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PRESERVES HIGHER TIP PERCENTAGE?
If Senate File 504 is passed without a Tip Credit amendment, resulting in tipped employees ultimately being paid $10.55
per hour, there is a growing concern that full service restaurant patrons may respond by lowering their customary tipping percentage.
There are two reasons for this concern. First, full service restaurants will need to raise their prices to accommodate the 46% hourly
wage increase for tipped employees and some patrons will respond to higher prices with a lower tip percentage. Second, informed
consumers will be aware of the fact that servers are earning much higher fixed hourly wages and there is no longer a compelling
reason to offer the same gratuity percentage as they did in the past … especially since the tip percentage is now being applied to higher prices.
If full service restaurant patrons lowered their customary tipping percentage this would result in a no win situation. All Minnesota
restaurant patrons would have to endure higher prices and servers would be negatively impacted by lower tipping percentages.
There really are no known compelling reasons to oppose Tip Credit. The opposing testimony to Tip Credit legislation has been totally
focused on continually increasing the hourly wage of the highest earning hourly employees in the hospitality industry (the tipped employees).
Those that testify, and those that oppose Tip Credit legislation, seem to always ignore the impact on the industry’s lowest paid hourly
employees (the non-tipped employees), the Minnesota consumers that have to endure increased prices for the mandatory raises to the
highest paid tipped employees and the full service restaurant industry that so desperately always tries to keep prices down in order not
to further lose market share to less expensive alternatives.
What is so ironic is those that think they are helping the full service restaurant tipped employees by opposing Tip Credit legislation are
really hurting them. This is because the increased restaurant prices necessary to the cover the mandatory increased wages to tipped
employees will cause a decrease in business resulting in less tip income for tipped employees.
See Also HELPS SUSTAIN FULL SERVICE RESTAURANTS.