Massachusetts Gov. Maura Healey has astonished the restaurant industry by declaring her opposition to a ballot initiative that would end the state’s tip credit.
The Massachusetts proposal, known as Question 5, is the lone surviving attempt this election cycle to kill the break for a state’s restaurant employers via the ballot box. Organized labor had tried to put a similar proposal before voters in Ohio but failed to gather the needed number of signatures.
Earlier efforts failed to get traction in New York and Illinois.
A tip credit-related measure will be put before voters in Arizona, but that initiative calls for amending the state constitution to preserve the payroll concession in perpetuity. It would replace the current fixed tip credit of $3 to 25% of whatever the minimum wage might be, while increasing the base rate paid to servers and bartenders by $2 an hour.
Healey’s opposition to Massachusetts’ proposal was unexpected because the state is solidly blue and regarded as one of the most liberal in the nation.
“I did not see that coming,” said Joe Kefauver, a veteran lobbyist with the Orlando-based government-affairs consultancy Align Public Strategies. “If we win in Massachusetts, this issue could be all but buried nationally.”
Much of the surprise is due to Healey’s solidly progressive and frequent pro-labor stances on issues in the past. But she explained during an appearance on Boston’s public broadcasting station, WGBH, that she had worked on and off as a server dependent on tips from the time she was 13 until she turned 24. She recalled how lucrative the work could be, and added that she’s been speaking to restaurateurs in her state about how a discontinuation of the tip credit would affect their businesses.
“Some have told me they’re just going to shut down,” Healey said during her regular monthly appearance on WGBH.
“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.
Her endorsement echoed what the state’s restaurant industry has been telling the public via TV ads and other communications channels. It does not guarantee the measure’s defeat. But it does help the industry counter the message that labor group One Fair Wage has been drumming loudly in the Bay State, tapping the deep pockets of its union benefactor, Service Employees International Union, or SEIU.
“She could be advocating for the other side, and we’d have to be spending a lot more,” Franklin Coley, Kefauver’s business partner in Align, said of the industry’s lobbying efforts against the ballot proposal. “It could matter a heck of a lot more if she’s aggressive in getting out there.”
During the weekly political affairs podcast Working Lunch, co-hosts Coley and Kefauver cited Healey’s pronouncement as a tribute to the lobbying efforts of the Massachusetts Restaurant Association. Coley speculated that the group had conducted an intense effort to educate the governor and her staff about unforeseen consequences to eliminating the credit.
A major point was the argument that many servers and bartenders are opposed to ending the credit because they fear customers would tip less or not at all. Maine voters approved a phase-out of the employer break in 2016, but the legislature reversed the results after servers waged an intense campaign for reinstatement, contending their incomes had fallen.
The credit allows employers to pay tipped workers a wage lower than the state minimum provided gratuities bring them up to that threshold. In Massachusetts, where the minimum wage is currently $15 an hour, servers need only be directly paid $6.50 an hour by their employers if tips total at least $8.50.
Question 5 would gradually raise the direct cash wage from employers until they were paying servers and bartenders the same rate as non-tipped employees by 2029.
During this week’s podcast, Kefauver and Coley suggested that One Fair Wage is stepping up its use of publicity stunts elsewhere to win public and political support for ending the tip credit. They noted how a rally in Michigan culminated in chains and shackles being ceremoniously sawed off workers, a suggestion the credit harkens back to slavery because it lets employers get away with paying some employees less.
The whole podcast, with its analysis of how the struggle over the tip credit is playing out, is available here. It also includes a review of pending state and local legislation that’s relevant to the restaurant Business.
Correction: The story has been updated to correct a misstatement of what Arizona’s ballot initiative would provide.Members help make our journalism possible. Become a Restaurant Business member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.