The future for waged workers in Massachusetts may be looking brighter — In June, Governor Baker approved a bill that will raise minimum wage from $11 to $15 by 2023, and Amazon, after the roll-out of plans for major expansion in the state, announced it will raise its minimum wage to $15 an hour starting in November.
Yet a raise for tipped workers at restaurants remains on the table.
The Department of Labor requires tipped workers in Massachusetts to be paid a minimum of $3.75 an hour — a median subminimum wage in a state with one of the highest costs of living. For many restaurant servers, this means depending on the good graces of customers.
Some Boston restaurants are changing that by overhauling the age-old practice of relying on gratuities.
Currently, California, Nevada, Oregon, Alaska, Washington, Montana, and Minnesota are the only states that require employers to pay the full state minimum — that's $11 in California, $8.25 in Nevada and $7.87 in Minnesota — before tips.
Saru Jayaraman is the co-founder of New York-based Restaurant Opportunities Centers United, an advocacy non-profit that promotes a full minimum wage for tipped workers in all fifty states. Jayaraman said the Massachusetts restaurant business — a growing 17 billion dollar industry that accounts for about nine percent of employment in the state — is ready for a change.
"It's really a mutation based on an old practice," Jayaraman said, noting that although tipping originated in feudal Europe, it was popularized in the United States when restaurant owners sought the labor of newly-freed slaves but did not want to compensate them.
Yet Steve Clark, vice president of governmental affairs at the Massachusetts Restaurant Association said most restaurant owners in the state would be reluctant to change their business models today.
“Gratuity has been ingrained in Americans’ consumer habits when they go out to eat for centuries,” Clark said. He noted that most places are only operating on a three to five percent profit margin, which makes paying employees a full wage difficult.
That might be changing.
The movement to eliminate tips — or diminish the significance of gratuity by paying workers more — is gaining popularity in metropolitan areas like San Francisco and New York, where Danny Meyer, owner of Union Square Hospitality Group and Shake Shack, eliminated tipping at all of his restaurants.
"I think anyone in Massachusetts would be hard pressed to say the New York restaurant industry isn't booming," Jayaraman said.
In April, Congress amended the Fair Labor Standards Act to no longer prohibit employers from pooling tips between the front and back-of-house employees — meaning food runners, dishwashers, and line cooks receive a portion of the tip servers collect.
Still, workers who receive tips must be paid the full minimum wage for pooling to be legal. Clark said a move like that might not work for the majority of restaurant owners in Massachusetts, where it is still illegal to pool tips even if servers are paid the full minimum wage.
“Most people that run restaurants are going to see it as a decrease for their tipped employees,” Clark said.
Local Initiatives
There are some local restaurants making a variety of new wage models work — albeit, on a much smaller scale.
Peter Simpson, owner and manager of Haymarket Cafe in Northampton, eliminated tipping at the cafe in 2015. Instead, he raised menu prices so he could pay all of his employees at least $14 an hour.
“I strongly feel that it should not be the customers who are paying the employees,” Simpson said. The cafe currently staffs about 20 employees, and Simpson said he has only needed to make a handful of new hires in the past two years.
“I have been open for 27 years now, so there’s a lot of people who have been coming here for a long time,” Simpson said. “There’s a visceral reaction customers have to a place that pays employees a livable wage.”
Today, the cafe has about 20 employees who are paid between $15 and $20 an hour. Simpson raised menu prices by 20 percent to account for the wage increase.
“A big concern for customers is the sticker shock,” Simpson said. “But you really have to stress what we’re trying to do here.”
Still, Simpson admitted Haymarket Cafe is not an ideal model for investors.
“I’ve never made any money here, it’s not like there’s a five percent profit margin, all profits go back to the cafe,” Simpson said.
Robert Harris, who owns The Table at Season to Taste, a small, twenty-seat restaurant in Cambridge, announced the establishment would no longer accept gratuities, opting instead to include labor costs in the price of food and beverages.
A full meal at the contemporary French eatery used to cost $75 per person without drinks, and now runs at $98.
“The restaurant is off by at least 10 percent compared to last year, because of the sticker shock component,” Harris said, even though the bottom line increase for customers was a lateral cost.
Yet Harris said the new model engenders a more collaborative working environment, so the blow to his bottom line worth it. The Table is staffed with 12 employees, all of whom assist in multiple areas of the restaurant.
“The servers feel good because they understand back-of-house is getting closer to what they’re making and pay is distributed in a more equitable fashion,” Harris said.
Harris, who grew up working in the restaurant industry, said he noticed significant disparities in how much tipped and non-tipped workers brought home on busy nights.
“You have servers come in at three or four o’clock, stay a little later, but generally make 30 to 40 percent more than the chefs,” Harris said.
The Table now pays both front and back-of-the-house workers between $18 to $25 an hour, not including salaried employees.
“For a brand new restaurant to do this, it would take a lot of courage,” Harris said.
The Impact on Servers
Juliet in Somerville operates under a similar business model. The small, European-style cafe and restaurant runs on a gratuity-free, revenue-sharing model.
“The incentive is shared by everyone to work together to create revenue and share in the success of that,” Co-owner Joshua Lewin said. Lewin declined to disclose the starting wage for employees at Juliet.
Former Juliet server Sam Mangino said the gratuity-free system made her feel more at ease interacting with customers.
“[Tipping] basically means employers give up the responsibility to pay their employees, and yet the guests are socially but not legally obligated to make it up,” Mangino said.
Still, most servers are willing to take the risk.
Melanie Brown started working as a server 18 years ago. Although Brown said patrons might behave poorly because they know she relies on customers to pay her wages, that doesn’t change the way she approaches her work.
“When I’m taking care of tables I’m not thinking of [tips],” Brown said. “I genuinely care about people.”
Fiona Luddy is a server at a high-end restaurant in Downtown Crossing. Luddy serves about 30 hours a week, and said she can make $200 to $400 per night, depending on how busy her section is.
Yet Luddy said even a $15 hourly wage would not suffice for the work she puts in as a server.
“You would sell your soul for tips but not for an hourly wage,” Luddy said.
