On Tuesday night, District of Columbia voters approved Initiative 77, a referendum to raise the minimum wage for waiters and other tipped workers from $3.33 an hour plus tips, to $12.50 an hour plus tips.
Most places in the U.S. have a different minimum wage for tipped workers that is much lower than the regular minimum wage, based on the assumption that tips will bring the workers up to and even far above the regular minimum wage. As Jonathan Decker has written here, this system has often worked to the benefit of both the workers and employers.
However, Initiative 77 would institute a different system in D.C. Now, if a waiter does not earn $12.50 per hour, the employer is required to compensate him for the difference. And furthermore, the City Council has passed a law to raise the minimum wage to $15 per hour by 2020, so tipped workers will eventually earn $15 per hour plus tips.
The referendum was approved by a margin of 55 percent to 45 percent.
Ironically, the initiative was opposed by many of the restaurant workers it was allegedly supposed to help. Tips often bring them a consistent income that is far above the regular minimum wage. Most restaurants operate on very thin profit margins, often in the single digits, and rely on tips to take care of their wait staff. The new wage will likely cause restaurants to raise prices, leading to lower tips and lower overall pay for wait staff and other tipped workers. It was also opposed by most restaurant owners who spoke about the issue and even many members of the all-Democrat City Council.
Opponents of the measure criticized its timing — it was held during a low-turnout primary during which there were no close races — and warned that its passage will cause restaurants to raise prices and lay off staff.
Immediately after the referendum passed, the Restaurant Association of Metropolitan Washington said it would continue to fight the measure. All new D.C. laws are subject to a 30-day review by Congress, and the D.C. City Council could also step in to reverse it. Whether either body will intervene remains to be seen.