The question “How much do I leave as a tip?” might get more complicated in Massachusetts as opposing groups duke it out over a ballot initiative that would pay the full minimum wage for tipped workers.
On one side, One Fair Wage and its supporters, which calls for gradually increasing the $6.75 minimum hourly wage for tipped workers to meet the state’s overall $15 minimum wage. Tips would still be allowed under the measure.
On the other, the Massachusetts Restaurant Association and the Committee to Protect Tips.
The initiative would be a boon to restaurant workers who don’t make much in tips, those at lower-priced eateries for example. Tips bring their pay up to $15 an hour, but not much more.
However, a look at Glassdoor and Indeed offer a different take on wait staff wages in Boston.
Glassdoor puts the estimated total pay for a waiter at $74,696 per year in the area, with an average annual salary of $49,642 per year. The estimated additional pay is $25,054 per year, which would include tips. .
Indeed pegged the average base salary at $25.14 per hour, with daily tips at around $150 per day.
That’s not every restaurant, of course, but a splurge at one of the city’s high-end establishments, with wine, sets the diner back several hundred dollars, with a generous tip likely.
The initiative doesn’t prohibit tips on top of the $15 minimum wage, which begs the question: will people tip if the gratuity is included in the bill? They don’t have to, and since prices will likely rise if restaurant owners have to pay higher salaries, the impetus to add a tip when it’s not required is small. Any chance to save a few bucks will be taken.
And you can bet on higher prices should worker wages increase. As CNBC reported last year, unlike other small businesses, it can be hard for restaurants to absorb or pass on price increases. A restaurant’s typical pretax profit is about 5% of sales. “It’s a very thin margin to begin with,” said Hudson Riehle, the National Restaurant Association’s senior vice president of research.
Some restaurants around the country have already added credit-card swipe fees and raised prices in light of inflation.
A survey by CorCom Inc. found that after Washington, D.C. began phasing out the tip credit, hundreds of restaurant owners imposed a mandatory service charge on customer checks to account for rising costs.
If Massachusetts restaurateurs followed suit, that would make it even less likely for a diner to add a tip on top of the higher bill, with a service charge to boot.
As the Herald reported, Doug Bacon, the head of Red Paint Hospitality Group, argued in a State House hearing yesterday that the minimum wage in Massachusetts will eventually hit $20 an hour in five years.
“I can tell you with 100% certainty that no operator can absorb a 200% increase in the cost of having a server or a bartender. So we’re going to raise our prices or change our staffing and our business model,” he said.
If restaurants reduce staff or cut back on hours to adjust for higher wages, that will erase gains for staff made under a tip-included ballot measure.
As for restaurant patrons, rising prices will lead to a readjustment in how often they dine out.
