriculture industry.
Now the state’s Democrats are adding another goal to the mix: Making tipped employees subject to the regular minimum wage.
Tipped employees, mainly working restaurants and bars, typically get most of their income from customers’ tips.
For that reason, they have their own much lower tipped minimum wage that their employers must pay them — $2.13 an hour federally and in New Jersey. Should their tips not result in their getting the regular minimum wage (currently $8.60 an hour), employers are required to make up the difference (although some labor advocates say they sometimes don’t).
Tipping seems to work well for many servers. The nonprofit, nonpartisan Employment Policies Institute says that New Jersey Restaurant Association data shows tipped employees earn $17 an hour on average. The mean U.S. wage for tipped workers, according to the Census Bureau, is $16.08 an hour.
Many servers, however, make less than those averages. New Jersey Democrats have long proposed increasing the tipped minimum wage. Now they’re reworking a bill by Assemblywoman Shavonda Sumter, D-Passaic, to eliminate the lower tipped minimum wage altogether and require employers to pay tipped employees the full regular minimum wage in addition to their tips.
That sounds like it would be a great deal for waitresses and other servers — but only if they remain employed and customers maintain their level of tipping.
In Maine in 2016, legislators pushed through a referendum, subsequently approved by voters, to raise the minimum wage for servers from $3.75 to $12 by 2024. Then servers, who immediately started receiving lower tips, organized a campaign against the increase and forced the legislature to reverse it the following year.
Six states have eliminated the lower tipped minimum wage, including California, Oregon, Washington, Minnesota, Montana and Alaska. Economists have found some evidence that the increased cost to employers caused some medium-rated restaurants to close, while many others reduced the number and hours of tipped employees.
There are plenty of servers whose combination of tips and pay fall far short of the $17-an-hour average. It’s possible, however, that a much higher minimum wage to help them might reduce the earnings of more successful servers — and reduce jobs and hours for both.
The state Legislature’s Democrats and the Murphy administration should examine closely the effects on restaurants and tipped workers in states that have dramatically increased their minimum wage before proceeding with Sumter’s bill. The number of restaurants and employees should be easy to track. The tipping response of customers to the higher wage — and the presumably higher menu prices and fewer servers that result — might take more effort to discern.
New Jersey officials also should hold hearings and even survey tipped workers here to get their input. They’re the ones who stand to benefit or suffer from possible action by the Democrats, and they probably have the best sense of how a much higher minimum wage might affect the tipping behavior of customers.
With the livelihoods of many people at stake and the best path unclear, state officials should do their homework and develop a broad consensus among workers and employers before proceeding with this significant change to their lives.