Special thanks this week go out to The Times Record for allowing me the space to lay out this four-part series over the past five weeks about saving the tip credit for servers and bartenders in Portland this November. I really appreciate the latitude, as typically these columns are standalones from week to week and rarely a four-part series.
The reason I’ve made it a series is because — unlike what social media may have you believe — most policy issues are complex and not summed up best as a slogan. The tip credit is complex, and make no mistake, for the majority of voters in November who are not following politics closely yet, they will hit the ballot box, read “Question D: An Act to Eliminate the Sub-Minimum Wage, Increase Minimum Wages and Strengthen Protections for Workers,” and think they are supporting bartenders and servers by voting yes, when 97% of servers do not want a change in how they get paid (according to an industry study in 2016).
In my final column on the subject (for now), I want to hit on a few other tactics that proponents of this issue could use in the coming weeks (as they have used these tactics before) and the misconceptions around them. Then I want to summarize what your “yes” or “no” vote means.
One side note: Though I’m the executive director of the Bath-Brunswick Regional Chamber and this vote is on the city of Portland ballot (which I normally wouldn’t comment on), many past initiatives that have gone statewide began at the Portland City Council chambers. Thus stopping this now helps my members who are passionate about this topic, and the entire state.
Let’s dive into why people typically work in restaurants and bars as tipped employees. This is a fundamental mistake made by proponents of tip credit elimination. Many tipped servers do this job because they like the fast-paced environment, like being around people, like that they get paid daily based on their performance, and like their unlimited earning potential. Many aren’t interested in a typical 40-hour work week and hourly pay.
Think about the schoolteacher who picks up a couple of server shifts on weekends or on school nights. Do you think that teacher does this because they can make $12.50 or $15 or $18 per hour for pre-tax amount of around $75 for a five-hour shift? Of course not. They work as a server because on a good five-hour dinner shift they can make $150 to $300 in tips serving and even more bartending.
Servers and bartenders are commission salespeople. Read that again. They are just like Realtors and car salesmen, they get a commission on what people buy. Instead of one big purchase like those other professions, it’s 40 to 50 purchases per shift (or much more for bartenders). When was the last time there was a clamoring for realtors and car salesman for not getting enough wage?
Which is another point — the tipping system is why people choose this industry. It’s not a drawback; it’s an incentive. They take these jobs with the understanding this is how they will get paid and that the better service will likely bring more income. They go to work knowing this. I work in an office and go out greeting people and, guess what? The nicer I am to people and the better I do my job, the more I get paid when annual reviews come along. It’s not exploitation; it’s the real-life scenario of doing your job well getting you paid more.
One final complex trick you need to avoid. Assuredly, over the next two months some server will post a picture on social media with their pay stub with some caption that reads, ‘Can you believe I worked 28 hours this week and this is all my employer paid me?” and the pay stub will be some ridiculously low number like $17.00 or something. Do you know why that is? Because servers have to claim their tips and the taxes that come from the tipped income received have to come out of something, so it comes out of the hours paycheck.
Doing this math, if a server worked 28 hours, and the employer pays half the minimum wage (for ease of math, let’s use $14, which is higher than minimum but makes half of it $7), then the server gets paid from the employer, pre-tax 28 hours times $7, or $196. Let’s say 25% is taken out in taxes, then the net on the hourly paycheck is $147. But the server in those 28 hours made $520 in claimed tips. When you take 25% of taxes from those $520 in tips, you get $130, which when deducted from the $147, the check shows a net of $17 in the “paycheck.”
Technically, the server is telling the truth, that the paycheck is only $17 from the employer. What the server is neglecting to tell you is that he or she made $520 in tips, plus that $17 for a total income that week of $537 for 28 hours of work. That’s an average $19.18 per hour. Remember, the majority of servers who testified in 2016 said they make $25 to $35 per hour (which is roughly $700 to $1,000 per week in tips for a 28-hour shift).
My summary is this: Question D is specifically designed, even in title with the use of “sub-minimum wage,” to deceive you. It’s a question that promotes an $18 minimum wage in Portland (when many Portland employers already pay more than that) and eliminates the tip credit when 97% of servers said they want to keep their tipped system. As nonservers, we should not be dictating how tipped servers get paid. Would you want to justify your profession and let the general public vote by referendum on your salary? I didn’t think so. Ask them; they’ll tell the truth. Vote “no” on Question D if you live in Portland.
Cory King is the executive director of the Bath-Brunswick Regional Chamber.
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