Servers and other tipped workers will see more in their paycheck soon now that New York will hike their minimum wages.
The state's acting Labor Department commissioner signed off on an agency panel's recommendation of a $7.50 minimum wage by January in the hospitality industry and letting it increase to $8.50 in the city, if state lawmakers decide to raise it here.
Industry groups warned of layoffs and stressing companies with razor-thin profit margins, but unions and organizers for low-income workers heralded the first raise for tipped workers since 2011.
“That would make New York tipped workers one of the highest in the nation,” said Hotels & Motels Trades Council President and state wage board member Peter Ward, at an Albany rally with Gov. Andrew Cuomo seated on stage.
The decision from acting Commissioner of Labor Mario Musolino strips categories of tipped workers, like food from hotels, for one tip rate. The current minimum wage rates for these employees range from $4.90 to $5.65. Musolino also rejected a recommendation to give businesses more of a “tip allowance” that counts against a minimum pay for a worker.
“I believe this recommendation strikes the proper balance,” Musolino wrote of the hiked minimum pay. “It increases wages for those who have been without a raise for far too long and completes the goal ... of establishing a single rate for all tipped workers.”
Isidro Suarez, a 31-year-old bus boy living in Corona, was making $5.50 an hour at a midtown restaurant and has gotten a new job boosting pay to $6.50. He appreciated the higher base pay, especially in colder months when there are fewer customers.
“Sometimes it's good sometimes, very bad,” he said.
He said the additional money coming his way next year would help cover day-to-day expenses.
“When I take the train, it's now more expensive,” he said.
Melissa Fleischut, president of the New York State Restaurant Association, slammed the 50% increase and said the new levels would result in fewer hours and jobs for workers, and higher pay for untipped wage earners.
Jimmy Haber, CEO of ESquared Hospitality, which runs the BLT chain and The Wayfarer restaurant, raised the idea of a no-tips model in the future and paying the standard minimum wage for most workers.
The Labor Department's decision, he said, would “spur restaurants to rethink how they will re-employ their front house staff and whether a tip model makes the most sense.”
That idea is on the menu for the Labor Department: the acting chief agreed to a review of eliminating the system of cash wages and tip credits.
Tsedeye Gebreselassie, a senior staff attorney with the National Employment Law Project, said the group backs ending the sub-minimum wage for tipped workers that forces them to rely on gratuities — a policy in seven states.
“There's no reason why restaurant employers can't pay the full minimum wage,” she said. “It makes no economic sense for a worker to have to rely on the generosity of the customer or whether or not they get a Friday night shift or a Monday morning shift.”