- - Wednesday, September 12, 2018

ANALYSIS/OPINION:

The Council of the District of Columbia will hold a hearing on Sept. 17 on whether to overturn Initiative 77 or allow it to stand and destroy the D.C. wage system for employees who receive tip income.

The ballot measure was voted on this summer in a low-turnout election. D.C. law allows the council to correct ballot outcomes where they believe the decision was founded on bad information. And make no mistake — bad information was intentionally promoted to deceive voters into supporting Initiative 77.

The most-repeated argument in favor of Initiative 77 was that servers’ and bartenders’ income was “sub-minimum” and subject to the “whim” of customers who might decide to not tip. For starters, no one earns less than minimum wage; labor law guarantees that. And tipped employees typically earn far more; you’ll have to look long and hard for those real life examples where employees are unhappy with tip income.

Still, proponents of Initiative 77 have feigned outrage that restaurant servers’ income can vary based on the size of customers’ tips. Yet, there are plenty of jobs and industries where income varies based on a customer’s decision.

A new car salesperson (as well as many other sales positions) operate under a commission system where almost all of their compensation is based on how often a buyer decides to order a new ride. Their income is determined quite directly by the consumer. Similarly, many attorneys take cases on a contingency basis. After investing their own time, they’re working for free unless they deliver a favorable verdict for a client. Variable pay is an incentive for people who bet on a system that values their charm and knowledge. It’s the bet a restaurant server makes when they apply for a job with big upsides from appreciative customers. It is a strongly ingrained part of our historic dining-out culture that servers engaged in lobbying are trying to protect.

So who is behind this clearly unpopular proposal? Incredibly, some actresses from New York and California who have nothing at risk.

The mystery surrounding Initiative 77 is why Jane Fonda and a few others have parachuted into an attempt to wreck the system. Surely they must have bigger causes to flak for each week. These few celebrities have become the most-public spokespeople against a tipped-wage system. Predictability, and in response, these actresses are vocally opposed by thousands of servers. The server community is offended by these busy-body tone-deaf culture-changing arguments that are not justified by the math for servers or the economics of the business. These Hollywood hypocrites forget their industry often applies variable pay scales that reject a guaranteed wage. Lots of talent will bet on a film’s performance with no salary guarantee for their time.

They get a percentage of the film’s gross, which is determined by — wait for it — the whim of the movie-going public. It’s the movie customer who is deciding if and how much they’re paid.

The upside is that an actor’s “take” from a film can exceed what the studio earns on net. Again, this is similar to the restaurant industry. Consider: On a $100 restaurant dinner check, a successful business owner typically makes a net profit of 5 percent. A server who waits on that same table will typically receive a 15 percent to 20 percent tip on that same $100. And that tip income is generated without having to risk any investment in the business.

The point that should not be lost is that tipped employees are free to make their own deal with an employer on a fair compensation package, including customer gratuities beyond their base guarantee.

The public and the D.C. Council should take great comfort in supporting the current payment system for tipped employees. But don’t take my word for it; next time you’re at a restaurant, ask your server if they would like to trade tipping for a fixed minimum wage.

Richard Berman is the president of Berman and Co., a public relations firm in Washington, D.C.


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