Why Are Seattle Restaurant Owners Pushing For A So-Called 'Tip Credit'?

Apr 9, 2014

If you’re a restaurant server in Texas or Mississippi, you probably earn $2.13 an hour from your employer. That’s the federal minimum wage for people who earn tips.

But here, servers earn at least $9.32 an hour, and then earn tips on top of that. Washington is one of seven states that require that tipped workers get the same minimum wage as everyone else. But with talk of a $15 an hour minimum wage, restaurant owners are pushing back.

Angela Stowell and her husband, Ethan, own nine upscale restaurants in Seattle. She says she supports a higher minimum wage for the lowest-paid workers, but the minimum wage doesn't need to rise for people who earn a lot in tips.

“It’s a way for businesses and specifically restaurants to increase the wage of our lowest earners, which are the back of the house, the cooks, the dishwashers, and maintain the current wages of the front of the house,” she said.

Stowell says those servers make about $30 an hour in tips and base pay.

But Seattle City Council member Kshama Sawant says paying tipped workers less and having them make up the rest in gratuities is not acceptable. Sawant, who ran on a platform of raising the minimum wage to $15 an hour, says nationally, tipped employees have a higher poverty rate than workers as a whole, and many of them don’t make a lot in tips.

“Think about the third-shift worker at Denny’s. What kind of tips are they getting?” she said.

Sawant says it’s unfair to shift the burden of compensating workers onto customers and away from business owners.

"What is a wage?" Sawant said. "I mean, a wage is what an employer pays an employee in order to acquire the labor services. If you start talking about tip credit and total compensation, you're talking about a different concept."

The debate has heated up in recent weeks. An advisory committee established by Seattle Mayor Ed Murray to examine minimum wage issues is set to issue recommendations by the end of this month. Union-backed activists have said they plan to submit a voter initiative shortly and push to have it on the November ballot.