Servers don't want to lose the tip credit, new research shows

A survey of nearly 4,000 tipped restaurant workers in eight battleground state found 90% prefer the current setup to getting a higher wage.
9 of 10 tipped employees want to keep the current system, according to the new data. |Photo: Shutterstock

The task of killing the tip credit may have just gotten harder in the eight states where labor advocates have been concentrating their efforts.

New research shows that about 9 of 10 tipped restaurant employees in those battlegrounds don’t want their current compensation model to change. Servers, bartenders and hosts would rather continue to get a low wage from their employers than risk a drop-off in guest gratuities, traditionally the main source of their income.

The canvass of 3,735 tipped restaurant workers found that 87% fear their earnings would drop if employers had to pay a full wage. It was unclear if the expectation was based on customers tipping less, or on the recipients having to pay more in income taxes, since presumably less of their pay would be unrecorded cash.

Only 7% of the respondents said they’d expect to earn more if the tip credit was eliminated. Another 6% indicated they’d anticipate no change in their incomes.

Asked what compensation model they’d prefer, respondents overwhelmingly indicated the status quo. Ninety percent said the current system of a low wage but expected tips is their first choice. Only 10% said they favor getting a higher wage and risking lower tips.

The research was conducted by Lloyd Corder, an adjunct professor at Carnegie Mellon University. Berman & Associates, a pro-employer lobbying firm, is publicizing the results.

“The survey data is crystal clear: Tipped employees overwhelmingly prefer the current tip credit payment system, and they don’t want it to change,” Corder said in a statement provided to Restaurant Business. “It’s rare to find an issue that commands such widespread support across diverse age, race, gender and geographic groups.”

The surveyed employees were located in the eight states that One Fair Wage, the union-backed group pushing hard for an end to the tip credit, has cited as prime opportunities: Massachusetts, Ohio, Illinois, Rhode Island, Pennsylvania, New York, Connecticut and Maryland. The latter was included because of the anti-tip credit activity underway in two of its counties. In all eight areas, One Fair Wage is championing either legislation to kill the credit, or a November ballot initiative that would allow voters to decide on the employer concession’s fate.

Research has been the ordnance of choice in the battle between pro- and anti-credit forces. One Fair Wage has dismissed much of the data and assertions from pro-employer forces as myths, citing contradictory findings on almost a point-by-point basis. For instance, the group cites third-party research that shows tips would not drop if servers and bartenders were paid the same wage as their back-of-house colleagues receive.

It also cites findings that a majority of tipped workers in at least six battleground states would like the tip credit to be phased out.

The fate of the tip credit is emerging as a key concern of full-service operators as the November elections and post-summer legislative sessions draw near.

The credit is currently banned in seven states.

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