December 13, 2017
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LePage proves why relying on tips isn’t sound economic policy

By The BDN Editorial Board
CBS 13 | BDN
CBS 13 | BDN
Maine first lady Ann LePage worked as a waitress at McSeagull's in Boothbay Harbor last summer.

Gov. Paul LePage inadvertently made the case recently for Maine’s increased wage for restaurant wait staff. The governor said he’d begun cutting his tips in half and leaving notes for those who served him telling them to contact their legislators if they didn’t like it.

“I cut the tip in half and then I put the comment, ‘Call your legislator,’ on my charge card,” LePage said late last month during an appearance on Z105.5. He apparently hopes punishing waiters and waitresses will encourage them to push lawmakers to reverse a portion of a citizen-passed referendum that raises Maine’s minimum wages.

LePage’s behavior highlights the problem of leaving the wages of restaurant servers to the whims of diners, some of whom, like the governor, will withhold tip money for reasons that have nothing to do with the quality of the service they received. Rather than this arbitrary system, wait staff should earn a predictable, fair wage. That’s what Mainers voted for last fall.

In November, Maine voters approved raising the state’s minimum wage from $7.50 an hour to $9 an hour this year and gradually to $12 an hour by 2020; after 2020, the minimum wage would change with inflation. The referendum also included a more gradual increase in the state’s tipped wage. Before the law change, Maine’s tipped wage was half the minimum wage, or $3.75 an hour. If waiters and waitresses did not make the equivalent of $7.50 an hour with their tips, the restaurant had to make up the difference. This is known as the tip credit.

Under the new law, the tipped wage is now $5 an hour and will increase by $1 each year to $12 an hour by 2024. This tip credit would shrink with each minimum wage increase and end when the tipped wage reached the same level as the state’s regular minimum wage in 2024.

The minimum wage increase, Question 4 on the November ballot, passed by the largest margin of any referendum question on the ballot. Despite this level of support, LePage and other opponents of the wage increase for restaurant servers say voters didn’t understand the question. There is no evidence that this is true.

Yet, almost immediately, opponents of the wage increase launched a campaign to negate the tipped wage portion of the law. On Wednesday, members of the Legislature’s Labor, Commerce, Research and Economic Development Committee heard nearly 15 hours of testimony on two bills to negate the yearly increases in the tipped minimum wage, as well as other bills to change the minimum wage.

Many servers testified that customers are tipping less and that they would make more money under the tip credit system with a lower minimum wage. Other servers said the higher wage offered more stability and respectability. Restaurant owners spoke of increased costs from the higher wages. None, however, addressed why customers should be required to subsidize their payroll, which is an idiosyncrasy of the restaurant industry.

We understand the strong feelings on both sides of this argument and are concerned if waitresses and waiters are receiving less tip money after the law change.

But, evidence shows that for most waitstaff, the story is one of low wages. According to the Bureau of Labor Statistics, the median hourly wage for a waiter or waitress in Maine was $9.38 an hour in May 2016, the most recent data available. That is $23,000 a year.

In Maine, eight of 10 workers who are paid the subminimum wage are women, according to the left-leaning Maine Center for Economic Policy. Tipped workers are twice as likely to live in poverty as other workers and nearly half of tipped workers rely on public assistance, the center’s research found. But the poverty rate for these workers is lower in states that require them to be paid the full minimum wage, the Economic Policy Institute reported in 2014.

In addition, shifting the burden of paying servers from customers to employers hasn’t been shown to have a negative effect on restaurant employment growth in the seven states that currently don’t have a separate minimum wage for tipped workers.

Kathryn Harnish, co-owner of The Vault restaurant in Houlton, told lawmakers that phasing out the tip credit will be a significant change.

“But uncertainty about how things might play out does not mean that we should not move forward,” Harnish said. “We want to reward our employees with a fair living wage. It’s just the right thing to do.”

Maine voters agreed, so lawmakers should give the change a chance to work.

 


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