Gov. Mark Dayton should not give in to the tip credit

Beyond the obvious argument over who’s making money, I don’t see how it’s warranted. The governor / DFL made tax changes last year, and they slayed a GOP rhetorical dragon and won vindication when the budgetary sky didn’t fall. You can say, with certitude, the same thing about the minimum wage. They raised it, and the employment sky didn’t fall here in MN. Unemployment rates are excellent in MN despite the minimum wage hike. So the DFL demonstrated there something about the quality of Republican speechifying and also their own wisdom. In an age of gridlock and stalemate they won a clear victory.

Gov. Mark Dayton is apparently prepared to give that back and partner with the GOP on a restaurant tip credit. I’d like to say that’s mystifying, but Dayton’s sons are restaurateurs, so Dayton’s ear is sympathetic to restaurateur insight. If not mystifying, it is disappointing and deeply unflattering to his thought process. The greater, prevailing wisdom that guides here should be that all businesses have their challenges and obligations, and restaurants aren’t unique. There’s no justification for them to get a wage carve out.


3 thoughts on “Gov. Mark Dayton should not give in to the tip credit

  1. pm1956

    I disagree with you. Problem is that reality is not a one size fits all. Minimum wage works great when people are paid only a wage. When 50% or more of your compensation comes from tips (or some form of payment that isn’t measured by “wage”), then minimum wage really isn’t a good tool for that particular sector.

    My guess is that if something isn’t done in the form of a tip credit, then restaurants will re-think the whole “tip” idea. After all, most tips today are no longer in the form of cash, but an add on to a credit card. Restaurants basically control that. They just need to create a new “tip” policy, and let their customers know about it up front (or on the credit card slip). Say, 50% of the tip goes to the server, and the rest gets split with the back of the house. If the customer wants to just give it all to the server, they can leave a tip in cash.

    I’ve got a good friend who is a chef and owns his high end restaurant. his top wait staff makes more than twice as much per year as he does. And, of course, the gap with the rest of the kitchen staff is even greater.

    1. W.E. Peterson Post author

      Wait a minute, we all know Tom Emmer was wrong about all that….
      To the extent I know you, I find this least consistent with what I perceive of your philosophy / guiding principles. I’m not persuaded the realities of this particular industry should justify a wage carve out, and that notion can co-exist with a liberal / progressive world view.

      Obviously, the chef works but he’s also the owner. Restaurants aren’t great businesses but figure he still gets equity benefits that don’t accrue to his servers and it’s not their problem that their wages are superior to what he pays himself to make his books function in a manner that works for him year over year. I certainly don’t see that this situation requires a legislative remedy. I mean, that’s the justification? Not that the industry will become untenable, but that tipping trends / policy might evolve?

      1. pm1956

        Well, they had a wage carve out, which was taken from them. When tip credit existed, it did not cause hardship for waitstaff. When the minimum wage was increased, this carve out was taken away.

        As i mentioned above, if the tip credit is not restored, i eventually expect that restaurant owners will adjust by changing the way tips work. Eventually, this will all balance out. It will be easier for restaurants if they get tip credit back, but if they don’t, it certainly will not be the end of the world

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