New York’s restaurant industry is the heartbeat of our city’s economy, culture, and community. It provides livelihoods for thousands of workers and a sense of identity for neighborhoods across the city. However, recent proposals to eliminate the tipped wage credit fail to address the industry’s unique dynamics and threaten to harm an industry that provides opportunity and flexibility for tipped workers.
We, owners of Latina restaurants from across New York, must speak out against this proposal. As women who have built businesses in a challenging industry, we know firsthand what it takes to sustain a restaurant here. Eliminating the tipped wage credit would harm the very workers and businesses some claim to want to protect.
Under New York law, tipped workers earn a base hourly wage that, combined with tips, must meet or exceed the state’s minimum wage. If tips fall short, employers must legally make up the difference. This system ensures workers earn at least the minimum wage while allowing them to earn significantly more through tips. Many employees in our restaurants routinely earn $25 to $40 per hour, far exceeding the minimum wage.
The idea that tipping leads to exploitation is misleading. Tipped employees thrive under the current system, with financial rewards tied directly to service quality. Removing the tipped wage credit risks replacing this merit-based system with a one-size-fits-all approach, reducing earnings and opportunities for workers who excel.
In May of 2023, Washington, D.C., abolished its tipped wage credit, resulting in the loss of 1,800 restaurant jobs and a nearly 6% employment decline between May 2023 and August 2024. A 2024 survey revealed that 70% of independent restaurants in D.C. had cut hours, laid off staff, or stopped hiring to offset costs.
Massachusetts, a state that had a higher percentage of Kamala Harris voters than New York, soundly rejected eliminating the tipped wage credit with 64% of voters demonstrating that they stood with restaurants and workers instead of those who proclaim they know what’s best for workers and restaurants.
New York’s restaurants already grapple with rising rents, utility costs, and food prices. Eliminating the tipped wage credit would force many small businesses to cut staff, reduce hours, or close altogether. Neighboring states like New Jersey and Connecticut, with lower operating costs, stand to benefit, drawing restaurants and tax revenue away from New York.
Proponents of eliminating the tipped wage credit often claim it benefits workers, but many tipped employees strongly oppose the change. A recent survey revealed that 84% of tipped workers support the current system, and 88% want it preserved. Another survey showed that If the tip credit were eliminated, 76% of restaurants would raise menu prices, 67% would cut jobs, and 54% would consider closing. Additionally, 42% might eliminate tipping altogether, a shift proven to reduce worker income.
As Latina restaurant owners, we face immense financial pressures, from skyrocketing insurance costs to escalating utility bills. These are areas where state legislators can make a meaningful difference. Reducing these costs would allow us to invest in our employees through increased hiring and hours.
While the current system isn’t perfect, abolishing the tipped wage credit is not the solution. Wage theft and exploitation are serious issues, but they can be addressed through stronger enforcement of existing laws. Increasing the number of Department of Labor inspectors, enhancing penalties for violations, and educating workers about their rights would yield better outcomes.
New York’s restaurants are more than just economic drivers — they’re cultural institutions. From family diners in Queens to high-end bistros in Washington Heights, these establishments contribute to the city’s vibrancy. Yet, we operate on thin margins, constantly adapting to economic challenges. The pandemic underscored this, with thousands of restaurants closing and jobs lost. As the industry recovers, eliminating the tipped wage credit would only destabilize it further.
Policymakers must listen to the voices of New York workers and owners who depend on the current system, not from outsiders trying to turn our state into California. Instead of eliminating the tipped wage credit, we should focus on enforcement, worker education, and reducing the costs of insurance and utilities. These steps would protect the livelihoods of tipped workers, support small businesses, and preserve New York’s vibrant restaurant culture.
Maintaining the tipped wage credit is not just a practical choice for workers and businesses — it’s essential for the future of our city.
Jaquez is the owner of IL Sole and Sa’Tacos in Manhattan. Castellanos is the owner of Ish Restaurant in Brooklyn. Baez is the owner of La Cocina de Yala, in the Bronx. Ayala is the owner of Bocaito Cafe in Queens.
