New Jersey’s tipped employees are giving a gratuity to Trenton lawmakers – do not eliminate the tip wage system.
A new statewide survey found that a strong majority of tipped employees oppose legislative efforts to dismantle the current tip wage system, which allows them to earn more than the state’s minimum wage of $15.49 per hour.
Under New Jersey’s current system, tipped employees are guaranteed to earn at least the state minimum wage of $15.49 per hour. Tipped employees receive a tip wage of $5.62, and if their tips combined with the tip wage fall short of $15.49, employers are legally required to cover the difference. As a result, the current system ensures that every tipped employee must legally make at least the state minimum wage.
Melissa Gourley, who has worked in the service industry for more than 15 years, said her dream of becoming a nurse would not be possible if the current tip wage system was eliminated.
“I make nearly twice as much bartending as I did working in the ER,” said Gourley. “The only reason I can pay for nursing school and work toward becoming an RN is because the tip wage system allows me to earn well above minimum wage.”
The New Jersey Restaurant & Hospitality Association (NJRHA) mobilized more than 150 tipped employees and employers last spring to testify before lawmakers in opposition to a proposal that would eliminate the tip wage. Legislation was introduced on April 4 that would eliminate New Jersey’s tip credit system.
NJ A5433 would require restaurant owners to pay all workers the full state minimum wage ($15.49 per hour), regardless of the tips they receive. The legislation was introduced by Rep. Verlina Reynolds-Jackson, a fourth-term Democrat from District 15. She said the measure was “about economic justice.” Ultimately, the proposal was changed to a discussion-only hearing at the last minute. Legislators did not vote to move the bill.
Over the summer, NJRHA led a survey of New Jersey’s tipped workforce about efforts to eliminate the tip wage. Nearly 400 servers, bartenders and other tipped employees responded.
The survey found:
- 88% prefer the current system over a flat wage model
- 79% say the tipping system works well and should not be changed
- 83% report earning $20-$40+ per hour with tips and base wage combined
- 82% believe eliminating the tip credit would reduce their earnings
NJRHA President and CEO Daniel Klim said the survey results, in addition to the standing-room only hearing earlier this year, leave no room for confusion on how tipped employees feel about maintaining the current tip wage system.
“This survey delivers a clear message from the very people most impacted – tipped employees want to preserve the system that lets them earn well above minimum wage,” Mr. Klim said. “Lawmakers should listen directly to these workers before pursuing changes that could put their livelihoods at risk, especially when they did not ask for this change.”
Survey participants emphasized that tipping not only has high earning potential but also provides vital income flexibility. Many expressed concern that eliminating the tip credit would lead to mandatory service charges and smaller tips.
“I simply could not absorb the increased labor cost that would happen instantly if tip wage was eliminated,” said Cory Wingerter, owner of The Tiger’s Tale in Montgomery. “I would be forced to raise menu prices, cut shifts and likely eliminate jobs just to keep the doors open. Many of our employees have been with us for a long time and this change would be devastating.”
The results reflect the reality of service workers in other jurisdictions, where proposals to eliminate the tip wage have been enacted, including Initiative 82 in Washington, D.C.
“We don’t have to guess what happens when policies like this go into effect – we’ve already seen the fallout,” Mr. Klim said. “In Washington, D.C., restaurants were forced to cut shifts, reduce staff and replace tipping with mandatory service charges just to keep their doors open. Tips dropped. Servers started earning less – not more. Dozens of long-time restaurants shut down, and the warm, personalized dining experience diners love, was replaced with a colder, transactional model.”
Officials there have since paused the phase-out policy, acknowledging the harm it caused to both workers and businesses.
