Could a higher minimum wage for tipped workers finally be on the menu in Baltimore?
Baltimore Councilman John Bullock said he will keep fighting to raise the minimum wage for tipped workers next year. But the push comes after an election where Marylanders cited concerns around the cost of food and Massachusetts voters rejected a similar plan.
Efforts to increase the base pay for service industry employees have faced headwinds in Maryland and beyond. The failed measure in Massachusetts would have incrementally increased tipped worker pay from $6.75 an hour to $15 an hour by 2029. In Michigan, there's a new bipartisan effort to stop the state's plan to gradually increase the base pay for tipped workers until it reaches the state's standard minimum wage in 2030.
Bullock's bill, introduced in June, has been on hold until the next City Council term starts next month. It proposes raising the tipped minimum wage from $3.63 an hour to $15 an hour, plus tips, by 2029. While voters in other places rejected tipped wage increases, in Baltimore, the City Council would make the final call.
Other returning council members backing Bullock's effort include Ryan Dorsey, Odette Ramos and Phylicia Porter. In the months since the bill was introduced, there's been no request for a public hearing — an important next step — and a soon-departing City Council president has not helped move it forward.
"We do believe there is a potential pathway forward looking at what some other cities have done," Bullock said. "Some have been successful in terms of getting legislation like this passed. Others, not so much."
Last year, the Chicago City Council voted to increase the tipped wage in a way that's similar to what Baltimore is trying to do. And in a win for service industry employees, Arizona voters this month rejected a ballot measure that would have decreased the tipped minimum wage.
Bullock said there's an appetite for this legislation in Baltimore. However, that has not been the case in the Maryland General Assembly.
The One Fair Wage Act of 2024 was introduced in January, but the House and Senate versions of the bill failed to advance. The Prince George's County Council considered, but ultimately tabled, raising tipped wages there last year. In neighboring Washington, D.C., residents voted to eliminate the minimum wage for tipped workers in 2018, but the D.C. City Council overturned it. Voters again approved it in 2022, raising the base pay from $5.35 an hour to $16.10 by 2027.
Efforts to raise the minimum wage have generally been popular in recent years. Gov. Wes Moore accelerated the state's mandated base pay this year to $15 per hour from a low of $12.80. The Economic Policy Institute estimated more than 341,000 workers were affected by the increase in Maryland.
The exception to that bump was tipped workers, who often work in the food service industry and rely on the generosity of customers to make up the difference in pay. Many service industry employers use tips to ensure tipped their workers are hitting minimum wage.
Bullock's bill, titled Fair Wages for Tipped Employees, proposes bumping the tipped minimum wage to $6 an hour starting on July 1, 2025, increasing by $2 annually until 2029. Once wages reach that point, employers cannot deduct any tip credit from the state-mandated $15 hourly wage.
"The idea, essentially, would be to phase out the tipped minimum wage, or subminimum wage," Bullock said. "Now, again, it would not take away the ability to give tips."
The Restaurant Association of Maryland has been vocal against changing the tipped minimum wage or the tip credit, as it's also known. The organization was against efforts in Howard County, Montgomery County, Prince George's County and statewide.
"Despite what the activists supporting this legislation say, there is no such thing as a 'subminimum wage' for restaurant tipped employees," said Melvin Thompson, senior vice president of government affairs and public policy at the Restaurant Association of Maryland.
Eliminating the tip credit would "quadruple labor costs for full-service restaurants" and would "significantly decrease" tips for servers, Thompson said. He points to service charges that have become more popular at restaurants nationwide, adding that customers are less likely to tip on top of that additional charge.
Menu prices could increase and some businesses may have to eliminate jobs, Thompson said.
One Fair Wage has advocated for the tipped wage increase in Baltimore and elsewhere — including in Massachusetts, where it just failed. One Fair Wage President Saru Jayaraman said they hope to get a Ways and Means Committee hearing in early 2025 once new council members are settled in for the next term.
"Right now, the $3.63 an hour is so antiquated and so out of step with the actual cost of living in Baltimore, it would be in the interest of any elected official to move this initiative, this bill, forward," she said.
According to the U.S. Census Bureau, in the past, restaurants have paid more for workers because of a higher payroll and often raised prices. But employees were not usually laid off and the likelihood of going out of business does not increase just because the minimum wage goes up.
Sebastian Martinez Hickey, state economic analyst at the Economic Policy Institute, agreed with some of these findings but noted the tipped minimum wage is not a simple issue for workers.
While employers are required by law to ensure this gap is covered, he said it's "highly difficult to enforce" because employees have to be aware of the law and do their own calculations. If there is a discrepancy, workers must confront their employers.
"The tipped minimum wage inherently has the structural disadvantage for workers, and that results in both economic harm and places workers in situations where they can experience physical or verbal abuse," Martinez Hickey said.
