Photo by Jerod MacDonald-Evoy | Arizona Mirror
Arizona restaurants are hoping voters will change the state’s constitution to let them pay servers and bartenders 25% less than the minimum wage, allowing them to pad their profit margins, critics say.
Originally designed to counter a ballot initiative that would have sharply increased the minimum wage and scrapped existing laws allowing restaurants and bars to pay most tipped workers less than the minimum wage, Proposition 138 is the only worker pay measure that voters will consider this year. The proposal to increase the minimum wage was barred from the ballot after the restaurant industry successfully challenged the signatures its backers filed to qualify for the November election.
Under current Arizona law, businesses can pay tipped workers $3 less than minimum wage, which currently stands at $14.35. If Prop. 138 were on the books today, restaurants, bars and other businesses could pay their tipped workers $3.59 less than the minimum wage.
“This is transparently bad. The math here just does not check out at all,” Jeanne Woodbury, a lobbyist for Creosote Partners who has decided to run a no on 138 campaign by herself, told the Arizona Mirror. “I do think people, when they spend any amount of time looking into Prop. 138, they are able to do the math.”
That $0.59 difference isn’t much, but it adds up quickly. For each full-time tipped worker, Prop. 138 would allow restaurant owners to pocket more than $1,200 a year. And when the minimum wage rises in January — state law mandates inflationary increases every year — the 25% pay cut will grow larger, as will the amount of money restaurants and bars will save on paying employees.
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Fearing the total elimination of their ability to pay tipped workers less than the minimum wage — that reduction in pay must be made up for with tips — the Arizona Restaurant Association headed to the state Capitol this year to head it off with a constitutional amendment they called the “Tipped Workers Protection Act.” Touting the larger pay cut as a way to ensure workers are paid the minimum wage, they convinced Republican lawmakers to send the proposal to the ballot.
When lawmakers considered the bill, a group of people wearing green “Save Our Tips” shirts spoke in favor of it. Those people who spoke in favor all have connections to the Arizona Restaurant Association — something that was not revealed to legislators.
A political action committee named “Save Our Tips AZ” registered with the state about two weeks before lawmakers took up the measure; its chairman and treasurer are the president and chief operating officer of the ARA. Now, the campaign has been rebranded as “Yes on 138” but connections to “Save Our Tips AZ” still exist.
Organizations with similar names have appeared in other states that have had similar ballot initiatives to raise the minimum wage.
Advocates of the measure pointed to Washington, D.C., as an example of how a change in minimum wage could impact restaurants. In 2022, the District passed a measure that guaranteed tipped workers the minimum wage. The area saw an astroturfed campaign against the change led by a conservative group that pushed op-eds and quotes — often from local servers — to mainstream media outlets.
Astroturfing refers to a practice in which a campaign is made to appear as a grassroots effort when in reality it is orchestrated or managed by a public relations firm or a well connected political player.
The campaign also used the name “Save Our Tips.” Restaurants in the area also began adding surcharges related to the increase, despite it not being in effect at the time.
The D.C. campaign was managed by Lincoln Strategy Group, a Tempe company owned by former Trump consultant Nathan Sproul, which used similar language and arguments. Sproul has previously told the Mirror that his group was not involved with Save Our Tips AZ.
Similar tactics have emerged in the Prop. 138 campaign. Last month, the Arizona Republic published an op-ed by a local server promoting Prop. 138. What wasn’t disclosed, however, is that the author also was present at the committee meeting earlier this year wearing a “Save Our Tips” t-shirt, and wrote a statement urging voters to support Prop. 138 in the Arizona Secretary of State publicity pamphlet that was paid for by Save Our Tips AZ. She works at a restaurant that is managed by Upward Projects, which has donated to the ARA and similar organizations.
Save Our Tips AZ paid the $75-each fee for 33 people to publish statements in the publicity pamphlet in favor of Prop. 138. State law requires that payment to be disclosed in the publicity pamphlet.
Matthew Benson, the spokesperson for Yes on 138, dismissed any criticism because the campaign paid for publicity pamphlet statements for the Republic op-ed author or anyone else.
“That is a routine practice, because there is a cost associated with placing arguments in the pamphlet,” Benson said, adding that the Mirror should “tread carefully” about making connections between the Yes on 138 campaign and people who have come out in support.
“She is a restaurant server,” Benson reiterated about the op-ed author, adding that her appearance at the committee meeting was of her own volition. “She doesn’t have any role with the campaign.”
In a video last month critical of Prop. 138 and the campaign backing it, YouTuber HistorySock noted the connections between the Republic op-ed’s author and the campaign — including that the opinion piece was submitted to the Republic by Benson, according to his communications with the paper’s editors.
Even though the minimum wage increase measure didn’t qualify for this year’s ballot, Benson said it is still important that voters pass Prop. 138 because proposals to raise wages and eliminate the reduced pay for tipped workers will return in the future.
He also addressed the ARA’s support of Prop. 138.
“They’re supporting the campaign. I don’t think that is any secret,” Benson said, pushing back on claims that the Yes on 138 campaign is astroturfed.
Eva Putzova, a former Flagstaff City Council member who led an initiative to raise the minimum wage in Flagstaff, said that effort faced similar opposition from the ARA and its national arm. Now, she and servers in the Flagstaff area are rallying against Prop. 138, which they said is a way to call the Flagstaff minimum wage ordinance unconstitutional.
“We are assuming this is an attack on local control,” she told the Mirror.
Proponents of Prop. 138 have argued that the measure is to protect tips for servers. Putzova pushed back on the idea that enshrining lower pay for tipped workers in the Arizona Constitution will benefit servers. That practice, she said, stems from America’s racist past. After the Civil War, restaurants and the hospitality industry hired emancipated Black men and women, but did not want to offer them a wage, so they offered them gratuities instead. Tipped workers were not guaranteed a wage until the mid 1960s.
“This created a kind of system of two kinds of workers — some that deserved wages and salaries paid by their employers and others that are (paid) at the whim of customers,” Putzova said.
Woodbury said she has been frustrated that the same organizations who have consistently opposed minimum wage increases — the Arizona Restaurant Association and Arizona Chamber of Commerce and Industry both have fought wage hikes in Arizona — are now openly advocating to cut their workers’ pay by even more.
“There is a really big conversation happening, and we can see with these astroturfed campaigns against One Fair Wage measures in other states and here that this is part of the bigger debate of how tips should work — but none of that is on the ballot,” Woodbury said. “I don’t think I’ve seen a single group or person support (Prop.) 138 who isn’t just backed by the Arizona Restaurant Association.”
Putzova and servers in Flagstaff are also trying to sound the alarm on the already existing issues surrounding tips and wage theft. Many share their tips with other members of the staff — and in some instances are asked to share with employees who receive a full salary, which Putzova said is against federal law and a form of wage theft.
A Department of Labor investigation that looked at approximately 9,000 restaurants from 2010 to 2012 found over 1,170 tip credit violations worth approximately $5.5 million. That same investigation found 85% of chain restaurants were not in compliance with paying tipped workers correctly.
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