Labor Advocates Allege Powerful Restaurant Lobby Is Depressing Wages in Massachusetts

As a new proposal to eliminate the tipped minimum wage in Massachusetts moves through the legislature, the progressive labor advocacy group One Fair Wage and Boston-based organization Corporate Accountability have just released a white paper criticizing the alleged role of the Massachusetts Restaurant Association in blocking the passage of laws that would raise worker wages in the state.

The paper claims that the Massachusetts Restaurant Association, an affiliate of the National Restaurant Association, has been a principal opponent of new workers’ rights legislation in the state over the course of the past two and a half years, with roughly a quarter of its lobbying efforts going toward opposing legislation that would eliminate subminimum wages and allow workers to take emergency paid sick leave in the state. The paper also alleges that Massachusetts Restaurant Association-affiliated lobbyists “attempted to influence key legislation through campaign contributions.” (Campaign donations in Massachusetts are a matter of public record — anyone can, with relative ease, search for this information.)

In particular, the paper’s authors highlight an example of the Massachusetts Restaurant Association’s alleged tactics where an affiliated lobbyist made donations to the political committees of three state legislators who eventually voted against the so-called “Grand Bargain.” The legislation, which passed anyway and was signed into law in June 2018, will increase the minimum wage in the state to $15 by 2023 and mandated paid family and medical leave. Although it did not eliminate the tip credit — a rule that permits businesses to pay less than the standard state and federal minimum wages to workers such as servers and bartenders who earn a significant portion of their income via tips — the legislation will raise the tipped minimum wage for service workers in the state to $6.75 by 2023.

Bob Luz, the president and CEO of the state restaurant group, told Eater in an email that the Massachusetts Restaurant Association was an active participant in the “Grand Bargain” and that it never opposed an increase in the minimum wage, though it did advocate for a “lower and slower” approach. Luz says that the MRA is “absolutely opposed” to eliminating the tip credit for restaurants, because doing so “would have a dramatic impact on a large percentage of the industry and most importantly our highest-earning employees.”

“Tipped employees are guaranteed the full minimum wage under both state and federal law,” Luz says. “Every single time that this proposal to eliminate the tip credit reemerges, we hear from countless tipped employees imploring us to stop this proposal. Servers are not asking for this change, especially in Massachusetts, where data from the [United States Department of Labor] shows that servers in Massachusetts make more than $1 per hour [more] than servers in California who are paid minimum wage.”

The authors of the white paper further allege that Massachusetts Restaurant Association lobbyists are “also making well-placed campaign contributions to influential politicians like former House Speaker Robert DeLeo, who served as the speaker of the house from 2009 to 2020,” in an effort to influence legislation. As of publication, DeLeo has not replied to Eater’s request for comment.

While the white paper addresses specific actions being taken in the fight for fair wages for restaurant workers in Massachusetts over the past several years, the topic remains of pressing local and national importance across the food and service industry. At stake in Massachusetts is An Act Requiring One Fair Wage, which would eliminate subminimum wages and allow for tip-sharing with back-of-house restaurant workers, among other things. Recently, Congress has also taken up the debate over raising the minimum wage across the country to $15 an hour by 2025 and eliminating the tipped minimum wage — which sits at $2.13 per hour — by the end of the decade through the Raise the Wage Act.

The National Restaurant Association — the nationwide lobbying group for the restaurant industry — remains one of the staunchest opponents of the Raise the Wage Act, and to eliminating the tip credit in states like Massachusetts. Central to the National Restaurant Association’s and Massachusetts Restaurant Association’s arguments is that tipped restaurant workers stand to lose money if the credit is eliminated in favor of instituting a higher standard minimum wage — the working logic being that tips will disappear entirely.

In a letter to congressional leaders in February, the National Restaurant Association wrote, “We share your view that a national discussion on wage issues for working Americans is needed — but the Raise the Wage Act is the wrong bill at the wrong time for our nation’s restaurants. The restaurant industry and our workforce will suffer from a fast-tracked wage increase and elimination of the tip credit.”

However, advocates at One Fair Wage and even heads of some national chains say that the evidence from states that have moved to eliminate the tip credit and raise the standard minimum wage to $15 per hour shows this is not true. California, for example, has outlawed the tip credit. Instead, employers must pay workers at least the full minimum wage, and workers are allowed to make tips on top of whatever they’re being paid.

A top executive from Texas Roadhouse recently said on an earnings call that the chain hasn’t really seen “an impact to tips for those servers in those higher-wage states. They continue to get [tipped] well, and their overall average wage is pretty high.”

Denny’s chief financial officer, Robert Verostek, has also stated that that California’s law to raise the minimum wage to $15 by 2023 has been good for business. “As they’ve increased their minimum wage [...] California has outperformed the system,” Verostek said on an earnings call in February. “Over that time frame, they had six consecutive years of positive guest traffic — not just positive sales, but positive guest traffic — as the minimum wage was going up.”

“Everything that they’ve ever said is that the California model is horrible, it killed the industry, the industry is dying,” says One Fair Wage president Saru Jayaraman in an interview with Eater. “And we’ve shown years and years and years of data that the opposite is true. The industry is booming in California, and in fact these very chains that lead the NRA are growing faster in California than everywhere else. And then they finally said it themselves — it’s been good for them. And it’s not even that it hasn’t hurt them. It’s been good for them in terms of consumer spending.”

Jayaraman says that One Fair Wage research shows that all four quartiles of tip earners — from fine dining restaurants in cities like San Francisco and Seattle to chains like IHOP and Denny’s — earn more money when subminimum wages are eliminated. In contrast, tipping in America is a legacy of slavery and has been historically used as a way to keep a certain class of workers — especially Black women and other women of color — from accessing federal wage labor protections. Those inequities, which date back to the end of the Civil War, still exist today. It’s been demonstrated repeatedly that tipping fosters income inequality among workers of color and results in higher rates of sexual harassment across the industry.

“It is complete mythology and baloney that anybody is worse off [without the tip credit] — nobody is worse off,” Jayaraman says. “Even the employer — everybody’s better. The small business grows faster, the chains grow faster. The highest tip earners do better, the lowest earners do better. Everybody does better.”

While the Senate has since punted the Raise the Wage Act, citing the economic pressures of the pandemic, the fight will no doubt continue as state legislators debate An Act Requiring One Fair Wage.