the CASE for PHASING OUT

MAINES SUBMINIMUM WAGE

for TIPPED WORKERS
OCTOBER 2016

the CASE for PHASING OUT

MAINES SUBMINIMUM WAGE
for TIPPED WORKERS

s the movement for higher wages builds momentum from coast to coast,
Maine residents are calling for the state to join the almost twenty states
and more than forty cities and counties that have recently raised their minimum wage.1 Residents will vote on a ballot initiative in the November 2016
election that, if successful, would gradually raise the states minimum wage from its
current level of $7.50 to $12 per hour by 2020. A $12 minimum wage in Maine by
2020 would raise wages for 181,000 residents.2
The ballot proposal would also gradually eliminate the subminimum wage for
tipped workers, currently set at 50 percent of the full minimum wage, or $3.75 per
hour.3 Under current law, employers can pay tipped workers the lower tipped wage
as long as gratuities cover the difference between the regular minimum wage and
the subminimum tipped wage.4 Tipped workers include waiters and waitresses, bartenders, food delivery workers, and many others at the heart of important Maine
industries like tourism and hospitality. By eliminating the subminimum tipped wage,
the ballot initiative would directly address the economic insecurity and high rates of
sexual harassment that uniquely affect the nearly 24,000 tipped workers in Maine.5
This report analyzes the impact of maintaining a lower minimum wage for tipped
workers and draws from the experience of One Fair Wage states and cities that have
abolished the subminimum tipped wage. It finds that:
The

outmoded subminimum tipped wage promotes poverty wages and unstable incomes for a tipped workforce that is 79 percent female in Maine.6
Contrary to industry claims that most tipped servers earn high incomes, the
Bureau of Labor Statistics (BLS) reported in its 2015 Occupational Employment
and Wage Estimates that the median wage for tipped waiters and waitresses
in Maine was just $9.06 per hour, including tips.7 This median wage was just a
little higher than Maines minimum wage during the period captured in the BLS
data (the minimum wage in Maine has been set at $7.50 per hour since 2009).8

 While

a small number of tipped workers are employed at high-end

restaurants where they earn a significant amount in tips that translate
into higher incomes, high-earning servers are a small minority and not
representative of tipped workers in Maine.9

 ight percent of all workers in Maine live in poverty, but Maines tipped
E
workers experience poverty at over twice that rate.10 Like tipped workers across the country entitled only to a subminimum tipped wage,
they work for widely fluctuating incomes11 which leave them and their
families economically vulnerable.
 eople of color feel the impact of the tipped subminimum wage even
P
more sharplya quarter of tipped workers of color in Maine live in
poverty, compared to 18 percent of white tipped workers.12

With

a base wage of $3.75 per hour, Maines tipped workers depend

almost entirely on tips for their income. This forces servers to tolerate
inappropriate behavior from customers in order to make a living and
also makes them vulnerable to objectification and harassment from coworkers and management. In fact, women restaurant workers in states
with a subminimum tipped wage of $2.13 per hour are twice as likely
to experience sexual harassment as women in states that do not have
a subminimum tipped wage.13

The

nations top wage enforcement experts at the U.S. Department

of Labor report that the complex subminimum tipped wage system
whereby employers are required to monitor employee wages and tips
so that they can make up the difference between an employees earnings and the full minimum wage if tips fall shortis so complicated that
it is difficult to enforce and results in high rates of noncompliance by
employers.14

 ecognition of the harms and pitfalls of a subminimum tipped wage

R
has sparked a growing movement to abolish it. Two federal bills to raise
the minimum wage would gradually eliminate the subminimum tipped
wage.15 Leaders who support eliminating the subminimum tipped wage
include President Barack Obama,16 Secretary of State Hillary Clinton,17
Senator Bernie Sanders,18 and over two hundred members of Congress,
including Maine Congresswoman Chellie Pingree.19

 ontrary to opponents predictions, raising the subminimum wage

C
while prohibiting a lower tipped subminimum wage has not led restaurants to abolish tipping and has not led diners to reduce tipping
levels. While a small number of high-end restaurants are experimenting with eliminating tipping, overall tipping rates are the same, if not
higher, in the seven One Fair Wage states.20 In fact, tipping rates in San
Francisco21 and Alaska,22 are among the highest in the country, despite
the fact that these jurisdictions do not have a subminimum tipped wage.
 he restaurant industry is strong in the seven One Fair Wage states,
T
demonstrating that it is economically feasible to phase out the subminimum tipped wage without harming restaurant jobs or sales.23 The
National Restaurant Associations (NRA) data show relatively high rates
of restaurant industry employment and sales growth in states that do
not permit a subminimum tipped wage compared with states that
permit it.24
 estaurant employment in the seven One Fair Wage states is projected
R
to grow in the next ten years by 10.7 percent, while Maines restaurant
employment rate is projected to grow 7.6 percent during that same period.25 Restaurant sales during the next ten years are expected to grow
by an average of 6.1 percent for the seven One Fair Wage states, a rate
that exceeds both the national average sales growth rate of 5 percent
and Maines projected sales growth rate of 3.7 percent for the same
period.26 At the local level, cities like San Francisco and Seattle, which
are implementing high minimum wages and which prohibit a subminimum tipped wage, are seeing their restaurant industries thrive.27
A $12 minimum wage and the gradual elimination of the subminimum tipped wage in Maine can increase consumer demand without
significant inflationary effects. Economists at the University of California, Berkeley, estimate that increasing Maines minimum wage to $12
by 2020 would increase overall prices by less than 1 percent.28 At the
same time, extensive economic research shows that workers who see
their incomes increase as a result of a higher minimum wage are likely
to spend their additional earnings in their communities.29 A higher minimum wage, in combination with the elimination of the subminimum
tipped wage, could therefore boost sales for Maine restaurants and
encourage economic growth across industries.

1 BACKGROUND: THE SUBMINIMUM TIPPED WAGE

HAS NOT ALWAYS EXISTEDAND IT IS NOT UNIVERSAL TODAY

Tipping is a nineteenth-century practice imported from Europe and originally opposed in the United States as un-American and undemocratic.30 However, with
encouragement from business interests, tipping eventually proliferated in the aftermath of the Civil War, when the service industry, best exemplified by the Pullman Train
Company, adopted a strategy of hiring former slaves who were not paid a wage but
instead depended on customers to pay them in tips.31
Until 1966, there was no federal subminimum wage for tipped workers.32 But with
the 1966 expansion of the federal Fair Labor Standards Act (FLSA) to cover hotel, motel, restaurant, and other leisure and hospitality employees who had previously been
excluded from the FLSA, the law was amended to allow employers to pay tipped
workers a subminimum wage set at 50 percent of the full minimum wage.33 In 1980,
Congress raised the subminimum tipped wage to 60 percent of the full minimum
wage, but returned it to 50 percent in 1991.34
In 1996, bowing to pressure from the restaurant industry, the Republican-controlled Congress froze the subminimum tipped wage at $2.13, decoupling it from the
full minimum wage for the first time since its adoption, and setting up two decades
of a frozen subminimum wage for tipped workers.35
Notwithstanding federal law, seven statesCalifornia, Nevada, Oregon, Washington, Minnesota, Montana, and Alaskado not permit a subminimum wage for tipped
workers.36 Tipped workers in those One Fair Wage states receive the full minimum
wage, and their tips function as a gratuity shouldas additional income over and
above their wages.

2 THE TYPICAL TIPPED WORKER IN MAINE STRUGGLES

ON BARELY MORE THAN THE MINIMUM WAGE AND

FACES SIGNIFICANT ECONOMIC INSECURITY

The typical tipped worker in Maine earns just a little more than the states minimum
wage. As discussed in more detail below, while a small number of tipped workers are
employed at high-end restaurants where they earn significant amounts in tips that
result in higher incomes, they are a small minority and not representative of tipped
workers in the state. As a whole, tipped workers receive meager wages and experience poor working conditions. In fact, data show that seven of the twelve lowest-paid
occupations in Maine are tipped occupations (see Table 1).
Tipped restaurant workers account for 89 percent of the tipped workforce in
Maine,37 and servers and bartenders, alone, account for 60 percent of all Maine
tipped workers.39 According to 2015 BLS data, covering the period from November
2012 through May 2015 (adjusted to 2015 using the Employment Cost Index), the
4

T1

MEDIAN WAGES FOR

THE 12 LOWEST-PAID
OCCUPATIONS IN MAINE
2015 BLS Occupational
Employment Statistics39

TIPPED OCCUPATIONS IN BOLD

OCCUPATION

MEDIAN HOURLY WAGE

Locker Room, Coatroom, and Dressing Room Attendants

$8.60

Baggage Porters and Bellhops

$8.81

Counter Attendants, Cafeteria, Food Concession, and Coffee Shop

$8.82

Ushers, Lobby Attendants, and Ticket Takers

$8.86

Manicurists and Pedicurists

$8.91

Combined Food Preparation and Serving Workers, Including Fast Food

$8.91

Amusement and Recreation Attendants

$8.93

Bartenders $8.94
Hosts and Hostesses, Restaurant, Lounge, and Coffee Shop

$8.96

Personal Care and Service Workers, All Other

$9.00

Waiters and Waitresses

$9.06

Motor Vehicle Operators, All Other

$9.07

median wage for tipped restaurant servers in Mainebase wage plus tipswas just
$9.06 per hour.40 Maines subminimum tipped wage during that period was frozen
at a meager $3.75, and the full minimum wage was set at $7.50 per hour.41 Thus, the
typical Maine server received enough tips to bring their hourly earnings up to just a
little more than the full minimum wagea far cry from the high income that the restaurant industry claims is representative of tipped servers in the state.42 Even Maine
restaurant servers earning at the seventy-fifth percentile in terms of hourly wages
earn only $11.59 per hour.43 Those earning at the ninetieth percentile earn $17.19
per hour.44
Cost of living analysis shows that all workers throughout Maine, whether tipped
or non-tipped, need to earn at least $12 to afford the basics (see Appendix 1). According to data from the Economic Policy Institute, in 2014, a single worker with no
children working full-time in Rural Maine needed to earn at least $14.71 per hour to
make ends meet; a full-time single worker with one child required at least $22.75 per
hour to do the same.45 Based on these cost of living estimates, even servers earning
at the ninetieth percentile in Maine are barely making ends meet. Bartenders fare
worse: their median hourly wage (including wages and tips) is just $8.94 per hour.46
In other words, the typical waiter, waitress, and bartender in Maine is barely getting
by, even after taking tips into account.
The inherently uneven and often unpredictable nature of tipped work is no doubt
a factor driving Maine tipped workers low wages. While most of us expect to be paid
the same for every day or hour we work, this is often not the case for tipped workers.
Restaurant servers may make a substantial amount of money on Friday or Saturday
night but much less on other days. As one tipped worker explained, nobody likes
to work Sunday morning or Mondaybut somebody has to do it. When thats my
5

F1

POVERTY RATES IN MAINE

Bartenders and servers experience

poverty at over twice the rate of the
overall workforce in Maine51

19%
BARTENDERS
AND SERVERS

8%

ALL
WORKERS

time, I know Im not going to make any money. Working Friday

night is like working five Sunday mornings.47 Bad weather, a
sluggish economy, the changing of the seasons, and a host of
other factors can also cause sudden drops in tipped income
and lead to economic insecurity.
It is no surprise then that in Maine, tipped workers face
poverty rates that are double those of the overall workforce,
and the poverty rate for servers and bartenders is even higher.48 Servers and bartenders in Maine experience a poverty
rate of 19 percent while workers, generally, experience a poverty rate of 8 percent (see Figure 1). Tipped workers in Maine
also rely on public assistance to make ends meet at high
rates. Seventeen percent of tipped workers in Maine use food
stamps, and 18 percent have insurance through Medicaid.49 In
contrast, amongst Maines overall workforce, 11 percent rely
on food stamps and 9.2 percent rely on Medicaid.50 Public
assistance is essential for basic economic security, but is not
intended to serve as a wage subsidy for low-wage employers.

3 MAINES TIPPED WORKERS ARE OVERWHELMINGLY ADULTS,

DISPROPORTIONATELY WOMEN, LIKELY TO HAVE AT LEAST

SOME HIGHER EDUCATION, AND MORE LIKELY TO LIVE
IN POVERTY THAN OTHER WORKERS

Demographically, tipped workers in Maine are older and more educated than commonly perceived, and they often support families on their tips:

In Maine, 59 percent of workers in predominantly tipped occupations are adults

age 25 or older.52
Seventy-nine percent of the tipped workforce in Maine is female.53
 early 46 percent of workers in predominantly tipped occupations in Maine have
N
had some amount of higher education.54

As

noted above, servers and bartenders in Maine experience a poverty rate of

19 percent, compared with a rate of 8 percent for Maine workers, generally (see
Figure 1). In addition, 17 percent of tipped workers in Maine rely on food stamps,
and 18 percent have insurance through Medicaid.55

4 ELIMINATING THE TIPPED MINIMUM WAGE

COULD SIGNIFICANTLY REDUCE SEXUAL HARASSMENT

FOR MAINES TIPPED RESTAURANT WORKERS

Because tipped workers largely rely on customers for their income, they must often
tolerate inappropriate behavior at work from customers, co-workers, and management. In fact, while only 7 percent of women in the U.S. work in the restaurant industry,
more than a third (37 percent) of all sexual harassment claims to the Equal Employment Opportunity Commission (EEOC) come from the restaurant industry.56
A 2014 survey of 688 restaurant workers by ROC United and Forward Together
showed that women working in customarily tipped occupations in states that have
eliminated the two-tiered wage system were less likely to experience sexual harassment than women in states where they must depend on customers tips for the bulk
of their income.57 Women restaurant workers in states with a tipped subminimum
wage of $2.13just slightly lower than Maines tipped subminimum wage of $3.75
are twice as likely to experience sexual harassment as women in states that do not
have a tipped subminimum wage.58 Women working in tipped restaurant occupations reported that the cultural expectations of their work in terms of appearance and
behavior were often more heavily sexualized when they depended on tips to meet
their base wage.59 In states that allow subminimum wages for tipped workers, women
reported high rates of tolerating inappropriate comments and sexual behaviors while
at work to ensure a good tip and to simply keep their job.60 Depending entirely or
almost entirely on tips for income ultimately pressures tipped workers to endure
inappropriate behavior.61
Moreover, sexual harassment fueled by the subminimum tipped wage affects workers
of all genders. Men and transgender workers report that sexual harassment is widespread
in their restaurants.62 Forty-six percent of men reported that sexual harassment was an
uncomfortable aspect of work life, and 60 percent of transgender workers reported experiencing scary or unwanted sexual behavior.63 Transgender survey respondents
were two-and-a-half times more likely to report harassing comments about their sexual
orientation or gender identity from customers than their cisgender coworkers.64
A negative experience with sexual harassment in a restaurant workplace has lingering effects that appear to amplify over time. The 2014 study also surveyed a subset
of 233 women who had previously worked in the restaurant industry, and it found that
over one third of those who had been tipped workers reported quitting their jobs as a
result of unwanted sexual advances.65 Overall, they were 1.6 times more likely to tolerate harassing behaviors in the workplace than women currently employed as tipped
workers, indicating that women who encounter sexual harassment in the restaurant
industry are more likely to tolerate sexual harassment in other environments.66 In
other words, the subminimum wage emboldens and normalizes inappropriate conduct, shaping perceptions of sexual harassment as acceptable workplace behavior
that tipped workers can carry to future workplaces.
Eliminating the tipped subminimum wage in Maine would likely reduce the incidence of sexual harassment for tipped workers and potentially alter workplace norms
in a positive manner for all tipped workers in Maine and across the country.

WHEN ALI MOVED TO MAINE FROM CALIFORNIA where servers are

paid the full minimum wage in addition to receiving tipsshe wasnt prepared for the
seasonal impact that comes with living on a subminimum tipped wage as a server. Ali
told us that her pay was cut in half in the winter, but my rent didnt change and the cost
of heating goes up. We dont get snow days, so sometimes it feels like we put our
lives on the line to get to work and then [only] make $20$25, and then get sent home
because its too slow.
According to Ali, seasonal variations are just one component of the precarious financial situation for servers in Maine. Because of the subminimum tipped wage, Alis entire
financial stability comes from peoples gratuitywhich can be 0 percent. There are times
when people dont tip, which means I dont make any money. There are times [when] I sit
for an hour and a half and wait a table so I can make money. Since Ali makes only $3.75
an hour from her employer, the wages from her employer go almost entirely to taxes
which makes her dependent on the whims of customers to make ends meet.
To make matters worse, the subminimum wage for tipped workers facilitates
unwanted sexual behavior from customers at Alis workplace. Ali told us, I have experienced sexual harassment, I have been given [phone] numbers instead of tips, I have
been groped. I have been called the help. I have been told the only reason I make tips
is because I am slutty. Ali believes that eliminating the subminimum wage for tipped
workers would help protect her from harassment. She explained that this referendum
would make me stand up for myself and for what I believe is right. I wouldnt have to
deal with sexual harassment on a daily basis to live and survive.

5 THE COMPLEX SUBMINIMUM TIPPED WAGE SYSTEM IS DIFFICULT

TO ENFORCE AND RESULTS IN WIDESPREAD NONCOMPLIANCE

Some of the nations top wage enforcement and policy experts, including the U.S.
Department of Labor, report that the complex subminimum tipped wage system
where employers are supposed to monitor employee wage and tip levels and make
up the difference if tips fall short of bringing workers up to the full minimum wageis
so complicated that it is difficult to enforce, resulting in high levels of noncompliance
by restaurant employers.
Employers in Maine are required to make up the difference if a workers base
wage of $3.75 per hour plus tips does not add up to the full minimum wage.67 But
this complex system is both difficult to comply with and largely unenforceable for a
number of reasons:
1 It requires extensive tracking and accounting of tip flows, which is burdensome
and difficult for employers.68
8

2 Employers are allowed to average tips over the course of the entire
work-week and required to top up only if an employees average
hourly earnings are less than the full minimum wage.69
3 Tips are allowed to be pooled among various types of restaurant
employees, allowing a portion of the tips that a server receives to be
reallocated to other employees.70
4 Tipped workers who have experienced tip-stealing or other forms of
wage theft are often reluctant to demand what they are owed out of
fear of reprisal. Tipped workers rely on their supervisors to schedule
them for shifts, and their earnings in tips often depend on which shifts
they work.71
A 2014 report by the White House National Economic Council and the
U.S. Department of Labor confirms these challenges, stating that [t]he rules
for tipped workers are complicated and can be confusing for employers and
employees alike.72 The report noted that [o]ne of the most prevalent violations is the failure to keep track of employee tips and therefore the failure to
top up employees if their tips fall short of the full minimum wage.73 It found
that, when surveyed, more than 1 in 10 workers in predominantly tipped
occupations report hourly wages below the full Federal minimum wage, including tips while just 4 percent of all workers report hourly wages below
the minimum wage.74 An in-depth story by The New York Times on the nail
salon industry in New York similarly found that even though nail salon workers are considered tipped workers under state law, interviews with scores
of workers revealed rates of pay so low that the so-called tip calculation is
virtually meaningless and [n]one reported receiving supplemental pay from
their bosses, as is legally required when their days tips fall short of the minimum wage.75
Compliance and enforcement challenges aside, under a subminimum
tipped wage system, customers are directly responsible for paying the majority of workers wages. For many servers in Maine who are paid just $3.75
an hour, zero-dollar paychecks are the norm since their employer-provided
wages go almost entirely towards taxes. Thus, rather than a gratuity for good
service, the existence of a subminimum tipped wage renders tips a customerfunded wage replacement that lowers labor costs for employers in a few
select industries.

6 A GROWING MOVEMENT SEEKS TO ABOLISH THE OUTMODED

SUBMINIMUM TIPPED WAGE, AND NATIONAL LEADERS, INCLUDING

PRESIDENT OBAMA, SECRETARY CLINTON, SENATOR SANDERS, AND
MORE THAN TWO HUNDRED MEMBERS OF CONGRESS, SUPPORT IT
A growing list of national leaders are backing proposals to gradually phase out the subminimum
tipped wage. This list includes:

President Barack Obama76

Vice President Joseph Biden77

Secretary of State Hillary Clinton78

Senator Bernie Sanders79

U.S. Secretary of Labor Tom Perez80

 75 members of the House, including

1
Maine Congresswoman Chellie Pingree81
33 U.S. Senators82

All of these leaders have endorsed or cosponsored the federal Raise the Wage Act (H.R.
2150; S. 1150), which would gradually phase
out the subminimum tipped wage and raise the
federal minimum wage to $12 by 2020. A number have also endorsed the Pay Workers a Living
Wage Act (H.R. 3164; S. 1832), which would gradually phase out the subminimum tipped wage
and raise the federal minimum to $15 by 2020.
Their support highlights the growing national
consensus among progressive leaders that it is
time to get rid of the unfair and outdated subminimum wage for tipped workers.

MICHAEL LANDGARTEN HAS OWNED AND OPERATED RESTAURANTS

for close to 30 years. After working as a computer programmer and a musician, Michael began
a career in the restaurant industry in 1986. Since then, he has been animated by his loyal customers and a passion for quality food. Michael supports eliminating the subminimum tipped
wage because, in his experience, underpaid workers lead to unhappy staff who are hard to
motivate, as well as to high turnover. Moreover, Michael feels strongly that if all restaurant
workers are shown the respect they deserve with a wage they can live on, the industry will
improve, as will the guest experience.
Unfortunately, many restaurant workers in Maine dont make living wages and tipped
restaurant workers struggle with an additional level of uncertainty, not knowing how much
they will take home week-to-week or even day-to-day. According to Michael, the submini-

MICHAEL LANDGARTEN
Roberts Maine Grill,
Bobs Clam Hut,
and Lils Caf

mum [tipped] wage creates insecurity and instability in the service workforce. Since those in
service are always feeling in danger of not making enough, they are subject to 1) the whims
of their guests (in the worst cases sometimes including harassment); 2) the ups and downs
of business; and 3) management decisions (for example, what section they are assigned).
Michael believes that restaurant owners can benefit from eliminating the subminimum
wage for tipped workers. Instead of subminimum tipped wages being a source of great
divisiveness between front and back of house, raising the wage for all restaurant workers
to One Fair Wage offers the potential to unify the whole staff behind a common purpose
thrilling guests with great food and service. For forward-thinking restaurateurs like Michael,
raising the minimum wage for tipped workers means that the quality of the work will improve

10

dramatically and result in a better compensated and secure workforce.

7 THE RESTAURANT INDUSTRY IS HEALTHY IN STATES

THAT HAVE NO SUBMINIMUM TIPPED WAGE

While lobbyists for the restaurant industry argue that eliminating the subminimum
tipped wage would hurt the restaurant industry and harm restaurant workers, the
facts belie those claims. A 2015 Cornell Hospitality Report looked at the impact of
minimum wage increases on restaurant employment and business growth levels over
twenty years across the United States. It found that raising the regular and subminimum tipped wage raises restaurant industry wages without large or reliable effects
on full-service and limited-service restaurant employment.83 The restaurant industrys
own analysis shows that the industry is healthy in the states that do not have a subminimum tipped wage, and that sales in those states are projected to grow at an even
faster rate than in many of the states that have retained a subminimum tipped wage.
The NRA estimates that 2015 marked the sixteenth consecutive year in which
the restaurant industrys job growth outpaced growth in the overall U.S. economy,84
and that in 2016, restaurant job growth will outpace the overall economy again, adding more than 300,000 jobs.85 In fact, jobs in the eating-and-drinking place sector
increased by 38 percent since 1999, while jobs in the overall economy increased by
only 10 percent during that period.86 Restaurant sales are expected to reach $783
billion this year, according to the latest NRA Industry Forecast.87
Many states experiencing strong restaurant job growth do not allow a subminimum tipped wage and require employers to pay tipped workers some of the
countrys highest minimum wage rates. Restaurant employment in Californiawhere
the minimum wage is now $10 per hour and will reach $15 by 2023,88 and which
has no subminimum tipped wageis projected to grow by 10.1 percent during the
20162026 period.89 In Oregon, which similarly has no subminimum tipped wage,
the minimum wage is currently $9.75 in most parts of the state90 and will increase to
between $12.50 and $14.75 per hour over the next six years.91 Restaurant employment in Oregon is projected to grow by 13.2 percent between 2016 and 2026.92 And
in Washington State, where the minimum wage is $9.4793 and voters will decide in
November whether to increase the minimum wage to $13.50 through a ballot initiative,94 restaurant employment growth during the same period is expected to grow
by 12.6 percent.95
In fact, restaurant employment in the seven states without a subminimum tipped
wage is expected to grow an average rate of 10.7 percent in the next ten years (see
Table 2). In contrast, restaurant employment in Maine is projected to grow 7.6 percent during that period (see Table 2). When it comes to restaurant sales, projected
2016 sales for the seven One Fair Wage states average 6.1 percent (see Table 2), a
rate which exceeds both the projected national average of 5 percent96 and Maines
projected sales growth rate of 3.7 percent.97 Table 2 summarizes the NRAs projected
employment and sales growth for the seven One Fair Wage states as well as Maine.
Historical data from 2001 to 2015 for the seven One Fair Wage states and Maine
also show that raising wages while prohibiting a subminimum wage for tipped workers has had no adverse effect on those states vibrant restaurant scenes. Maine, on
11

T2 Comparing Maines projected restaurant employment and sales growth with projected

employment and sales growth in states without a subminimum tipped wage

Seven States

CURRENT
MINIMUM WAGE 98

SUBMINIMUM
TIPPED WAGE? 99

Varying

No

with No Subminimum
Tipped Wage

but all higher than

Maines current $7.50

NRA PROJECTED
JOB GROWTH, 20162026 100

10.7% weighted average 6.1% weighted average

Alaska $9.75 No

6.9%

5.3%

Washington

12.6%

7.0%

Oregon $9.75 most areas No

$9.50 certain nonurban counties

13.2%

6.9%

California $10.00

No

10.1%

6.6%

Montana $8.05

No

11.1%

5.4%

Minnesota $9.50

No

8.3%

3.9%

12.9%

7.3%

7.6%

3.7%

$9.47

No

Nevada $8.25 No
MAINE

12

NRA PROJECTED
SALES GROWTH, 2016 101

$7.50

Yes | $3.75

the other hand, which maintained both a low minimum wage and a low subminimum
tipped wage during this period (see Figure 2), lagged behind all seven One Fair
Wage states when it comes to restaurant employment growth (see Figure 3). It also
lagged behind four of the One Fair Wage states in the growth of restaurant establishments (see Figure 4).
Restaurant industry spokespersons might argue that many of the states that have
eliminated the subminimum tipped wage are located on the West Coast or that some
of those states are significantly larger than or different from Maine. Together, however,
the seven states show that the restaurant industry has been able to grow in a variety of
jurisdictions that have adopted relatively high minimum wage rates and treat tipped
workers like all other workers entitled to the full minimum wage.
The size of the restaurant industry varies significantly among the seven states that
have eliminated the subminimum wage for tipped workers, and one cannot claim that
the seven One Fair Wage states all have significantly larger restaurant industries or
restaurant sales figures when compared with Maine. According to data from the NRA,
Alaska had 1,383 eating and drinking locations in 2015, and its restaurant industry is
projected to reach $1.6 billion in sales in 2016 (see Table 3). California, at the other
end of the spectrum, had 69,908 eating and drinking places in 2015, and its restaurant industry is expected to reach $79.1 billion in sales in 2016 (see Table 3). Notably,
both Alaska, at the lowest end of the employment spectrum, and California, at the
highest end, have higher projected restaurant sales per restaurant employee than
Maine (see Table 3). Restaurant and foodservice jobs account for between 9 percent
and 19 percent of all employment in the seven One Fair Wage states, and the rate in
Maine falls within that range (see Table 3).

F2 Comparing the

subminimum
tipped wage in
Maine with the
minimum wage
in the seven One
Fair Wage states
(20012015)102

$10

$2

F3 Comparing

restaurant
employment
in Maine with
restaurant
employment in
the seven One
Fair Wage states
(20012015) 103

the growth
of restaurant
establishments
in Maine with the
same growth in
the seven One
Fair Wage states
(20012015)104

2001

2015

2001

2015

1.75
1.55
1.35
1.15

1.8
1.6
1.4
1.2
1.0
0.8

ALASKA

2015

1.95

0.95

F4 Comparing

2001

CALIFORNIA

MAINE

MINNESOTA

MONTANA

NEVADA

OREGON

WASHINGTON

13

T3 Comparing the size of the restaurant industry in the seven

One Fair Wage states with Maines restaurant industry

NUMBER OF EATING
PROJECTED SALES
PROJECTED SALES

AND DRINKING
(2016) 106
PER RESTAURANT

LOCATIONS (2015) 105 EMPLOYEE 107

RESTAURANT AND FOOD

SERVICE JOBS AS
PERCENTAGE OF ALL
PRIVATE EMPLOYMENT (2015) 108

Alaska

1,383

$1.6 billion

$74,419

9%

California

69,908

$79.1 billion

$59,788

11%

Minnesota

9,709

$9.5 billion

$49,843

10%

Montana

2,639

$1.8 billion

$46,875

12%

Nevada

5,603

$6.9 billion

$58,974

19%

Oregon

9,626

$7.4 billion

$51,353

12%

Washington

15,037

$13.1 billion

$57,330

10%

MAINE

3,112

$2.2 billion

$50,691

11%

Ultimately, based on economic research like the 2015 Cornell study cited above,
as well as historical and projected restaurant industry data concerning the strength
of the restaurant industry in the seven One Fair Wage states and Maine, Maines
restaurant workers, businesses, and the state itself stand to benefit from raising the
minimum wage to $12 per hour and eliminating the subminimum tipped wage.
Moreover, in Maines case, a $12 minimum wage and gradual elimination of the subminimum tipped wage will not only not cause widespread job losses or restaurant
closings, these changes have the potential to increase consumer demand for the
states restaurants.
Introducing a One Fair Wage of $12 per hour for tipped workers would mean
an eventual annual stimulus in additional earnings of up to $258 million, which is an
average of a low estimate of $168 million and a high estimate of $347 million. The
low estimate is based on the difference between the reported hourly earnings (base
wage plus tips) for tipped workers currently earning under $12 per hour, and the new
minimum wage of $12. The high estimate is based on the difference between the
base wage ($3.75) for all tipped workers and the new minimum wage of $12 per hour,
a stimulus that would benefit the local economy, including the restaurant industry.109
The lower estimate includes a number of tipped workers who report earning less than
the state minimum wage of $7.50 per hour, a number that would decrease after adoption of a One Fair Wage policy, since the current subminimum wage system results
in, as noted above, high rates of noncompliance with wage and hour regulations.
Economists at the University of California, Berkeley, also estimate that increasing
Maines minimum wage to $12 by 2020 would increase overall prices by less than 1
percent (roughly 0.9 percent cumulatively over the next four years, or 0.22 percent
14

each year).110 That is far less than the Congressional Budget Offices projection for
core inflation, which is expected to be approximately 2 percent per year in future
years.111 At the same time, extensive economic research shows that workers whose
incomes increase as a result of a higher minimum wage tend to spend their additional
earnings in their communities.112 Restaurants in Maine are likely to see new or more
frequent customers if voters approve the $12 minimum wage ballot initiative and
experience the type of solid growth seen in the One Fair Wage states.113
Raising the wages of the lowest paid workers creates a wave of new consumers who previously werent able
to spend money at local businesses. Working long hours at multiple jobs doesnt leave much time for low-wage
workers to get out into their community and spend time with loved ones. Families struggling to make ends meet
cant afford the luxury of taking their children out for ice cream. Now that Seattle businesses are paying a living
wage I look forward to seeing new customers in my shops and welcoming new fans of our products.
MOLLY MOON NEITZEL, Owner, Molly Moons Homemade Ice Cream with seven locations throughout Seattle
and a member of the Main Street Alliance of Washington

8 THE RESTAURANT INDUSTRY IS THRIVING IN CITIES LIKE SEATTLE

AND SAN FRANCISCO THAT ARE RAISING THEIR MINIMUM WAGE

AND HAVE NO SUBMINIMUM WAGE FOR TIPPED WORKERS

The restaurant industry is thriving in cities like Seattle and San Francisco that are
phasing in a $15 minimum wage and do not permit employers to pay a subminimum
tipped wage. These cities are therefore demonstrating at the local level that a robust
minimum wage even higher than Maines proposed $12 minimum, in combination
with no subminimum tipped wage, can be manageable for the restaurant industry
and does not hurt jobs.
Im a server at a restaurant in Seattle where we are experiencing a restaurant boom. Ive worked in the restaurant
industry for more than seven years and believe that by increasing the minimum wage to $15, we can put more
money in the hands of workers that they can then spend at restaurants. My customers leave 15 to 20 percent in
tips on average, and I dont think that theres a correlation between my wages and how much I earn in tips.
NATE MIDGLEY, Seattle server, 7 years in the restaurant industry

SEATTLE

In April 2015, Seattle began implementation of its new wage floor, which will reach
$15 by 2021 for all employers.114 Last fall, in a front-page story titled Apocalypse
Not: $15 and the Cuts that Never Came, the Puget Sound Business Journal reported
on [t]he minimum wage meltdown that never happened, explaining that Seattles
restaurant industry has continued to expand and thrive as the $15 wage phases
15

F5 Total Seattle food services

and beverage industry

business licenses115

3,709

4,025

MARCH 2014

OCTOBER 2016

Im a businessperson from Seattle and was a part of the group that led the Fight for $15 there. In Seattle, the first
city to pass the fifteen dollar minimum wage, most people from outside thought that was some sort of departure
from rational economic policy. We already had the highest minimum wage in the country, and we have no tip
penalty in our city. So, if people were right that higher wages kill jobs, then we should have no restaurants in
Seattle. But thats the really odd thing, not only do we have some restaurants in Seattle, we have a lot of them.
In fact, we have more restaurants per capita in Seattle than even New York. According to a Bloomberg analysis,
Seattle has the second highest density of restaurants in the countrythe only place that outperforms Seattle
is San Francisco. So, they say that higher wages kills jobs in the economy and its just not true.
NICK HANAUER, Seattle-based entrepreneur

in.116 More recent reports confirm that neither the citys economy nor the restaurant industry has suffered.117 In fact, a few months after Seattle began phasing in its
minimum wage, the regions unemployment rate hit an eight-year low of 3.6 percent,
significantly lower than the state unemployment rate of 5.3 percent.118 Moreover,
since Seattle passed its trailblazing $15 minimum wage in 2014, the number of food
services and beverage industry business licenses issued in the city has increased by
9 percent (see Figure 5).

SAN FRANCISCO

Like Seattle, San Francisco does not permit a subminimum tipped wage, its minimum
wage is increasing to $15 by 2018,119 and its restaurant industry is booming. According to the Golden Gate Restaurant Association, the metrics show that San Francisco
has still seen record restaurant growth,120 despite a rising minimum wage and other
factors affecting the restaurant industry. San Franciscos experience with prior minimum wage increases offers further proof that wage floor increases do not lead to
economic catastrophe. After a 2003 ordinance was adopted, which indexed the citys
minimum wage to inflation, thereby raising the wage floor each year, University of
California researchers analyzed the effects of this policy in a 2007 study. They gathered employment and hours data from fast-food and full-service restaurants in San
Francisco, as well as from surrounding counties that were not covered by the higher
16

I am currently working as a bar back in Seattle, and the restaurant industry seems strong to me. Higher wages
havent changed the way customers tip. The only thing the higher minimum wage did was give you something
else to make small talk about with the regulars. People who used to tip still tip the same amount, in my
experience. I think tipping is simply part of our culture and nobody here is going to stop tipping because their
server makes a decent wage. No one sees better overall pay for low-wage workers as a bad thing.
TOBIAS COUGHLIN-BOGUE, bar back in Seattle, 10 years in the restaurant/hospitality industry

indexed minimum wage. They found that the higher wage had not led San Francisco
employers to reduce either their employment levels or employee hours worked.121
A follow-up 2014 study examined the combined impact on San Francisco employers of the citys minimum wage ordinance and of other city compensation mandates
that cumulatively raised employment costs 80 percent above the level of the federal
minimum wage. The study again found no adverse effect on employment levels or
hours, and it found that food service jobsthe sector most heavily affectedactually
grew about 17 percent faster in San Francisco than in surrounding counties during
that period.122

9 RESTAURANTS IN CITIES THAT ARE RAISING THE MINIMUM WAGE

AND HAVE NO SUBMINIMUM TIPPED WAGE ARE NOT RUSHING

TO ABOLISH TIPPING, AND TIPPING RATES HAVE NOT DROPPED
SIGNIFICANTLY UNDER SUCH POLICIES

Contrary to predictions by some in the restaurant industry, raising the minimum wage
and eliminating the subminimum tipped wage will not lead restaurants to abolish
tipping or lead diners to reduce tipping levels. While a small number of mostly highend restaurants today are experimenting with eliminating tipping,123 the practice
continues to be the norm in states like California, Washington, Oregon, and Minnesota where workers receive the full minimum wage before tips.
In fact, Alaska, a state without a subminimum wage for tipped workers, holds the
record for the highest average tip rate among all fifty states.124 In San Francisco, which,
as noted above, is increasing its minimum wage to $15 by 2018 and where employers
are also not permitted to pay tipped workers a subminimum base wage, the Golden
Gate Restaurant Association, the voice of the restaurant industry in the city, recently
noted that [d]iners in San Francisco reported an average 19 [percent] tip rate.125

Even though the minimum wage has been increasing in the past couple years, tipping and gratuities have not
been negatively affected. But we still have a long way to go to catch up to a living wage. As a server, I noticed
that customers continue to tip as customary. When we reach $15 an hour in CA, I expect customers to continue
tipping at the same levels. HUGO ALEMAN, Los Angeles server, 23 years in the restaurant industry

17

National data confirm that raising the tipped wage significantly increases earnings of workers in [Full-Service Restaurants].126 And an analysis of wages for tipped
workers found that tipped workers in equal treatment states [with no subminimum
tipped wage] earn 14.2 percent more than tipped workers in low tipped minimum
states.127 Data for waiters and bartenders show that earnings are about 20 percent
higher in states where tipped workers must be paid the full minimum wage before
tips than in states that follow the federal $2.13 tipped minimum wage. 128

My former company, Cover, monitors restaurant tipping practices closely as we operate a mobile payments
platform for the industry. When cities or states have proposed eliminating the lower tipped wage and/or raising
the minimum wage to $15, some have predicted that it would lead restaurants to abandon tipping or result in
significantly lower tipping ratespotentially lowering net pay for wait staff, at least at high end restaurants. But
the on-the-ground experiences in cities like San Francisco and Seattle have disproven those predictions. While
a small number of restaurants are experimenting with getting rid of tipping in cities across the country, the
number and frequency of restaurants dropping tipping is no higher in those cities that have the combination of
a high minimum wage and no lower tipped wage. Also, customers in those cities have not significantly reduced
their tips. MARK EGERMAN, Restaurant industry tipping expert; Co-Founder of the Cover restaurant mobile
payments platform; and a senior fellow at the Center for American Progress129

18

CONCLUSION

The experiences of the seven One Fair Wage states, as well as cities with
no subminimum wage for tipped workers, show that both high minimum
wage rates and the elimination of a subminimum tipped wage are economically manageable for restaurant employers and greatly improve the
earnings and wellbeing of tipped workers. The bulk of Maines tipped
workers struggle to get by on low wages. Unless a minimum wage increase
to $12 is combined with the gradual elimination of the unfair $3.75 subminimum tipped wage, tipped workerssuch as waiters and waitresses,
car wash workers, nail salon workers, and delivery workerswill continue
to face low wages, fluctuating pay checks, and widespread legal violations
that leave them economically vulnerable.

19

APPENDIX

COST OF LIVING ANALYSIS SHOWS THAT ALL WORKERSTIPPED

AND NON-TIPPEDNEED A $12 MINIMUM WAGE
METRO AREA

FAMILY SIZE

2014

2016

Bangor

Single Adult

$14.35 $14.93 $15.53 $16.16

With one Child

$24.46

$25.45

2018

$26.48

2020

$27.55

Lewiston/Auburn
Single Adult

$13.18 $13.71 $14.27 $14.84

With one Child

$23.11

$24.05

$25.02

$26.03

Portland

Single Adult

$15.31

$15.93

$16.57

$17.24

With one Child

$26.08

$27.13

$28.23

$29.37

Rural Maine

Single Adult

$14.71 $15.30 $15.92 $16.56

With one Child

$22.75

$23.67

$24.63

$25.62

NELP analysis of Economic Policy Institutes Family Budget Calculator, which lists
family budgets in 2014 dollars. See www.epi.org/resources/budget/. NELP analysis
assumes a 2 percent rate of inflation and no median wage growth.

20

NOTES

1 Raise the Minimum Wage, Campaigns, http://www.raisetheminimumwage.com/pages/campaigns/ (last viewed Oct. 14, 2016).

2 Maine Center for Economic Policy, Restoring the Value of Work (Aug. 2016) at 4, available at
http://www.mecep.org/wp-content/uploads/2016/08/Minimum-wage-brief_final_08-17-16.
pdf.
3 United States Department of Labor, Wage and Hour Division, Minimum Wages for Tipped
Employees, https://www.dol.gov/whd/state/tipped.htm (last viewed Oct. 5, 2016).
4 Me. Rev. Stat. tit. 26, 664.

5 See Bureau of Labor Statistics (BLS), May 2015 State Occupational Employment and Wage
Estimates (OES), Maine, available at http://www.bls.gov/oes/current/oes_me.htm. The BLS May
2015 estimates are based on responses from six semiannual panels collected over a 3-year
period: May 2015, November 2014, May 2014, November 2013, May 2013, and November
2012. Bureau of Labor Statistics, Occupational Employment Statistics, Technical Notes for May
2015 OES Estimates, http://www.bls.gov/oes/current/oes_tec.htm (last viewed Oct. 5, 2016).
The OES gathers three years of data covering 1.2 million establishments, and close to 57
percent of all employment to reduce sample error and increase the reliability of wage and
employment data in small geographical areas. All wage data are updated to the release year by
adjusting the earlier two years to the final reference period using over-the-year wage changes
in the latest Employment Cost Index of the National Compensation Survey, BLS, a quarterly
index measuring change in labor costs. This report considers the following BLS occupations
customarily tipped occupations: Massage Therapists; Bartenders; Counter Attendants, Cafeteria, Food Concession, and Coffee Shop workers; Waiters and Waitresses; Hosts and Hostesses, Restaurant, Lounge, and Coffee Shop; Food servers, Non-restaurant; Dining Room and
Cafeteria Attendants and Bartender Helpers; Barbers; Hairdressers, Hairstylists, and Cosmetologists; Miscellaneous Personal Appearance Workers (including Manicurists and Pedicurists;
Shampooers; Makeup Artists, Theatrical and Performance; and Skincare Specialists); Baggage
Porters, Bellhops, and Concierges; Taxi Drivers and Chauffeurs; and Parking Lot Attendants.

6 Analysis of American Community Survey, 20102014 merged-five year sample, by the Restaurant Opportunities Centers United (ROC-United), examining data for individuals employed
in customarily tipped occupations (see note 5 for a list of customarily tipped occupations),
or other occupations, as noted, living in Maine, based on Ruggles et al., Integrated Public
Use Microdata Series: Version 5.0 [Machine-readable database]. Minneapolis: Minnesota
Population Center, 2010.

7 See supra note 5 (see Median hourly wage for Waiters and Waitresses).

8 Maine.gov, State of Maine Department of Labor, Bureau of Labor Standards, History of Maines
Minimum Wage Rate, http://www.maine.gov/labor/labor_laws/minwagehistory.html (last
viewed Oct. 5, 2016).
9 See discussion in Part 2, infra.
10 See supra note 6.

11 Sylvia A. Allegretto & David Cooper, Economic Policy Institute and University of California,
Berkeley, Center on Wage and Employment Dynamics, Twenty-three Years and Still Waiting
for Change: Why Its Time to Give Tipped Workers the Regular Minimum Wage (July 2015)
at 19, available at http://www.epi.org/files/2014/EPI-CWED-BP379.pdf.
12 See supra note 6.

13 Restaurant Opportunities Centers United et al., The Glass Floor: Sexual Harassment in
the Restaurant Industry (Oct. 2014) at 2, available at http://rocunited.org/wp-content/uploads/2014/10/REPORT_The-Glass-Floor-Sexual-Harassment-in-the-Restaurant-Industry2.pdf.

14 National Economic Council et al., The Impact of Raising the Minimum Wage on Women And
the Importance of Ensuring a Robust Tipped Minimum Wage (Mar. 2014) at 67, available
at http://www.whitehouse.gov/sites/default/files/docs/20140325minimumwageandwom
enreportfinal.pdf.
15 Raise the Wage Act, H.R.2150; S.1150, 114th Congress (20152016); Pay Workers a Living
Wage Act, H.R. 3164; S.1832, 114th Congress (20152016).

16 The White House, Raise the Wage, https://www.whitehouse.gov/raise-the-wage (last viewed

Oct. 6, 2016) (noting that the Obama Administration has expressed support for the Raise
the Wage Act).
17 Daniel Marans, Hillary Clinton Takes a Stand Against Subminimum Wage for People with Disabilities, Mar. 29, 2016, The Huffington Post, available at http://www.
huffingtonpost.com/entry/hillary-clinton-subminimum-wage-people-with-disabilities_
us_56faf630e4b083f5c605ef20 (noting that Hillary Clinton supports eliminating the tipped
minimum wage).

18 Bernie 2016, Sanders Statement on New York and California Minimum Wage Increase, Apr.
4, 2016, available at https://berniesanders.com/sanders-statement-new-york-californiaminimum-wage-increase/.
19 See supra note 15 (as of Oct. 6, 2016).

20 See Roberto A. Ferdman, Which US states tip the most (and least), as shown by millions of
Square transactions, March 21, 2014, Quartz, available at http://qz.com/189458/the-unitedstates-of-tipping/(compare One Fair Wage states to other states in table assessing Which US
states are nicest to their servers?).

21 According to the Golden Gate Restaurant Association, [d]iners in San Francisco reported an
average 19% tip rate. Samantha Higgins, Golden Gate Restaurant Association, The State of
the Industry: An Update from GGRAs Executive Director (Apr. 2016), available at http://ggra.
org/the-state-of-the-industry-an-update-from-ggras-executive-director/. A 19 percent tip rate
exceeds even the highest state tip rate of 17 percent in Alaska. See supra note 20.

22 See supra note 20.

23 See discussion in Parts 7 and 8, infra.

24 Id.
25 Id.
26 Id.
27 See discussion in Part 8, infra.

28 According to an analysis by economists at the University of California, Berkeley, Institute for

Research on Labor and Employment.

29 See Raise the Minimum Wage, Minimum Wage as Economic Stimulus, http://raisetheminimumwage.org/pages/stimulus (last viewed Oct. 5, 2016); David Cooper & Douglas Hall,
Economic Policy Institute, How raising the federal minimum wage would help working families and give the economy a boost (Aug. 2012), available at http://www.epi.org/publication/
ib341-raising-federal-minimum-wage/.
30 Saru Jayaraman, Why Tipping is Wrong, Oct. 15, 2015, The New York Times, available at
http://www.nytimes.com/2015/10/16/opinion/why-tipping-is-wrong.html?_r=0.

31 Food Labor Research Center et al., Working Below the Line: How the Subminimum Wage
for Tipped Restaurant Workers Violates International Human Rights Standards (Dec. 2015),
available at http://rocunited.org/wp2015b/wp-content/uploads/2015/12/WorkingBelowTheLine_LRR.pdf.

32 William G. Whitaker, Congressional Research Service, The Tip Credit Provisions of the Fair
Labor Standards Act (Mar. 2006) at CRS-3. Tipped workers working for chain establishments
and retail stores were nevertheless largely exempt from protections under the FLSA originally
in that they were not considered to be engaged in interstate commerce. See Douglas, Paul
H. & Hackman, Joseph. The Fair Labor Standards Act of 1938 II, Political Science Quarterly,
Vol. 54, No. 1 (Mar. 1939), pp. 29-55.
33 William G. Whitaker, Congressional Research Service, The Tip Credit Provisions of the Fair
Labor Standards Act (Mar. 2006) at CRS-3.
34 Id. at CRS-5.
35 Id. at CRS-6.

36 See supra note 3.

37 See supra note 5. The following categories of workers were considered tipped restaurant
workers: Waiters and Waitresses; Bartenders; Dining Room and Cafeteria Attendants and
Bartender Helpers; Hosts and Hostesses, Restaurant, Lounge, and Coffee Shop; Counter
Attendants, Cafeteria, Food Concession, and Coffee Shop workers; and Food servers, Nonrestaurant.
38 See supra note 5 (comparing the number of Waiters and Waitresses and Bartenders with the
total number working in customarily tipped occupations).
39 See supra note 5 (derived from Median hourly wage listed in downloadable XLS file).
40 See supra note 5.

41 Maines minimum wage has been set at $7.50 per hour since 2009. See supra note 8. The
tipped minimum wage is Maine is set at 50 percent of the full minimum wage. See supra
note 4.

42 See, e.g., Michelle Corry, Maine Voices: Minimum-Wage proposal could wipe out margins,
put Maine restaurants in peril, Mar. 22, 2016, Portland Press Herald, available at http://
www.pressherald.com/2016/03/22/maine-voices-minimum-wage-proposal-could-wipe-

21

out-margins-put-restaurants-in-peril/; Heather McIntosh, Maine Voices: Take it from tipped

workers, not their bosses: Increase the minimum wage, Mar. 29, 2016, Portland Press Herald, available at http://www.pressherald.com/2016/03/29/maine-voices-take-it-from-tippedworkers-not-their-bosses-increase-the-minimum-wage/.

43 See supra note 5.

44 Id.

45 See Economic Policy Institute, Family Budget Calculator, http://www.epi.org/resources/

budget/ (last viewed Oct. 6, 2016).

80 Steve Ahlquist, Labor Sec. Perez supports raising min wage, eliminating tipped min wage,
Apr. 27, 2015, RIFuture.org, available at http://www.rifuture.org/labor-sec-perez-supportsraising-min-wage-eliminating-tipped-min-wage.html.
81 See supra note 15 (as of Oct. 6, 2016).
82 Id.

46 See supra note 5.

83 Michael Lynn & Christopher Boone, Have Minimum Wage Increases Hurt the Restaurant
Industry? The Evidence Says No! (2015), Cornell Hospitality Report, available at http://scholarship.sha.cornell.edu/cgi/viewcontent.cgi?article=1000&context=chrreports.

48 See supra note 6.

85 Id.

47 Rajesh D. Nayak & Paul K. Sonn, National Employment Law Project, Restoring the Minimum
Wage for Americas Tipped Workers (Aug. 2009) at 8, available at http://nelp.3cdn.net/f6df4ed353601d4c50_x6m6iy650.pdf.
49 Id.
50 Id.
51 Id.
52 Id.
53 Id.
54 Id.
55 Id.

56 See supra note 13 at 1.

57 Id. at 3.
58 Id. at 2.

59 Id. at 78, 25.

60 Id. at 2729.
61 Id.

62 Id. at 2.
63 Id.

64 Id. at 20.
65 Id. at 29.
66 Id.

67 See supra note 4.

68 The Maine Department of Labor instructs employers that when the employer paid wage plus
tips do not average at least the minimum wage at the end of the work week, the employer
must make up the difference in wages. Maine.gov, State of Maine Department of Labor,
Bureau of Labor Standards, Frequently Asked Questions, http://www.maine.gov/labor/labor_laws/faqs.html (last viewed Oct. 6, 2016).
69 Id.

84 National Restaurant Association, Restaurant job growth to outpace economy in 2016 (Feb. 10,
2016), http://www.restaurant.org/News-Research/News/Restaurant-job-growth-to-outpaceeconomy-in-2016.
86 Id.

87 National Restaurant Association, 2016 Restaurant Industry Forecast, http://www.restaurant.

org/News-Research/Research/Forecast-2016 (last viewed Oct. 6, 2016).

88 United States Department of Labor, Wage and Hour Division, Minimum Wage Laws in the
States August 1, 2016, https://www.dol.gov/whd/minwage/america.htm (last viewed Oct.
6, 2016); see supra note 1.

89 National Restaurant Association, Projected Restaurant Employment Growth 20162026,

http://www.restaurant.org/Restaurant/media/Restaurant/SiteImages/News%20and%20
Research/Forecast/2016/2016-Employment-Growth-Map.jpg (last viewed Oct. 6, 2016).
90 Oregon Bureau of Labor and Industries, Oregon Minimum Wage Rates, http://www.oregon.
gov/boli/TA/docs/oregonminimumwage_eng_2016-07.pdf (last viewed Oct. 6, 2016).
91 See supra note 1.

92 See supra note 89.

93 See supra note 88.

94 Ballotpedia, Washington Minimum Wage Increase, Initiative 1433 (2016), https://ballotpedia.org/Washington_Minimum_Wage_Increase,_Initiative_1433_(2016) (last viewed
August 10, 2016).
95 See supra note 89.

96 National Restaurant Association, Projected Restaurant Sales Growth in 2016, http://www.

restaurant.org/Restaurant/media/Restaurant/SiteImages/News%20and%20Research/
Forecast/2016/2016-Sales-Growth-Map.jpg (last viewed Oct. 6, 2016).
97 Id.

98 See supra note 88.

99 See supra note 3.

100 See supra note 89.

101 See supra note 96.

70 Maine law permits tip pooling that is consistent with FLSA and regulations made pursuant
to that Act. See supra note 4.

102 United States Department of Labor, Wage and Hour Division (WHD), Minimum Wages for
Tipped Employees Historical Tables, https://www.dol.gov/whd/state/tippedHistory.htm
(last viewed Oct. 6, 2016).

72 See supra note 14 at 7.

104 Id.

71 National Employment Law Project, An Order of Fair Pay: How a Wage Order Eliminating New Yorks Sub-Minimum Wage for Tipped Workers Will Deliver Fair Pay for Workers,
Women, and the States Economy (July 2014) at 4, available at http://www.nelp.org/content/
uploads/2015/03/New-York-Tipped-Minimum-Wage-Order-Report.pdf.
73 Id.
74 Id. at 6.

103 Restaurant Opportunities Centers United analysis of employment reports (Bureau of Labor
Statistics, Quarterly Census of Employment and Wages, 20012014) for NAICS 722 Food
Services and Drinking Places in Maine, Alaska, California, Minnesota, Montana, Nevada,
Oregon, and Washington.
105 National Restaurant Association, News & Research, State Statistics, http://www.restaurant.
org/News-Research/Research/Facts-at-a-Glance/State-Statistics (last viewed Oct. 6, 2016).

75 Sarah Maslin Nir, The Price of Nice Nails, May 7, 2015, The New York Times, available at
http://www.nytimes.com/2015/05/10/nyregion/at-nail-salons-in-nyc-manicurists-are-underpaid-and-unprotected.html?_r=0.

106 Id.

77 Id.

109 The economic stimulus is calculated by Restaurant Opportunities Centers United by taking
the average of: 1.) a high estimate of the increase from the tipped to the full minimum

76 See supra note 16.

78 See supra note 17.

22

79 See supra note 18.

107 Projected sales per restaurant employee derived by dividing 2016 projected sales by the
number of 2015 Eating and Drinking Places Employees. See supra note 105.
108 See supra note 105.

wage, assuming all restaurant tipped workers earn the tipped minimum wage of $3.75 and
other tipped workers earn $5 per hour, times the number of workers in each category, times
median hours and weeks worked; and 2.) a low estimate of the increase from the calculated
hourly wage when the hourly wage including tips falls below the hourly wage cut-off, times
the actual number of workers, hours, and weeks worked as gathered from ACS, 2013, and
including a multiplier effect. The economic multiplier is based on the macroeconomic multipliers calculated by Moodys Analytics Chief Economist Mark Zandi, which estimate the
one-year dollar change in GDP for a given dollar reduction in federal tax revenue. For the
low-wage worker multiplier, we followed a methodology developed by the Economic Policy
Institute and averaged Zandis stimulus multipliers for the Earned Income Tax Credit (within
the parameters of the American Recovery and Reinvestment Act) and Making Work Pay
(ARRAs refundable tax credit for working individuals and families) for a multiplier of 1.21.

117 Blanca Torres, A year in, the sky is not falling from Seattles minimum-wage hike, March
31, 2016, The Seattle Times, available at http://www.seattletimes.com/business/economy/ayear-in-the-sky-is-not-falling-from-seattles-minimum-wage-hike/; Jared Bernstein, So far,
the Seattle minimum-wage increase is doing what its supposed to do, Aug. 10, 2016,
The Washington Post, available at https://www.washingtonpost.com/posteverything/
wp/2016/08/10/so-far-the-seattle-minimum-wage-increase-is-doing-what-its-supposedto-do/?utm_term=.e26f8b8d0677.

111 Congressional Budget Office, The Budget and Economic Outlook: 2016 to 2026 (Jan.
2016) at 157, Table 2-1, available at https://www.cbo.gov/sites/default/files/114th-congress-2015-2016/reports/51129-2016Outlook_OneCol-2.pdf.

121 Michael Reich et al., Univ. of Calif.-Berkeley, The Economic Effects of a Citywide Minimum
Wage (2007), available at http://www.irle.berkeley.edu/cwed/wp/economicimpacts_07.pdf.

110 S ee supra note 28.

112 See, e.g., Kal Filion, Economic Policy Institute, Increases in minimum wage boost consumer
spending (May 2009), available at http://www.epi.org/publication/snapshot_20090527/;
Raise the Minimum Wage, Minimum Wage as Economic Stimulus, http://raisetheminimumwage.org/pages/stimulus (last viewed Oct. 6, 2016); Fiscal Policy Institute, New York
Economists Support a Statewide $15 Minimum Wage; Recent academic research shows
its good for workers, businesses, and the economy, http://fiscalpolicy.org/new-york-economists-support-a-statewide-15-minimum-wage-recent-academic-research-shows-its-goodfor-workers-businesses-and-the-economy (last viewed Oct. 6, 2016).
113 See Table 2.

114 S eattle.gov, Office of the Mayor, $15 Minimum Wage, http://murray.seattle.gov/

minimumwage/#sthash.wGPyQDaz.dpbs (last viewed Oct. 6, 2016).

115 Compare Seattle.gov, City of Seattle Business License Database, List of Top 100 NAICS
(North American Industry Classification System) with Descriptions (March 2014), https://
web.archive.org/web/20140321225147/http:/www.seattle.gov/licenses/find-a-business
with Seattle.gov, City of Seattle Business License Database, List of Top 100 NAICS (North
American Industry Classification System) with Descriptions (accessed October 2016), http://
www.seattle.gov/licenses/find-a-business. Food services and beverage industry licenses
include the following categories: Full Service Restaurants; Limited Service Restaurants;
Drinking Places; Mobile Food Services; and Snack and Non-Alcoholic Beverage Bars.

116 Jeanine Stewart, Apocalypse Not: $15 and the cuts that never came, October 23, 2015,
Puget Sound Business Journal, available at http://www.bizjournals.com/seattle/print-edition/2015/10/23/apocolypse-not-15-and-the-cuts-that-never-came.html.

118 Coral Garnick, Seattle jobless rate hits 8-year low in August, Sept. 16, 2015, The Seattle
Times, available at http://www.seattletimes.com/business/local-business/state-jobless-ratestays-steady-at-53-percent-in-august/.
119 See supra note 1.

120 See supra note 21.

122 Michael Reich et al., Univ. of Calif. Press, When Mandates Work: Raising Labor Standards at
the Local Level (2014) at 31, available at http://irle.berkeley.edu/publications/when-mandates-work/; see also Susan Berfield, San Franciscos Higher Minimum Wage Hasnt Hurt
the Economy, Jan. 22, 2014, Bloomberg Business, available at http://www.businessweek.
com/articles/2014-01-22/san-franciscos-higher-minimum-wage-hasnt-hurt-the-economy;
Carolyn Lochhead, S.F. praised as model for U.S. on increasing minimum wage, Jan. 28,
2015, SF Gate, available at http://www.sfgate.com/politics/article/S-F-praised-as-model-forU-S-on-increasing-5183378.php.

123 See, e.g., Pete Wells, Danny Meyer Restaurants to Eliminate Tipping, Oct. 14, 2015, The
New York Times, available at http://www.nytimes.com/2015/10/15/dining/danny-meyerrestaurants-no-tips.html; Bret Thorn & Nancy Kruse, Is tipping on the way out?, Mar. 1,
2016, Nations Restaurant News, available at http://nrn.com/operations/tipping-way-out;
Phil Vettel, No-tipping policy begins at NYC restaurant and industry is watching, Nov. 20,
2015, Chicago Tribune, available at http://www.chicagotribune.com/dining/ct-no-tippingnyc-restaurant-danny-meyer-20151119-story.html.
124 See supra note 20.
125 See supra note 21.

126 Sylvia Allegretto & Carl Nadler, Tipped Wage Effects on Earnings and Employment in FullService Restaurants, Industrial Relations, Vol. 54, No. 4 (Oct. 2015) at 646, available at http://
www.irle.berkeley.edu/cwed/allegretto/pubs/AllegrettoNadler.pdf.
127 See supra note 11 at 11.
128 Id.

129 Quote obtained by the National Employment Law Project.

23

25

the CASE for PHASING OUT

MAINES SUBMINIMUM WAGE
for TIPPED WORKERS

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