Your March 6 editorial regarding a proposed citizen initiative on the November ballot to raise the minimum wage fails to recognize one critical component of the deeply flawed Maine People’s Alliance proposal: the detrimental impact that the elimination of the tip credit would have on small-business owners and service employees in Maine.

The editorial, which was written strictly from the point of view of the proponents of this effort, simply fails to address the effect that the elimination of the tip credit would have on restaurants, a cornerstone of Maine’s, and Portland’s, small-business economy.

The tip credit, which has been in place for decades, allows for a restaurant employer to pay their tipped workers half the prevailing minimum wage. It accounts for the fact that tipped workers will receive tips, like commissions, that make up for and exceed the difference between the current standard minimum wage of $7.50 per hour and the cash or tipped wage, which is currently $3.75 an hour. My employees always exceed the minimum wage by $20 to $30 per hour.

Eliminating the tip credit for service workers in Maine would result in a nearly 260 percent increase in the cost of employing tipped workers over the next few years, and will, without a doubt, have a negative impact on the jobs and livelihoods of both tipped workers and their small-business employers.

It would also affect the ability of tipped employees to maximize their earnings by providing exemplary service, as people began to hear about the sizable increase in these workers’ base pay.

Margins in the restaurant industry are slim, generally 3 to 5 percent, so an increase of 260 percent for tipped workers over time is bound to wipe out that margin and place most area restaurants with table service in an extremely negative position.


The restaurant landscape in Maine would change forever, and the accolades received by the city of Portland – and many other cities and towns in our state – will begin to diminish, as will the jobs for workers and the investments made by small restaurant owners and entrepreneurs. Developers would not open new restaurants, and those small businesses with marginal reserves would be forced to close.

Make no mistake: Many small-business owners like myself believe the statewide minimum wage for non-tipped workers should increase to the $10 level, as it has in Portland and as proposed in a competing measure put forth by a large coalition of Maine business groups.

But the 50 percent tip credit should be retained in statute, as was also achieved in a similar sense in Portland’s ordinance. The Portland City Council found that keeping the tipped wage at $3.75 was the right course of action, both for Portland’s restaurant owners and for their tipped employees.

Ask any tipped employee at a restaurant near you if they would prefer to make a set wage or hustle and create their own destiny. The employees at my restaurant would always choose their own initiative.

We must not punish employees who now make a very good living on tips – or restaurateurs, who are the fuel of the city and state’s economies – with Seattle-style statutes that will depress growth in our economy and cost jobs.

The restaurant business model in Maine is one that is predicated on the use of the tip credit, and it works well. All monies borrowed and cash expended by an investor are based on the fact that servers can use tips as part of their income.

To eliminate this long-standing statute will not only stop investors from opening new table-service restaurants in Maine, but also make the survival of many of Maine’s small, iconic restaurants difficult at best. If the Maine People’s Alliance measure is passed in November, Maine would be the only state east of the Mississippi that would not have this option available to its restaurant community.

I strongly encourage voters to contact their legislators to urge them to support the competing measure before the Maine Legislature that would raise the minimum wage to a sustainable and reasonable $10 an hour, but keep the tip credit that is current law. The tip credit is absolutely imperative for the survival of our small businesses, both in Portland and across the state.


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