Category Archives: Elections

Minimum Wage Proposal Divides D.C. Workers, Voters

Washington, D.C. has a $12.50 per hour minimum wage, increasing to $13.25 on July 1. But for tip-earning workers, such as servers and bartenders, the minimum is $3.33 per hour ($3.89 as of July 1)—tips are supposed to make up the difference. And if they don’t, then employers make up the shortfall. Ballot initiative 77, due for a vote on Tuesday, would raise tipped workers’ minimum wage to match non-tipped workers’ minimum wage in steps through 2026. It would also index D.C.’s minimum wage to the Consumer Price Index so it would automatically annually increase after it reaches $15.00 in 2020. The proposal has divided the restaurant community.

Both sides have good points. Some restaurant owners favor a set wage because it gives them more stability in planning their costs. Some workers prefer that arrangement, too. They know, coming into work, roughly how much they’ll make on a given shift.

But some restaurant owners would rather pay the low wage, even if they sometimes have to randomly supplement it if business is slow or customers are stingy tippers. It lets them print lower prices on their menus, and there can be tax advantages in reporting lower wages. And some servers also prefer lower wages with higher tips because they walk out of work every night with cash in their pocket. They don’t have to wait two weeks for a paycheck. And if they go the extra mile for a good customer, tips can be very lucrative.

So who’s right? They all are. And that’s why ballot initiative 77 is a bad idea. It’s anti-choice.

Restaurateurs and their employees should be allowed to agree on any working arrangement they both see fit. Nothing is stopping restaurants from having a policy of paying its servers a higher wage and discouraging tipping. If that’s what some people prefer, they should be free to choose it, and are. And if some restaurants and workers prefer the low wage/high tip model, they should be free to pursue that, too. The choice should be made by people, not by legislation.

Customers are just as divided. Some prefer walking into a restaurant knowing that what’s printed on the menu is what they’ll pay. Others prefer being able to reward good service with a high tip, or repay bad service with a small tip. Everyone’s different. And they shouldn’t all be shoehorned into one model.

As for the other part of ballot initiative 77, indexing the minimum wage to inflation so it automatically goes up every year—voters should tread carefully. Some workers will benefit, but at a cost to others. Hour cuts, firings, workers never hired at all, non-wage benefit cuts, cuts to on-the-job perks like free parking and meals, and more are all unintended consequences that follow minimum wage hikes. Iain Murray and I have written about those tradeoffs here and here.

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Deadline for Major New Regulations This Week?

An early midnight rush of controversial new regulations might be on the way over the next week or so. Why now instead of the very end of the Obama presidency? Because the Congressional Review Act gives Congress 60 legislative days to strike agency regulations—but if a session of Congress ends before those 60 days are up, the clock starts over with the new Congress. So if an agency issues a rule with 59 or fewer legislative days left, the next Congress will still be able to strike down the rule, and President Obama will not be in office to veto Congress’ action.

The congressional calendar is always subject to change, so the exact 60-day deadline isn’t set in stone. According to Sam Batkins of the American Action Forum, the likely dates range from May 17 to May 23. So if an agency wants to be certain its most controversial new rules are not struck down, it will likely issue them no later than May 23. Indeed, April was a busier month than usual for the Federal Register and for new rules. Ditto the first half of May.

Of course, there are reasons to be skeptical of a midnight rush continuing through this week. If the next president is a Democrat, she would likely veto any congressional efforts to strike regulations issued by a fellow Democrat. So while this election season has been as unpredictable as any, agencies may not have anything to worry about after all.

And if Donald Trump does win the GOP nomination, the GOP’s House and Senate majorities are at risk. That would eliminate any Congressional Review Act threat. Further, if Trump wins the presidency, his lack of a clear ideology means he might also veto Congress as well, even if both chambers stay Republican.

Finally, agencies work on their own timetables. Many regulations, especially the larger, more technical ones, are planned out years in advance, and can’t be written in a rush. The rulemaking process, which requires publishing a proposed version of the rule and a public comment period, is also not well-suited for expediting new rules.

So will the recent uptick in new regulations slow down in the next week? Time will tell. Keep an eye on this space.