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Danny Meyer’s tip ban targets a pay problem that’s going to get worse

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Restaurateur Danny Meyer Photograph by Slaven Vlasic — Getty Images

Famed restaurateur Danny Meyer has a long history of criticizing the most American of dining practices: tipping. He’s called it an awkward tradition that lets guests dictate servers’ pay. And when he announced on Wednesday that he would soon ban tipping at all 13 of his New York restaurants, he added another critique: tips have created a giant chasm between his servers’ and kitchen workers’ pay.

The move is well-timed, as New York State will up its minimum wage for tipped workers in January, which could make the wage divide between waitstaff and kitchen staff even more pronounced.

According to the Bureau of Labor Statistics, in the metropolitan area that includes New York City (along with surrounding counties in New York and New Jersey) the average restaurant cook earned an average of $13.41 per hour in 2014, while the average waiter or waitress made $13.21, an hourly average that includes tips (though it’s important to note that this figure is provided by employers and most likely estimates the amount of money workers earn via gratuity).

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Data from NYC Hospitality Alliance, meanwhile, points to much more unequal compensation among the two occupations. It pegs the median hourly wage for restaurant servers at $25.34. And line cooks? They earn a median of $13 hourly, according to Alliance executive director Andrew Rigie.

That disparity may come as a surprise to diners, especially those who assume that the gratuity they leave is shared among all the restaurants employees. That’s not actually the case. Tip pools can compensate workers at the front of the house—servers, bussers, bartenders—but federal labor law prohibits restaurant owners from using tips to pay the kitchen staff. That means diners’ growing generosity—Meyer says the average tip has increased from 15% in 1985 to about 21% today—hasn’t trickled down to the workers in the back of the house.

Meyer’s company, the Union Square Hospitality Group, wouldn’t say how the hourly take-home pay of its cooks compares to that of its servers (The New York Times says kitchen employees at one of Meyer’s restaurants, The Modern, currently earn about $11.75 per hour), but Meyer’s comments allude to a rather large divide between the two. “I hate those Saturday nights where the whole dining room is high-fiving because they just set a record, and they’re counting their shekels, and the kitchen just says, ‘Well boy, did we sweat tonight,'” Meyer told Eater.

The disparity doesn’t just fuel animosity among coworkers; Meyer also suggests that poor pay is causing a cook shortage.

By eliminating tipping and including a charge for “hospitality” in its menu prices—which are set to increase as a result—Meyer will collect one, all-inclusive sum from diners, which he can distribute to all restaurant employees as he sees fit. His goal is to keep servers’ income the same and increase the pay of cooks, dishwashers, and other kitchen workers.

The problem that Meyer has identified will be potentially exacerbated come January, when the minimum wage for tipped workers in New York is set to increase by 50% from $5 to $7.50, while pay for regular minimum wage workers will make a much milder jump, from $8.75 to $9.

Nationwide, workers who receive gratuity from customers are typically paid a lower minimum wage than workers who don’t get tips. The idea is that the money waiters, waitresses, and bartenders receive as tips will bring their hourly compensation up to the “full” minimum wage.

But in recent years, this second-tier of pay has become a frequent target of labor advocates, who have pushed legislators to address the tipped wage at the state and local level since the federal minimum wage for tipped workers—$2.13 per hour—hasn’t changed in 24 years. They scored a victory in New York State in February, when the state’s acting commissioner of labor accepted a wage board’s recommendation to hike the state’s tipped minimum wage from $5 to $7.50. The rate hadn’t budged since 2011.

When that increase goes into effect on December 31, diners are unlikely to change their practice of leaving a 15% or 20% tip, which means the $2.50 per hour wage bump will be a net gain for servers. Meanwhile, kitchen workers earning the “full” minimum wage will see their hourly pay go up $0.25.