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Kelli Dietz was a veteran server at Moose Bar and Grill in North East Minneapolis.
One night, a Minneapolis police officer, “Grabbed my arm while i was working and he told me in my ear what he wanted to do to me [sexually]. I felt helpless because of my position at the bar. I have to treat them well to get tipped well. I am embarrassed to say that I allowed it.” She would later learn that the officer, Thomas (Tyler) Robert Tichich, was relieved of his position after being accused of sexual assault in December 2016. Three days ago a jury, found him guilty. Tichich awaits sentencing.
Understanding the harassment that tip-reliant wages inevitably force her to tolerate, Dietz said, “I feel a pressure to send a headshot with my freaking resume because I know it will increase my chance of getting my job.” Often, earning higher tips resulted in being placed in uncomfortable situations throughout her work day.
Advocates of higher minimum wages with no carve outs for tipped workers point to tips as a source of sexual harassment in the hospitality industry. Former Executive Director of grassroots campaign 15 Now, Ginger Jentzen has worked in the service industry for many years. She explains that,
“In Minnesota, raising the minimum wage and keeping the same wage for tipped and non-tipped workers is in part about undoing the economic basis for women to put up with harassment in the workplace. Women make up the majority of service industry workers, and report tolerating higher rates of sexual harassment in states with a sub-minimum wage for tipped workers.”
Despite this, there are those in the industry who would prefer to see tipped workers “carved out” of the minimum wage laws and ordinances gaining strength in Minnesota and across the U.S. Their alternative focuses on a formula that allows employers to use a portion of employee earned tips to pay part of a required minimum wage, a “tip credit.”
Jennifer Schellenberg is the co-founder and President of the Restaurant Workers of America, an advocacy organization that dedicates its efforts, “to preserve and protect tipping and tip credits.” She has been a server in Minnesota for almost two decades and is one of the most visible figures within the debate for $15.
A tip credit permits an employer to subtract potential tip wages earned from its minimum wage obligation for tipped employees, equal to the difference between the required cash wage and the local minimum wage. The required cash wage is the tip credit subtracted from the minimum wage; the result being that employers can pay their tipped employees less than the state minimum wage.
Minnesota has been a “one fair wage” state ever since tip credit was eliminated by 1984 legislature. Noting the link between tip wages and gendered work, Chris Conry, Strategic Campaigns Director at non-profit Take Action Minnesota explained that, ”the victory of 1984 was a response to the organizing of women.” President of the Minnesota AFL-CIO Bill McCarthy further explained that the 1984 legislature, “understood that tips are a reward for good service between the customer and worker. They understood that tips shouldn’t be an excuse to pay working people less.”
Schellenberg disagrees with the premise that tips are tied to sexual harassment. She explained that, “at work I can tell people to get the fuck out.”
“The claim that raising our wage and/or discouraging tipped income is going to combat sexual harassment is not only nonsensical from a human to human basis, but from a statistical basis. Other professions that make more are dealing with more sexual harassment,” She said. “The claim that our pay scale somehow encourages this behavior and/or people to put up with this behavior takes away blame from the perpetrator. There is no way, shape, or form that because I am a tipped worker I am going to put up with somebody grabbing my ass.”
The Fight a Living Wage and a Focus on Tips
The passage of a living wage ordinance in Minneapolis with no carve outs proved to be a victory for progressive organizations and a set back for industry tied organizations pushing for a tip credit like the Minnesota Restaurant Association and Pathway to $15.
Advocates of a tip credit argued that it would decrease inequity in Minneapolis and protect tipped workers. They also argue that the restaurant industry in Minneapolis would be irreparably damaged without a tip credit.
The debate over $15 rages anew as in St. Paul as Mayor Melvin Carter made makes statements indicating his support for $15, while advocates for a tip credit or “tip penalty” regroup under a the RWA. Rep. Joe McDonald (R-Delano) has brought the tip credit debate to the entire state as chief author of House File 4061.
According the to House research staff, “The bill repeals the prohibition on tip credits in current law” and would create a two-tiered minimum wage for tipped employees.
After more than three decades, HF 4061 would bring a tip credit to the statewide minimum wage, reversing a 1984 bill that eliminated the tip credit. Attempts by Republicans since 1984 to introduce a tip credit have consistently failed.
Conry argues that the bill will affect the Minneapolis living wage ordinance, “for the category of tipped workers, it would preempt the local ordinance.”
Over email Schellenberg said that she helped helped influence the bill’s amendments.
Schellenberg argues that a tip credit is necessary, otherwise the restaurant industry will collapse, disproportionately harming communities of color.
“What I’m fighting for is the ability for business to give incentivized raises for people that actually live on their paycheck.”
She stated that at her employer Northbound Smoke House and Brew Pub, the profit margin is 2.04%. According to her, an increase to $15 with no tip credit means $300,000 a year in extra costs.
“There is not gonna be extra wiggle room to giver Javier and Jose an extra 3 bucks because they work really hard and deserve it. Because at this point, our business is busting at the seams and unable to make profits,” she said. “If I don’t advocate for this tip credit, then my Ecuadorian busser will lose his job and my dishwasher’s position will be taken by the cooks. The lowest paid people will always be the ones cut from our community.”
Wade Luneburg Political Director of UNITE HERE! Local 17, testified at the hearing, “I’ve been attached to this industry for 35 years myself, many years as a server. Employers will generally open with remarks by testifying that it can be a harsh business, providing hospitality to the consumer with slim profit margins and slim rewards. But this is NOT an industry in crisis. Instead, it keeps expanding and diversifying into more ways of doing business”
The non-profit JOBS NOW Coalition confirms Luenberg‘s assertion. JOBS NOW assessed the Fourth Quarter 2017 Minnesota Department of Employment and Economic Development (DEED) Job Vacancy Survey and found that, “food preparation and serving openings are up 200 percent.”
Minnesota Reflects a National Strategy
Restaurant owner and representative Dave Baker (R-Willmar) asserted that a minimum wage increase would be detrimental to the industry, and without a tip credit he cautioned that, “if it continues as the way it is going now, our full-service restaurants won’t exist in 10 years.”
Jentzen explains that the fear and urgency expressed by industry-tied advocates was the same language used during the MInneapolis $15 Ordinance.
“When working people built a movement for $15 an hour in Minneapolis, big business lobbied hard for their interests. Including the Restaurant Association, with its long history of stoking fear against raising the minimum wage; but for them, this is about protecting profit,. not workers’ rights,” she said. “These big business groups fought the statewide minimum wage increase from $7.25 to $9.50 and sick time, making the same doomsday arguments they do across the country that never become reality.”
These urgency arguments from tip credit advocates align with national strategies to combat minimum wage increases. Reporting from The Intercept outlined plans obtained by an internal memo from longtime food service industry consultant Rick Berman. Berman advises clients to fund his organization in order to shift the debate on minimum wage.
Berman has called on the food service industry, “to make the case that businesses cannot afford greater labor costs.” This is done through a comprehensive media outreach strategy, including “opinion columns and letters to the editor, television and print advertisements, and support for websites run by Berman, including Faces of 15, a site featuring businesses allegedly shut down over local minimum wage hikes.”
According to a National Restaurant Association commissioned poll obtained by The Intercept, the alarmist messaging is falling flat. The GOP pollster Frank Luntz’s firm Luntz Global found that, “seven in 10 Americans want to see the minimum wage raised even if it means that they’d have to pay more for meals. It also found that the industry’s various talking points against raising the wage are mostly falling flat with the general public.”
Minnesota advocates for a tip credit have also relied on conservative publications to get their message out. Schellenberg refers to a pro-tip credit op-ed published in the Washington Examiner, a Philip Anschutz owned publication which is recognized as a conservative publication. An April 19 article published on reason.com, a self described libertarian publication, was promoted in an industry Facebook group sympathetic to tip credit.
Regarding the source of its funding, Schellenberg explains that RWA does not get national funds; instead, revenue comes from membership fees from restaurant workers and small business owners. “Membership is free for the first year and $10 afterward. “The majority of our funding right now is coming from small business owners. Small business membership is $100. The majority of our members are tipped workers.” However, Schellenberg asserts that 15 Now and Restaurant Opportunity Center United (ROC) are funded by unions, thereby working in their interest..
She argues that ROC in particular works in the interest of unionization, “I have read quotes from Saru [Jayaraman Co-Founder and President ROC] one saying, “The goal is to create a labor friendly environment, so that in a few years the unions can organize the workers. That quote is very telling to me. ‘Labor friendly’ is a very specific way to say I want workers to be distressed so they need representation. There is no other way to interpret that. There is no other way to say workers are not distressed now and they don’t need representation now, but we want to create an environment where they need representation. ‘Labor friendly’ is a very specific way to say that.”
In response, Jayaraman explains that, “ROC is a non-profit organization whose mission is to raise wages and working conditions in the restaurant industry—nothing more. We’re not a union and have never received any funding from any union. In fact, the National Labor Relations Board has put out official memorandum stating we’re not a labor organization.”
Ultimately there is a lot at stake as the conversation on tips has shifted from local ordinances to state legislation.