NYC’s Minimum Wage Jumps to $16 an Hour—But Not for Many Tipped Workers

Organizers with the One Fair Wage campaign say increasing pay rates for tipped workers across the state is especially pertinent given the recent arrival of thousands of new immigrants, many of whom have sought work in the food and restaurant industries. The campaign is pushing for Gov. Kathy Hochul to take up the cause this session in Albany.

On Jan. 1, New York City’s minimum wage jumped to $16 an hour, part of a plan passed by state legislators last year to annually increase the minimum pay rate across the state through 2026.

But many tipped workers, including those in the restaurant and food service industry, are still earning less—though labor organizers are looking to change that this year, urging Gov. Kathy Hochul to prioritize nixing the so-called “subminimum wage” in the legislative session that kicked off this week.

Under state law, employers are allowed to pay certain workers less than the minimum wage—in New York City, $13.35 for service employees and $10.65 for food service workers—as long as the employee’s earned tips make up the difference, an amount known as the tip credit.

And while former Gov. Andrew Cuomo previously eliminated the subminimum wage for certain tipped workers, like car wash employees and nail technicians, it’s remained place for restaurant and food service workers, a sector that’s suffered a staffing shortage in the wake of the COVID-19 pandemic.

“The restaurant industry already is an industry that is underpaid and undervalued,” said Tefa Galvis, national organizing director with the One Fair Wage campaign and a former food industry worker herself. “People don’t want to work exploitative jobs.”

In New York, the campaign has been pushing for passage of a bill sponsored by State Assemblymember Jessica González-Rojas and State Sen. Robert Jackson that would gradually raise the pay standard for all tipped workers until its on par with the minimum wage, phasing out the subminimum wage over the course of five years.

The minimum wage has gone up! It's $16 in NYC, Westchester & Long Island and $15 for the rest of the state.

BUT this isn't the case for everyone. Last year Albany left behind restaurant workers who are still paid a subminimum wage. This year let's fight to pass #OneFairWage!

— Jessica González-Rojas (@votejgr) January 2, 2024

The group wants Hochul to include the proposal in her budget plan this winter, citing the impact of inflation and increased cost of living. Seven other states across the country have adopted similar legislation, including California, where tipped workers are less likely to rely on public assistance than their counterparts in New York, according to a census data analysis from the campaign.

“We are seeing people leave New York, we’re seeing people not being able to afford to live in New York,” Galvis said.

A spokesperson for Hochul said the governor “will review legislation if it passes in both houses of the Legislature.”

One Fair Wage plans to rally in Albany Monday in support of the bill. They say its passage is even more critical this year given the recent arrival of new immigrants to New York, many of whom have sought work in the food and restaurant industries. Local leaders have pushed to speed up federal work authorization and increase employment opportunities for new arrivals, tens of thousands of whom remain in the city’s shelter system with limited job options.

“With a significant influx of migrants and asylum-seekers, the risk of exploiting these individuals in jobs with sub-minimum wages is alarmingly high,” Saru Jayaraman, president of the One Fair Wage campaign, said in a statement Tuesday.

While employers are legally required to make up the difference between the subminimum wage and the minimum wage if a worker’s tips don’t, that doesn’t always happen, according to experts and advocates.

A 2019 report from the state’s Department of Labor, following a series of public hearings on the subminimum wage, detailed “rampant wage theft in particular industries.” A recent analysis by the news sites ProPublica and Documented tallied more than $52 million in stolen wages from New York restaurant workers between 2017 and 2021, the most of any sector.

Immigrant workers in particular “are more likely to be exploited and taken advantage of because they’re in survival mode,” Galvis said. “Ending subminimum wages and having one fair wage for everyone cuts the possibility of wage theft.”

Some restaurant industry groups, however, are opposed to phasing out the subminimum wage, saying it would hurt businesses in a sector that was hit hard by the pandemic and already operates on thin profit margins, and would force owners to cut jobs. “Maintaining the tip credit” was the top item on the New York State Restaurant Association’s list of legislative priorities last year.

“Businesses will change the way they staff and operate, suffer and close because they can’t afford the massive expense of losing the tip credit,” reps for a hospitality trade group and an organization representing service workers argued in a Daily News oped in 2018, when Albany leaders were previously debating the change.

But Galvis pointed to the other states that have since eliminated the tip credit as evidence that the cause is gaining momentum, and said it’s an issue of equity. “Businesses and business owners need to pay their part,” Galvis said. “If the owner gets to make a profit over having the business, why doesn’t the service worker get to have a profit over their service, which is their labor?”

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