A server waits on customers at a café. Voters in several states delivered mixed verdicts on ballot measures to change the hourly rate for workers who earn tips or to raise the overall minimum wage. (Scott Olson/Getty Images)
Voters in two red states agreed to increase their minimum wage in steps to $15 an hour and to require employers to give workers paid sick time, and a third red state also approved sick leave.
But a proposed $18-an-hour base wage in California failed, as did initiatives in two states to change the hourly rate for workers who earn tips.
The issue of “tipped wages” drew significant interest during the presidential campaign, when both major party nominees promised to eliminate federal taxes on tips. President-elect Donald Trump’s pledge would require the approval of Congress.
In Massachusetts, a ballot measure would have gradually increased the state’s minimum wage for tipped workers — now at $6.75 an hour, as long as their tips bring them up to at least $15 an hour — to match the general minimum wage of $15 an hour by 2029, with tips still allowed. It was defeated 64%-36%.
Some restaurant workers worried that customers would be stingier if they knew servers were getting the higher base pay, and restaurateurs argued the measure would raise their costs and potentially push them out of business.
The National Restaurant Association and its state chapter poured about a million dollars into a campaign against the measure, according to the Massachusetts Office of Campaign and Political Finance.
In an open letter to restaurants following the vote, the Massachusetts Restaurant Association said defeat of the ballot measure saved the state’s restaurant industry $870 million, an average of $133,000 per restaurant. The group said “servers, bartenders, suppliers, owners, managers … chambers of commerce, visitor organizations, political parties on both sides of the aisle, and the Governor have all been the pulse of the No on 5 movement in Massachusetts.”
One of those bartenders, Gretchen Shelgren, who works at Mamma Mia’s restaurant in Plymouth, said in an interview after the vote that word of mouth also had a lot to do with the measure’s defeat. “People just told their friends, who told their friends, and it worked, obviously.”
She said upping her minimum wage would likely have reduced her take-home pay. She said she makes more than triple the regular minimum wage with tips.
But supporters of the ballot measure said the defeat was less a word-of-mouth campaign than a heavily financed effort by the restaurants that stood to save thousands of dollars in extra pay for their employees. The “No on 5” campaign produced T-shirts, napkins, flyers and other items that restaurants gave out to customers.
“They dumped millions of dollars into this,” said Grace McGovern, a server and organizer for the national One Fair Wage organization, which championed the higher wage. “Money and influence runs deep.”
But Massachusetts campaign finance records show her group also poured a million dollars into the effort.
McGovern also alleged that supervisors told their workers that their jobs might be in jeopardy if restaurants were forced to pay the higher wage.
In Arizona, voters overwhelmingly rejected a measure that would have allowed employers to pay tipped workers less.
By 75%-25%, an initiative failed that would have allowed tipped workers to be paid 25% less per hour than the minimum wage — or $10.77 an hour, currently — as long as their pay including tips was at least $2 over the state minimum of $14.35. Currently, businesses in Arizona can pay tipped workers $11.35, $3 less than the minimum.
Blue state rejects wage hike
The California proposal to raise the minimum wage to $18 an hour in steps by 2026 narrowly failed, 51%-49%. Opponents and backers amassed a combined $1.8 million war chest for the issue — the lowest amount of all the propositions on Californians’ ballots this year, according to The Sacramento Bee. If the measure had passed, it would have made California, along with Hawaii, the highest general minimum wage of any state.
The current statewide California wage floor is $16 an hour, but some workers get more by law. Earlier this year, California set a new base wage for fast-food workers at $20 an hour. Health care workers are on a track to get a gradual increase to $25 an hour.
Supporters of the higher minimum wage in California argued that higher salaries would help lower-income families and possibly reduce the number of residents on public assistance. Labor groups were the largest backers of the increase.
But opponents, led by California business interests, maintained that the higher pay for employees would hurt them, particularly as they are battling inflation-induced higher prices for supplies and labor costs. The business groups also said that higher mandated wages could force them to lay people off.
Voters approve sick leave
Missouri voters agreed 58%-42% to establish a $13.75-an-hour minimum wage by next year, which would then increase by $1.25 a year until it reached $15 an hour in 2026.
The referendum also requires employers to provide one hour of paid sick leave for every 30 hours worked. Businesses with 15 or fewer employees will be required to provide at least five days of paid sick leave annually, while larger businesses must provide at least seven days.
Alaska voters agreed 57%-43% to raise their state’s minimum wage to $15 an hour by July 2027 and ensure paid sick leave for workers. Under the measure, employees at companies with fewer than 15 workers can accrue up to 40 hours of sick leave annually, while those at larger businesses can accrue up to 56 hours.
Voters in Nebraska by a wide margin, 74%-26%, approved a ballot measure requiring businesses to offer paid sick leave — up to seven days for businesses with at least 20 employees and five days for those with fewer workers.
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