New York City

Cuomo administration to raise tipped wage to $7.50

February 24, 2015 By David Klepper Associated Press
Union members of the Hotel and Motel Trades Council cheer a speech by New York Governor Andrew Cuomo on Tuesday in New York. The Cuomo administration announced Tuesday that restaurant servers, hotel housekeepers and other tipped workers in New York will soon make $7.50 an hour before tips, a change that will translate into a big raise for thousands of workers throughout the state. AP Photo/Mark Lennihan
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Restaurant servers, hotel housekeepers and other tipped workers in New York will soon make $7.50 an hour before tips, a big raise for thousands of workers and a significant increase in labor costs for business owners.

Like most states, New York allows businesses to pay tipped workers less than the state’s minimum wage as long as tips make up the difference. Currently, servers in New York make $5 per hour, compared to a minimum wage of $8.75.

The increase will take effect Dec. 31. In New York City, the tipped wage will automatically go to $8.50 an hour if the city gets permission to raise its minimum wage above the state’s rate.

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For Erin Leidy, who delivers pizza in Ithaca, N.Y., $2.50 an hour more will help her make her car payment and pay for a new pair of boots. The old pair has holes; a significant problem in the western New York winter.

“I come home every night with my feet soaking wet and cold,” said Leidy, 36. “And I will buy better food. And more of it.”

But restaurant owners warn the higher labor costs will force them to raise menu prices, reduce hours for workers, or close altogether.

“Tipped workers make their living on tips, not hourly wages,” said Brad Rosenstein, the third-generation owner of Jack’s Oyster House in Albany, where he says servers often make three times the minimum wage in tips or more. “It’s just a question of time before inflation hits the restaurant industry. It’s becoming harder and harder to operate a restaurant in New York state.”

The increase was approved by Gov. Andrew Cuomo’s labor commissioner as states across the country debate increases in the minimum wage, which is set to go to $9 an hour in New York at year’s end. Cuomo, a Democrat, is calling to increase the figure to $10.50 statewide and to $11.50 in New York City. Mayor Bill de Blasio is seeking authority to raise his city’s wage to $13.

“The sweetest success is shared success, when we all do well together,” Cuomo said Tuesday at a Manhattan labor rally. “We want businesses to do well. Let’s share with the workforce. Let’s all rise together. That’s what New York has been about. That’s what this nation is all about.”

Seven states including California have abolished the tipped wage altogether, meaning service employees are paid at least the minimum wage before tips.

A state Wage Board in New York reviewed but ultimately rejected that idea in its recommendations to state Labor Commissioner Mario Musolino. Musolino also rejected the board’s suggestion to allow business owners to pay servers a tipped wage of $6.50 if they make significantly more than the minimum wage when tips are factored in.

Melissa Fleischut, president of the New York State Restaurant Association, said the increase should have been phased in to allow business owners to absorb the impact.

“By rubber-stamping an extreme, unprecedented 50 percent increase it becomes hard to believe New York is really ‘Open for Business,'” she said in a statement, mocking the state’s recent marketing campaign meant to encourage business.

Labor advocates, however, vowed to keep fighting for even higher wages.

“My faith that good things can happen in Albany when people step forward to be heard has been restored,” said Sara Niccoli, director of the New York State Labor-Religion Coalition. “Next up, full elimination of the sub-minimum tipped wage. We will get there.”

The median wage for New York’s 133,550 waiters and waitresses is $19,103.


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