COVID-19 Has Made Clear That New Jersey Needs to Raise the Tipped Minimum Wage

Just over a month ago restaurants and bars throughout the state were bustling with people, music and celebrations.  In restaurants from Paramus to Cape May, there were tables of friends sharing appetizers and beer, champagne toasts celebrating job promotions and wedding proposals, and families enjoying a dinner out. But in what still seems so surreal, today those same establishments sit empty, with perhaps just a handful of workers preparing takeout food for delivery or curbside pick-up.  And it has left the more than 15 million restaurant workers out of work and often facing dire economic insecurity.

I have spent decades studying restaurant workers and economic security. I have meet hundreds of the workers who cook our meals, mix our drinks, and serve us our steaks.  Prior to this crisis, many of them were already in vulnerable positions, scraping by from month to month. Eighty percent of American restaurant workers lived in economic insecurity in the United States before the COVID-19 pandemic. In New Jersey tipped workers receive a subminimum wage of $3.13 per hour. And many restaurant workers do not have health insurance and often face unpredictable workplace schedules making earning a consistent income difficult. And because our labor market is characterized by occupational segregation, most of these workers are women and workers of color.

I have written several books on restaurant workers.  One long-time restaurant workers I met at the Jersey Shore while doing research on aging and economic insecurity in the restaurant industry was Diane.  Diane is a 69-year-old server who has spent the past five decades in the restaurant industry, dependent on customers’ tips to survive. She has never owned a home or built up savings. Diane lives shift to shift, hoping to make enough in tips each week to cover her basic life expenses. Her greatest fear is that she will wind up homeless. And while she is on a waitlist for senior housing, that can take years to come through. Her backup plan, if she loses her apartment, is to live in her car with her cat. With restaurants closed now, Diane, like so many workers, needs a new back-up plan.

In the immediate term, the historic $2 trillion stimulus package is critical to address the catastrophic economic insecurity that restaurant workers and businesses are experiencing right now. The package will provide immediate cash relief through direct cash payments to individuals and family, expanded unemployment insurance, student loan relief, grant and loan support for businesses; along with other important provisions. That’s in addition to earlier legislation to provide much needed paid sick days and family leave.  And there have been growing GoFundeMe campaigns and other industry relief efforts to help mitigate some of the economic loss. But these types of packages are just a start.

Assuming the most optimistic of predictions, that social distancing measures become more relaxed over the next several months, it is unclear what life then looks like for workers in these industries. Early reports from China indicate that as the social distancing is relaxed, food and beverage establishments have been slower to return to work. These same concerns are on the minds of many workers and business owners in the United States. Will restaurants re-open over later this summer with fewer tables for diners to maintain social distancing?  How can friends sit together at a bar to have a drink and maintain six feet of social distance? Will customers be comfortable dining in restaurants or stick with take-out orders? Will the workers who were depending on working food concessions at summer festivals and concerts for income find that large gatherings are still banned? And will the locally owned small business have enough capital to even re-open at some point?

In these scenarios, workers may slowly return to work later this year but find they may be working fewer hours or shifts. For restaurant workers this translates into less income. So, while workers may no longer be unemployed, they could be woefully under-employed. And because many of them do not have employer-provided health insurance, they’ll likely struggle to maintain their health while working in higher risk personal contact jobs.

New Jersey economic security plan that incorporates social distancing protocols in American workplaces and their impact on workers, particularly vulnerable workers in restaurants and bars. Consider it the next step in the stimulus.

For one, there needs to supplement wages for workers who return to work in the next few months who experience decreased hours or shifts. There needs to be partial employment insurance.  If in order to maintain social distance we have less chefs working in the kitchen or less bartenders serving drinks behind the bar, that means less shifts for workers.  And for shift workers, less hours means less income. We need to ensure that workers’ overall income is not negatively impacted by less shifts.

Second, we also need to eliminate the sub-minimum tipped wage for restaurant workers in the state. If restaurants will be practicing “social distancing” when they re-open, restaurant workers will be serving fewer customers and consequently receiving less tips. By eliminating the tipped minimum wage, we can better ensure that workers will receive a steady income without being dependent on customers.

The new normal of New Jersey’s restaurants and bars will be taking shape over the next few months and year. This unforeseen change in work needs to be meet with a policy agenda that is both comprehensive and flexible to ensure the economic security of these workers.

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One response to “COVID-19 Has Made Clear That New Jersey Needs to Raise the Tipped Minimum Wage”

  1. Restaurants in NJ depend on the summer crowds, tourism and Murphy right now is throwing it out there that NJ won’t be open for business until June or July!!!! Is he crazy!!! And let’s say NJ opens in that time, how many tables is he gonna force restaurants to lose?! People cannot afford to sit a home and good luck convincing people that have to stay in their homes with during the summer 80 to 90 degree weather with their loud kids screaming how bored they are and can’t go anywhere. You get what you vote for.

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