Why Workers Support Prop. 138 - It Protects The Tip Credit and Their Earnings!

In a recent Op-ed, Tempe Server, Daryn Viser said it best:

At its heart, Prop. 138 protects the tip credit by modernizing the current stagnant $3 tip credit to 25% of the minimum wage. The tip credit is a key component to the hospitality compensation structure for tipped workers. This is because the tip credit allows tipped workers to earn substantially more than the minimum wage through tip revenue. This system results in higher overall income compared to flat wage models. Without the tip credit, the entire hospitality industry would need to change business models and customers would be forced to pay more while workers make less. To maintain operations, restaurants in cities with no tip credit are using “service included” models or instituting mandatory service charges on the bill. With these models, guests are told that the traditional tip is no longer necessary because the higher wage is included in the price of the food, or included in the charge at the bottom of the bill.

Under these models, that money is the property of the owner, not the server, thus decreasing the income of tipped workers dramatically. Restaurateurs like Danny Meyer, who have experimented with this no-tip model, have seen staff leave the company “in droves.”

Tipped workers understand this. If a guest is paying a 10-15% mandatory service charge, they will reduce or skip their tip all together. In fact, 90% of tipped workers support the current model, and 87% fear that their earnings would drop if the tip credit was eliminated.

Prop. 138 prevents this from happening by protecting the tip credit and keeping tips in the hands of employees.