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Editorial: Keep the tip credit

The state Labor Department is holding public hearings on a proposal from Gov. Andrew M. Cuomo to get rid of the subminimum wage for tipped workers, such as restaurant servers. The change would require employers to pay their people full minimum wage, which in upstate New York is $10.40 per hour.

The fact is, this is a change that many workers, as well as many employers who pay them, are dead set against. However well-intentioned, it seems like a case of government looking to fix something that isn’t broken.

The upstate subminimum wage for food service workers is $7.50, $2.90 less per hour than full minimum wage. The lower pay tier – called a tip credit – exists because servers, bussers and bartenders get money from tips that is supposed to fill the gap.

If the law requires waiters and waitresses to be paid full minimum wage, two outcomes are likely. First, higher labor costs will force most restaurants to raise prices. Second, restaurant customers – taking note of the bump up in prices and their servers’ higher wages – are likely to be more frugal when it comes to tipping.

If a server’s wages plus tips don’t reach the level of minimum wage, employers are required to make up the difference. Opponents of the tip credit point out that some employers manipulate their books or use other subterfuge to avoid paying employees their due.

Other critics charge that servers whose take-home pay depends on tips will be more vulnerable to sexual harassment from customers, with the servers in no position to risk calling out someone’s misbehavior.

Those arguments aren’t without merit, but taking away the tip credit would be an overcorrection, one with unfortunate consequences.

Consider the act of ordering a pizza for delivery. Who among us can say they haven’t skimped on the delivery person’s tip when the pizza purveyor includes a delivery charge on the bill?

The same logic would hold when a restaurant patron noticed that her favorite chicken Parmesan dish had gone up in price by a few dollars, partially due to her server being paid a higher wage. That’s the menu equivalent of sticker shock and it would certainly lead to a decline in generosity by customers at tip time.

Demonstrators on both sides of the issue voiced their views in a public hearing on Tuesday at Erie Community College’s city campus.

One restaurant server, Bridget Michalski from JP Fitzgerald’s in the Village of Hamburg, spoke in favor of keeping the law as is. Michalski said she has been waiting on tables for 38 years and has made enough in tips to help her and her husband put eight children through Catholic school.

“I’ve earned everything I’ve gotten,” she said, adding that a higher minimum wage would cut into her tip income.

We’re all for workers getting a fair shake. But being a food server is a profession in which the most competent, hardworking and likable people often reap the most rewards. It would be unfortunate if some of those working men and women had their livelihoods diminished by Albany overreach.

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