The effects of minimum wage increases continue to be debated. The UW study of Seattle’s minimum wage law found that the mandated increase led to fewer jobs and lower earnings for low-wage workers. As always, there’s disagreement in academic and policy circles. But for one group of workers, the question has particular salience.
Restaurant workers in Maine considered the possible consequences and lobbied to lower the minimum wage.
The minimum wage for tipped workers in Maine is half that of the state’s regular minimum wage ($9). It’s called the “tip credit” rule, as it allows employers to take a credit of up to 50 percent from their employees’ wages, because servers will generally make that money back (and hopefully more) in tips. If tips and wages, together, don’t equal the state’s minimum wage, employers are required to make up the difference.
But, at November’s referendum, the Maine House voted to raise the minimum wage by $1 each year (through 2024) and to remove the tip credit rule entirely, meaning that all employees — tipped or not — would be earning the state’s minimum wage, reports the Portland Press Herald.
Restaurant workers did not see the change as a win.
State Senator James Dill, a Democrat who initially voted to raise wages, told the Washington Post that after the Nov. referendum passed, he received “hundreds” of calls and emails from servers who were worried about their livelihood.
As a result, Dill threw his support behind a Republican measure to return the “tip credit” rule. After passing through the Senate on June 7, the bill was brought before the House on June 13, where it passed with a vote of 110-37.
Maine Governor Paul LePage signed the bill into law last week. It will go into effect 90 days after Legislature adjourned, reports the Bangor Daily News.
Their reasoning reflects some of the early findings in Seattle.
As the Washington Post reports, servers were worried about the ramifications of the new laws for two reasons: first, that it would force employers to raise prices on their menu items, which could affect their current tips; and second, and perhaps more importantly, that employers might be forced to cut servers’ shifts as a result.
“I don’t need to be ‘saved,’ and I’ll be damned if small groups of uninformed people are voting on my livelihood,” said Sue Vallenza, a Maine bartender who spoke to the Post. Vallenza further said she’s already seeing less in tips as a result of customers who believe the wage hike had already went into effect.
As the Post notes, labor activists are bracing themselves for similar outcries in Minnesota, New York, Massachusetts and Washington, D.C., but critics say that Maine’s servers don’t speak for the country’s restaurant workers.
Of course. Interesting times. As the nation’s major metros and some states continue their experiments with sharply increased minimum wages, the effects on low-wage workers will be closely monitored. The findings will be instructive. The “bold experiments” have real consequences.