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BENEFITS LOWEST PAID WORKERS
When a state adopts Tip Credit legislation, as 86% of all states have, there will be limited mandated wage increases
for the highest paid workers in the full service restaurant industry as a result of minimum wage increases. When labor
costs are not elevated due to mandated increases to the highest paid full service restaurant workers, then there are more
financial resources available from an employer for back-of-the-house wage increases.
When the already well-compensated tipped employers get a mandated minimum wage increase in pay, the back-of-the-house
employees (line cooks, prep cooks, pantry persons and dishwashers) will not receive mandated increases. This is because they
are already earning more than the minimum wage and any additional payroll dollars the restaurant has available must now go
to pay the tipped employees. In the full service restaurant industry “tipped employees” often earn two or three times more than
the hourly wage of non-tipped employees. The discrepancy between tipped and non-tipped employees in a restaurant can cause
friction among staff. It can be very demoralizing for hard working back-of-the-house staff to witness tip earning employees
sometimes count their tips in front of them and comment on how they earned well over $100 or even $200 during their shift.
The same shift that these back-of-the-house employees worked very hard and generally longer hours to earn considerably less.
To more fully understand this point, please see NO TIP CREDIT HURTS FULL SERVICE RESTAURANTS.