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Restaurants & bars try to stave off Cuomo’s killing tip credit

By Cathy DeDe, Chronicle Managing Editor

More than 30 restaurant owners, servers and others in the local food and beverage business voiced united opposition to Governor Andrew Cuomo’s Tip Credit plan at a May 10 forum led by State Senator Betty Little and Assemblyman Dan Stec at the Adirondack Pub and Brewery in Lake George.

Senator Little emphasized, “This is not legislation that the Governor would have to pass through the Assembly and the Senate.” She said “a back-door work-around” would impose a wage board order, through the state Department of Labor, which Sen. Little noted is headed by Cuomo appointee Roberta Reardon.

The governor proposes that restaurants servers and bar tenders be paid at least minimum wage, instead of the current $7.50 an hour.

Federal law and most states allow employers to pay a lower minimum wage to tipped workers as long as they earn at least the full minimum when tips are included. The difference between the industry’s reduced minimum wage and the full minimum wage is called a tip credit.

Adirondack Pub & Brewery owner John Carr said that years ago, “The state recognized that waiters serve two masters — the restaurant and the customer — and that these two masters contribute to your paycheck.” He said the state authorized the tip credit to encourage job growth.

Mr. Carr was among those who said going to a full minimum wage would have him reconsidering whether to stay open during the winter months, for example.

Attendees said eliminating the tip credit results in restaurants closing, or cutting back hours from, say, lunch and dinner to just dinner.

At last week’s meeting at the Adirondack Pub & Brewery. Chronicle photo/Cathy DeDe

Mr. Carr said Maine eliminated its Tip Credit in 2016. “Knowing the servers were making more money, people tipped way less, and the servers actually made less money,” he said. A year later, heeding the pleas of restaurant workers, Mr. Carr said the state reinstated the Tip Credit.

An employee of a “mom and pop” eatery in Queensbury said the hike from $5 to $7.50 per hour minimum for servers cost her employers $60,000 last year — “so they bought no new equipment, not the dining room tables we needed, nothing.”

The Lake George Steamboat Company reported it cost them $80,000 last year.

Wine distributor Greg Taylor said he saw a 12 percent drop in restaurant sales when the minimum wage rose, as restaurants cut back on hours and days of operation.

“It’s not just payroll,” said Mario’s Restaurant chef-owner Paul Nichols about the added costs. “It’s workers comp, FICA: Now that cost is all on the business, too.”

“They’re going after the tourism industry,” Sen. Little said. There’s not much that elected officials can do to influence the Department of Labor or Governor Cuomo on the Tip Credit, she said.

Assemblyman Stec added, “In places where it’s a 12-month, not a six-month, economy, maybe this is not a problem. In New York City, cost of living is so much higher, the market already demands $15 an hour. They’re already there in New York City, but not in upstate New York, and certainly not in the Adirondacks. It’s a bigger pressure on us.”

“It’s too far, too much, too fast,” he said.

Sen. Little said, “Our best advice is send emails and letters, make noise. That will get their attention. People think, if they’re not hearing from anyone, it’s not a problem. We need to hear from you.”

Hearing Friday in Albany

The nearest of state hearing on the Tip Credit is this Friday, May 18, at 10 a.m. In the Legislative Office Building in Albany. Those who wish to speak there should register online at www.labor.ny.gov. You can also submit comments there. Opponents of changing the Tip Credit plan to meet at 8 a.m. to protest the change.

Watertown former mayor, pub owner: State kills biz & itself

Chronicle editor Mark Frost writes: Jeff Graham, the ex-mayor of Watertown, N.Y., owns a bar there called Pearl Street Pub. His letter to the editor published in the Watertown Daily Times articulated his opposition to Governor Cuomo’s proposal to eliminate the tipped wage credit. Mr. Graham gave The Chronicle permission to excerpt from his letter.

This proposal [Gov. Andrew Cuomo’s proposal to eliminate the tipped wage credit] is part of a pattern of regulation and mandates that is antithetical to the interests of small business.

I thought the rationale was for people to make more money. From what I’ve read, it’s billed as a racial and gender issue. People are being discriminated against and exploited. Ah, familiar themes among those who traffic in identity politics.

With my recently received liquor license renewal was a letter about labor and human rights laws. If I didn’t comply, the state has a Joint Task Force on Employee Misclassification and Worker Exploitation.

Exploitation? That’s how this governor views employers.

I view us as the ones who make payroll even if it means I make nothing this week. We pay worker’s comp, which for my very small business is $2,000 a year. We pay unemployment insurance and our share of FICA. There’s a new family leave act that costs money, and nobody knows how it works. There are costly audits and regulating agencies that cop an attitude when dealing with the people they serve.

We comply with Mr. Cuomo’s new rules on scheduling. Rules are promulgated on the premise that employers are abusive. The underlying basis for all this is we are racists or exploiting women.

Then there is minimum wage, which is escalating to $15 an hour and no carve-out for tipped workers who often earn $30 to $40 an hour in real life. They are smart enough not to report it all, and some customers are nice enough to tip in cash, even when using plastic.

Elimination of the tipped wage will lead to higher dining costs, and employers will triage employees. Those who can handle more tables will make more. Those who cannot can enjoy the state’s ample social safety net.

As a long-time mayor of Watertown, I am no neophyte on government in Albany. This is a done deal, and the hearings are perfunctory. Meanwhile, I draw your attention to the latest census numbers showing upstate New York’s continued decline in population. A correlation must be drawn between Albany’s policies and New York’s slow demise.
— Jeff Graham, Watertown

Editor’s note: Mr. Graham’s letter was published on March 31 in the Watertown Daily Times. He told The Chronicle Tuesday that the governor has been getting “pushback” on the issue and that maybe there is hope he won’t eliminate the tip credit after all.

Why others push to eliminate Tip Credit: Protection for workers

Advocates of requiring restaurants and bars to pay the full minimum wage to service employees say that workers dependent on tips are more subject to discrimination and sexual harassment.

“I personally don’t agree with that. If you’re willing to work, in this industry we celebrate ethnic diversity. If you are willing to work, man, woman, whatever, there is work for you,” says Adirondack Pub & Brewery owner John Carr.

Support for eliminating the Tip Credit is led by a group called Restaurant Opportunities Centers, or ROC United, which The Hill.com says was founded in 2002 by the hotel employees union.

Its “me too” message has garnered support and funding from such groups as Planned Parenthood and the National Organization of Women.

But tip credit defender Maggie Raczynski, a bartender at Outback Steakhouse in Clifton Park, was at the May 10 meeting, “ROC has $9.8 million in funding, but I have 13,000 followers — and they try to speak for me.”

Her Facebook page is “Supporters of the Tip Credit in NY” (hashtag Save Our Industry). -Cathy DeDe

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