The Changing Service Industry

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The Changing Service Industry
End Of NYS Tip Credit Proposed By Governor Cuomo
By Kathleen McCarthy

   Tipped workers earning less than the minimum wage hourly could be a thing of the past in New York State. In December 2017 Gov. Andrew Cuomo announced he was directing the commissioner of labor to hold public hearings to look into the possibility of getting rid of the tipped credit in the state. Tipped food service workers earn $7.50 an hour in upstate New York before tips.  When a tipped employee is earning less than minimum with their hourly wages combined with their tips, then the employer must legally pay the difference so the employee is still earning at least the minimum wage. Eliminating the tip credit would cost employers, and that could in turn raise prices, the State Restaurant Association said. The minimum wage in upstate New York is $10.40/hour. The minimum wage for tipped service workers in the hospitality industry in Upstate New York is $7.50 cash wage and $2.90 Tip Credit to equal the minimum wage. The employee’s tips “serve as a critical wage subsidy that brings workers’ wages just up to the legally-mandated minimum wage,” according to Governor Cuomo’s office. “At the end of the day, this is a question of fairness. In New York, we believe in a fair day’s pay for a fair day’s work and that all workers deserve to be treated with dignity and respect.”

   Local restaurant owners and server’s across the state tend to disagree about the elimination of the NYS Tip Service Credit. Nick Pitillo of Villagio in Ellicottville and Osteria 166 in Buffalo says, “This will devastate the income of our quality servers and bartenders. It will change the restaurant industry as we know it today.” The worry is that as the restaurant owners pay service staff minimum wage, the menu prices will rise and the patron will be reluctant to eat out or else feel they can leave a lesser gratuity to the server. Cuomo’s review measure drew criticism from the state Restaurant Association and comes after the state increased the tipped wage and the minimum wage. Eliminating the tip credit would cost employers, and that could in turn raise prices, the state Restaurant Association went on to say. Skyler Bowman, who works as a server in a Rochester, NY restaurant says “We’re the backbone of these establishments and we’re working very hard for these tips every night, and sometimes we’re not even that 20 percent every night.” Brenda Clark from Buffalo, NY says “Without the tip credit, the income possibilities will not be there for me and I could not-or would not do the job. As a mother of young children I was drawn to bartending and food service by the flexible hours and earning potential in the Buffalo restaurant scene.” Dina DiPasquale from Dina’s in Ellicottvile says, “The restaurant industry will change dramatically. Servers will make less, customers will pay more and restaurants will have a difficult time keeping good staff. Tips= To Improve Professional Service.”

   Peter Kreinheder of the Ellicottville Brewing Company says they have a lot to lose if the Tip Credit is eliminated in New York State. One important effect will be that the public will be aware the servers receive minimum wage and they would reduce their tip, maybe as low as 5%. The recommended tip for good service is 20%. The employer will be required to make up the difference to get the employee to the minimum wage. As Kreinheder owns EBC in Ellicottville and Fredonia, as well as Ellicottville Brewing on Chautauqua, he is concerned of the impact this will have. In Ellicottville alone he says “ this would result in an additional $177,000 in payroll.”

   EBC is currently working on the development in Little Valley, NY to establish a state-of-the-art manufacturing facility as well as an outdoor hospitality center and museum to highlight the heritage of the craft brew industry. “We like to create the lab opportunities, sales opportunities, and production opportunities. It is rewarding to try to be part of that fabric and add 25-30 new jobs to the area” says Kreinheder. This change in the tipping credit could jeopardize this project. Of his 167 employees ½ are tipped workers. If servers were replaced by tablets (ipads) at each table, social interaction is dramatically reduced and tips would fall. A change to tablets could reduce 18 servers to 4 servers. This is a “game changer” for the industry. He speaks of concern for the Mom & Pop restaurants, which may be forced to close. He encourages grass root actions to express concerns known to the Governor.

   The health of Chautauqua and Cattaraugus counties depends on tourism to survive. Whether we are embracing winter or sailing on the lakes in the summer, all the tourists look forward to eating and drinking at the many fine establishments in the area. The tourism and hospitality businesses would suffer financially.

   Peter Kreinheder says “employees will leave the job if it is not working for them. More NYS residents would consider leaving the state. The average diner does not have more funds to spend on a $20 hamburger.”

   Email Governor Andrew Cuomo and Lieutenant Governor Kathy Hochul to let them know your opinion.