There’s far more at stake in today’s elections than who’ll be our next president. For restaurants, three ballot initiatives have particular significance. Here are three state proposals that industry lobbyists have cited as measures with significance for the industry as a whole. Not coincidentally, all three deal with wages.
Here are the three to watch:
California’s Prop 32
It’s hardly a surprise to see a labor-related proposal put before voters in the state that’s been arguably the most aggressive in pushing up wage rates. This year’s initiative would raise the minimum wage for any employer with at least 26 employees to $18 an hour as of Jan. 1, from the current level of $16 (most fast-food employees in the state qualify for a minimum of $20 an hour).
The minimum for all other employers would rise to $17 an hour in 2025.
The across-the-board rate would rise to $18 on Jan. 1, 2026. The wage would then be adjusted every year thereafter to reflect changes in the cost of living.
Joe Kefauver, a partner in the government-affairs consultancy Align Public Strategies, notes that proposals to hike wages are usually a slam-dunk in California. But not this time around, he said in the election preview of his firm’s podcast, Working Lunch. He and other lobbyists say it’s not clear if the usual support from organized labor will convince a majority of voters to vote “Yes” this time.
They cite consumers’ dismay with rising prices and taxes as the primary reasons. The state has estimated that prices could rise by as much as 0.5% as employers adjust to the new rates. It acknowledges that the increases would also raise the payroll expenses of state and local government, but did not predict by how much.
Massachusetts’ Question 5
The labor advocacy group One Fair Wage failed to get proposals for ending the tip credit on the ballots of Ohio and other states, leaving Massachusetts as its lone victory. What also makes Question 5 unique is its structure. Proposals to kill the credit are usually rolled into a proposal to raise the minimum wage. The Bay State initiative is a straight-up yes or no vote on phasing out the tip credit, a payroll break that even many working in the industry don’t fully understand.
There’s not a consensus on how the initiative will fare. But opponents were heartened by the surprise announcement from usually pro-union Gov. Maura Healey that she opposes the measure. The Democrat cited her own deep experiences as a server in her youth and how well the current wage structure for tipped employees worked for her.
She also cited the feedback she’d gotten from restaurateurs. “Some have told me they’re just going to shut down,” the governor said during one of her regular monthly appearances on WGBH, Boston’s public radio station.
“It’s important to vote ‘no’ on this because I think you run the risk of closing restaurants and putting these workers out of work,” the governor declared.
The initiative would phase out the tip credit in annual increments until all employees are entitled to the same minimum wage from their employers in 2029.
Arizona’s Proposition 138
Some pundits say a defeat of Question 5 would sideline One Fair Wage as it regroups and re-strategizes. The proposal that’s before Arizona voters today would ensure that state’s tip credit is “enshrined,” in the words of the industry’s chief lobbyist, National Restaurant Association EVP of Public Affairs Sean Kennedy.
The measure calls for altering the state’s constitution to ensure restaurants and other employers of tipped employees can continue paying those workers a lower cash wage as long as gratuities bring them up to the statewide minimum rate. Currently, employers there can pay servers and bartenders $3 an hour less.
Proposition 138 would change that structure. If it flies, tipped workers could be paid 25% less than the minimum wage if tips raise their incomes $2 an hour above the pay floor. The state’s minimum wage is currently $14.35 an hour, and rises to $14.70 in 2025.
The measure is a first of its kind for the industry. The restaurant business there takes particular delight in the initiative because it made it to the ballot while One Fair Wage failed to get a competing proposal greenlighted. The union-backed group couldn’t muster the needed signatures from voters. Its plan called for raising the minimum wage for Arizona to $18 an hour and killing the tip credit.
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