The Editorial Board at the WSJ has a real man bites dog story that led us to recognize another side to the minimum wage dispute. In Revolt Of The Tipped Masses the editors describe the conflict between the Washington DC City Council and the workers they are allegedly trying to help. Here is the part that turned on the light for us:
Before the measure passed in June, many restaurant workers wore buttons asking patrons to “save our tips” and “vote no on 77.” When Washingtonians passed the measure anyway, the workers pushed for repeal. Though restaurants pay a $3.89 hourly wage to tipped workers, “we choose these jobs because we make far more than the standard minimum wage” from tips, bartender Valerie Graham told the City Council.
As Valarie says, especially in an elite establishment in a big city like DC folks can be making a tidy sum on tips. A high minimum wage effectively eliminates tips.
Sidebar One: Many of them are not declaring the full amount of tips to the IRS. It is not relevant to us here but it does increase the incentive to fight City Council. Partially taxed higher amount is way better than fully taxed lower amount. End Sidebar One.
Sidebar Two: We are heading for China later this year. One thing every person emphasizes is that there is no tipping in China. End Sidebar Two.
What we recognized is that there are two groups of workers adversely affected by minimum wage legislation. We always emphasize the folks who will lose their jobs and it is a bigger deal to lose your job than to take a pay cut. The pay cut is a pretty big deal too. Remember what Valarie said: “We chose these jobs…” She is a person worth listening to.