Waiters and bartenders easily rake in hundreds of dollars in tips an evening at swanky Manhattan establishments. But a report to be released Monday says hospitality workers in the state are twice as likely to live in poverty as workers in sectors that don’t rely on tips.
The report, by a nonprofit anti-poverty advocacy group, is timed to a hearing in New York City by the state Wage Board to decide whether to raise the minimum wage for several hundred thousand workers who rely on tips as part of their income. The decision will affect restaurants and hotels, which represent one of the fastest-growing sectors in the state’s economy.
The median hourly earnings, including tips, of hospitality workers is less than two-thirds of the hourly earnings for the workforce as a whole, according to the report by the Community Service Society.
Under a “tip credit” intended to take into account their extra earnings, waiters, bartenders and other tipped workers in the state can legally be paid as little as $5 an hour instead of the state minimum wage of $8 an hour.
“This sub-minimum wage for tipped workers has some really severe effects—from homelessness to issues of food stamps and the rest,” said David Jones, president and chief executive of the Community Service Society.
Andrew Rigie, executive director of the New York City Hospitality Alliance, an industry group, said a significant bump in wages “would have devastating implications” for restaurant entrepreneurs struggling in a difficult industry.
The wage board was convened to focus on tipped workers at the order of Gov. Andrew Cuomo after a 2013 deal to raise the state’s minimum wage incrementally over several years to reach $9 by 2016 excluded tipped food-service workers. The board has been holding hearings across the state about whether to raise wages for the excluded workers and will make a recommendation to the state labor commissioner, who will make the final decision.
Since the 2013 deal, advocates feel political winds have shifted in their favor. They attribute the shift to a national push for a higher minimum wage and the election of New York City Mayor Bill de Blasio , whose campaign highlighted income inequality in the city and called for the creation of middle-class jobs.
“The times were different. It was before the emergence of real concerns about the incredible inequity in wages that was developing in New York state,” Mr. Jones said.
Advocates want to see workers make the state minimum wage, saying that would help create stable middle-class jobs. According to the report, 75% of hospitality workers in New York City are 25 years old or older. Nearly half are the head of their households.
Particularly troubling, Mr. Jones said, was the racial difference in wages. Latino food-service workers make on average $11.41 an hour with tips, compared with $12.17 an hour for white workers, the report said.
But a report released last week by the Hospitality Alliance found some workers are already making well above the minimum wage. Bartenders on average earn $27.48 an hour and servers average $25.34 an hour, the alliance found.
Alexandra Sanjuan, a 44-year-old Colombia immigrant, has worked in the restaurant industry since she moved to the U.S. in 1998. She has worked everywhere from a Colombian restaurant in Jackson Heights, Queens to Italian restaurants on Long Island.
She said she has never made enough to support herself and her two children, who are now 18 and 27 years old.
“A lot of these places they don’t even pay the minimum wage to the servers. They just give you $10 for the shift or $16 for 12-hour shift,” she said. “In other place they don’t even pay. You work just for the tips.”
Employers are required to pay the difference if employees make less than the standard minimum wage including tips. If employers don’t make up the difference, Mr. Rigie said, it is an issue of enforcement and a reason to raise the minimum wage for tipped workers.
Jeffrey Bank, chief executive of a restaurant group that owns Carmine’s Italian restaurant and Virgil’s Real Barbecue, said he employed a server, runner and busser for each table. If he had to raise wages he would simply cut the runners.
“The irony is what you’re really hurting is the employee,” he said.
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