Most Americans assume that when they leave a tip for waiters and bartenders, those workers pocket the money. That could become wishful thinking under a Trump administration proposal that would give restaurants and other businesses complete control over the tips earned by their employees.
The Department of Labor recently proposed allowing employers to pool tips and use them as they see fit as long as all of their workers are paid at least the minimum wage, which is $7.25 an hour nationally and higher in some states and cities. Officials argue that this will free restaurants to use some of the tip money to reward lowly dishwashers, line cooks and other workers who toil in the less glamorous quarters and presumably make less than servers who get tips. Using tips to compensate all employees sounds like a worthy cause, but a simple reading of the government’s proposal makes clear that business owners would have no obligation to use the money in this way. They would be free to pocket some or all of that cash, spend it to spiff up the dining room or use it to underwrite $2 margaritas at happy hour. And that’s what makes this proposal so disturbing.
The 3.2 million Americans who work as waiters, waitresses and bartenders include some of the lowest-compensated working people in the country. The median hourly wage for waiters and waitresses was $9.61 an hour last year, according to the Bureau of Labor Statistics. Further, there is a sordid history of restaurant owners who steal tips, and of settlements in which they have agreed to repay workers millions of dollars.
Not to worry, says the Labor Department, which argues, oddly and unconvincingly, that workers will be better off no matter how owners spend the money. Enlarging dining rooms, reducing menu prices or offering paid time off should be seen as “potential benefits to employees and the economy over all.” The department also assures us that owners will funnel tip money to employees because workers would quit otherwise.
It is hard to know how much time President Trump’s appointees have spent with single mothers raising two children on a salary from a workaday restaurant in suburban America, seeing how hard it is to make ends meet without tips. What we do know is that the administration has produced no empirical cost-benefit analysis to support its proposal, which is customary when the government seeks to make an important change to federal regulations.