One year since DC voted to increase tipped worker wages; customers continue to be confused with service fees

WASHINGTON (DC News Now) — Wednesday marks one year since D.C. voters passed Initiative 82, raising the minimum wage for tipped workers. It passed with an overwhelming 74% majority, first being implemented in May.

But six months later, is it working?

One Fair Wage members and supporters were at Busboys and Poets in Northwest, D.C., where supporters celebrated the anniversary despite opposition that continues from some.

Most customers DC News Now talked with are in favor of tipped workers making more money. But almost everyone can agree that the rollout has been confusing, with restaurants adding service fees and extra charges. Meanwhile, customers don’t know exactly where their money is going.

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Initiative 82 will eventually eliminate the tipped minimum wage as it increases from what was $5.35 an hour. The first increase was to $6 on May 1 and the second increase was to $8 on July 1.

“I don’t believe that it should fall on the customers to be paying my wage. It should be my employer. My employer should be paying me $15 an hour,” said Olivia Loibner.

Loibner is a former tipped worker who wants to see others make more but says the I-82 rollout has been subpar.

“I think customers are just very confused about do they tip, should they tip?” Loibner said. “The reality is like we’re still taking home the bare minimum, $15 an hour, which is still not enough to make a living off of in D.C.”

Some people still aren’t on board with the new law.

“It makes me not want to tip the person because you’re already getting charged that extra money. What I prefer is the old way,” said customer Roger Burdette.

One new report from One Fair Wage, High Road Restaurants and the National Consumers’ League shows a positive impact on workers.

“From November 2022 through May of 2023, the US Department of Labor Bureau of Labor Statistics data show that restaurant jobs have increased in D.C. by 6.8%,” said Mikey Knab, director of High Road Restaurants.

But from May through September of this year, the Employment Policies Institute (EPI) says full-service restaurant employment is down 2.4% or roughly 700 jobs.

“This wasn’t fear-mongering, as some have been saying. We’ve seen that employment has actually gone down in the District of Columbia in full-service restaurants between May and now,” said Rebekah Paxton, director of research at EPI.

Paxton said over 200 local restaurants have added service charges to adapt to rising wage bills.

“Hospitality job growth has actually increased. Fast-food restaurants and limited-service restaurant employment has increased over the same time period. So this is uniquely happening to the full-service restaurant industry,” Paxton said. “Our survey indicated that restaurants may have to move out of the area. There was a recent report that showed that the District of Columbia is actually losing competitive edge compared to local economies in surrounding areas.”

But Knab sees it differently, reporting that Square, a credit card processing company, measured an increase in worker earnings by 5.48%.

“That’s a higher growth rate than the 3.55% increase in base wages alone over the same period, demonstrating that tips have not declined,” Knab said. “In developing this report, we heard repeatedly that workers are traveling from Maryland and Virginia to enjoy higher base wages with tips on top here in the District.”

Service fees continue to be confusing, with the DC Attorney General issuing an advisory for restaurants in August to better disclose fees.

“I always ask the workers, I’m like, do you get this? […] I always feel like it’s always better for somebody who’s working in the service industry to have more money as opposed to less,” Loibner said.

The tipped minimum wage will keep slowly increasing until 2027 when there will be one minimum wage across the board in the District.

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